Spot NZUs moved up by 5 NZ cents this week to close Friday at NZ$6.90 ($4.53), but liquidity was low as traders show little interest in taking new positions before more is known about the ETS review.

Allowances traded in the NZ$6.90-7.00 range throughout the week and settled at the lower end of the range.

“Speaking to our forester clients, the current mood is one of patience. There is volume for sale but only at higher prices. So long as the sellers remain patient, we see pretty limited downside,” brokers OM Financial said in a note to clients.

But until emitters gain some confidence that the government will make at least some of the expected changes to the scheme after the ETS review – such as removing the 2-for-1 rule and reduce the amount of NZUs allocated for free – there is little appetite ta pay above current levels.

The big news of the week was that Genesis Energy will shut down its two coal-powered units at Huntly in December 2018, but the announcement failed to move the market.

The closure is still nearly three and a half years away, and even though Genesis said the power station emitted 2.3 million tonnes of CO2 in financial year 2015, and as much as 5 million in busier years, the actual CO2 reduction – probably around 500,000 tonnes per year, according to sources – because Huntly also runs on gas, and that will be cranked up to replace some of the lost coal-generated electricity.

By Stian Reklev – stian@carbon-pulse.com

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