NZ carbon prices slip below European permit prices
New Zealand carbon prices rose on Friday, but fell below European permit prices for the first time since July after strong gains in Europe due to planned legislative changes.
Spot permits under New Zealand's emissions trading scheme were seen trading around $NZ7.95, brokers said, compared with the previous week's price around $7.65. Weekly traded volumes slipped to 200,000 from 250,000 last week.
The European market surged on Thursday on speculation that prices would rise in the coming months on a European initiative to bolster prices.
Market participants said the European rally wiped out the price spread between NZUs and European CERs, adding that NZU prices slipped slightly below CERs for the first time since July, according to Point Carbon charts.
Brokers said the spread reversal would curb recent selling of New Zealand credits to swap into cheaper European credits, as investors would eventually be attracted to relatively lower NZU prices.
"A lot of the NZU selling has been a spread trade, so now that it's fallen below CERs, you wouldn't expect that to continue too much," one broker said.
The spread reversed after NZUs traded as much as $1.30 higher than CERs earlier this year.
EU allowances rallied as much as 9 per cent to an eight-week high around €9.11 on Thursday, jumping on news that European lawmakers on a key parliamentary committee had agreed to support measures that would raise carbon prices.
In the secondary market for UN-backed carbon credits, spot CERs jumped more than 10 per cent to €4.7, also their strongest in eight weeks.
Each permit represents a tonne of greenhouse gas emissions. The scheme is designed to help curb output of emissions blamed for causing global warming.
Comments on this article
Not so sure..
As you have mentioned in your article, our so called leaders appear paralysed and unable to do any thing, even enforce rules that already exist.
Perhaps then a monetary incentive such as carbon credit trading scheme, even with all the distortions of short selling and naked short selling, might be a substitute for inaction?
It might be easier to pick up on the ground rip offs, rather than the electronically generated rip offs that currently hide the under the curtain of international banking.
As expected!
The much promoted Carbon Credit scheme/scam has, as expected, degenerated into just a commodity trading program, rather than a genuine method of reducing carbon dioxide. Mostly it's because intelligent folks realise that CO2 is not the pollution culprit, and traders know where to make a buck when the opportunity presents itself! What will it take to get people to realise that propaganda such as the carbon credits scam is not an answer to polluting the planet and attack the real problems of pollution? Pollution is the chemicals in the water, pumped in by industries that know they can get away from it! It's the plastic bags that strangle turtles etc, when biodegradable ones are available at the same price - when these are mandated, that problem will be solved! And so on - the solutions are real and here now and cost virtually nothing but enforcement of CURRENT regulations!
WAKE UP FOLKS!