Spot NZUs closed Friday at NZ$6.80 ($4.54), up 5 NZ cents on last week, but most of the volume traded was for 2017 delivery as some took advantage of what could be seen as cheap forward prices, market participants said.

The spot permits remained range-bound, with just over 200,000 NZUs trading in a narrow NZ$6.70-6.80 range throughout the week.

But untypically for the New Zealand market, more interest was shown in the forward market, with some 400,000 2017 NZUs changing hands, according to sources.

The May 2017 contract closed on CommTrade at NZ$7.55, as some buyers gambled that after the UN climate summit in Paris and the ETS review prices are likely to rise.

“Some parties took the opportunity to buy forwards at cheap rates so they can spend money elsewhere,” one broker said.

Meanwhile, suspicion amongst participants is growing that the long-awaited GHG market review might not begin until after the Paris outcome is known, even though the ETS legislation states that it should be carried out in 2015.

New Zealand’s pledge to cut its GHG emissions to 30% below 2005 levels by 2030 depends on the Paris meeting’s decisions on carbon markets and accounting rules for land sector emissions, and the outcome of the ETS review is likely to reflect those.

Climate Change Minister Tim Groser’s office did not respond to questions about the timing of the review.

By Stian Reklev – stian@carbon-pulse.com

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