Source: Radio New Zealand
Supplied/ Unsplash – Mudit Agarwal
A market “surprised” by the government has failed to buy a single carbon unit at the final Emissions Trading Scheme auction of the year.
Not a single bidder registered for Wednesday’s auction, making 2025 the second calendar year in which all four quarterly ETS auctions have failed.
The first was 2023.
The managing director of commodities broker Marex, Nigel Brunel said recent climate policy announcements were “primarily responsible” as they signalled that the government was backtracking on climate change.
Emitters captured within the ETS still have to pay for their greenhouse gas emissions – but at the moment it is significantly cheaper to buy carbon units from elsewhere, such as forestry owners.
The minimum price carbon units could be sold for in the auction was $68, but emitters have been able to buy units elsewhere for as little as $40 recently.
Brunel said the market had been spooked most recently by the government’s decision in November to ‘de-couple’ the ETS from New Zealand’s Paris Agreement pledges.
“They could have done it quite differently, instead of just going, ‘Surprise!’”
Markets “hate uncertainty”, he said.
“It was announced without a lot behind it, [or] the rationale for doing it, so it gave the market concern that there were changes happening to the ETS that weren’t well-telegraphed – and the market reacted accordingly.”
However, the market had been weak all year.
“There’s been a number of things that have fed into it…. The fact that [the government] reduced the methane target, the fact that mandatory reporting requirements were weakened, just the continual mantra that we’re not going to do anything in offshore mitigation to meet our [2030 Paris target] kind of sent the signal to the marketplace that …the government was weakening overall on climate change policy,” Brunel said.
That had not been helped by “quips from minor parties that we should withdraw from Paris”.
The units from all 2025 auctions will now be cancelled out of the ETS, meaning they will not be available to emitters in subsequent years.
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
