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  • CarbonCrop Team

Growing updates: Market Insights and ETS changes

Note: the information in this video was accurate at the time of recording, but may have changed since and should not be considered advice.

Our quarterly CarbonCurious market-update session with commentary from Cathy Lawless from emsTradepoint, delved into the latest developments in the New Zealand Carbon Markets. We saw some key themes coming through, while the uncertainties we saw last quarter carried through.

So what have we actually been seeing?

Market Trends and Price Fluctuations

When looking back the data revealed a trend of dynamic, and fluctuating, prices of New Zealand Units (NZUs) in the past six months. When we delve deeper into this, there are some connections with government announcements and policy changes, which appear to influence market prices. This reflects the market's sensitivity to official statements, and changes to the Emissions Trading Scheme (ETS).

Government's ETS Review

The government initiated a review of the ETS, with a focus on net emissions and the role of forestry removals. While this triggered some uncertainty, it also demonstrates a commitment to enhancing the effectiveness of emissions reduction strategies. Concerns have been raised about the effectiveness of the current system in incentivising emissions reduction, given the reliance on forestry offsets. The review aims to fine-tune the system for even greater success.

The consultation process aims to address these concerns and gather public and industry perspectives.

This consultation is open to anyone, so if you have opinions we encourage you to participate and have your say in these changes.

Options and Implications

The government's consultation presented four options for the ETS review, each with its potential advantages and challenges. Separating incentives for gross emissions reductions and emissions removals emerged as a desirable solution, and a positive step toward optimising the system's efficiency.

Careful consideration of the options is required, and it's important to consult with forestry experts to ensure you're putting your making the best decision for your land.

Redesign of the Permanent Forest Category

The consultation discussed the redesign of the permanent forest category, including eligibility criteria and management requirements.

The goal was to strike a balance between incentivising the transition to indigenous forests and ensuring long-term sustainability. Emphasising the transition to indigenous forests while considering the sustainability of existing exotic forests encourages a positive environmental impact.

Forest owners are encouraged to consider their registration options and seek guidance from forestry consultants.

Key takeaways

Overall there’s a lot of change on the horizon, and while we can’t say what will happen, we can see the market's sensitivity to government announcements and decisions. With concerns about the current system's effectiveness, and potential changes around incentivising emissions reduction and forestry practices on the horizon, it’s going to be imperative for participants to stay on top of all the changes.

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