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  • CarbonCrop Team

What's Happening In the ETS? Market updates and recent changes

Our recent CarbonCurious webinar CarbonCrop cofounder Nick Butcher was joined by Quintin Tahau of emsTradepoint to discuss what's happening in the New Zealand carbon market right now, and changes and updates around the New Zealand Emissions Trading Scheme (NZ ETS).

The Current State of Carbon Pricing

The price of carbon credits is always changing. These shifts are influenced by new policies, the balance of supply and demand, and investment trends. The graphs below show these peaks and troughs over the year, and the pattern we’re seeing with ETS announcements and dips in price. As Nick shared, it’s not that the ETS is ineffective, but that we need to figure out the right settings for it to be effective.

For those of you with forests on your land, it's important to keep an eye on these prices as they directly affect the value of the carbon stored in your trees. At the time of discussion, the carbon price was around $70 per unit. This figure is a crucial reference point when calculating the potential income from their forest carbon removals. However, it's important to approach these numbers with caution. The market's speculative nature means that today's price is not guaranteed.

New Cost of Registering in the ETS

Managing forests for carbon credits isn't free of costs. 22 new fees and charges have been introduced for those participating in the ETS. These fees affect everyone with forests, whether you're just getting into the scheme or you've been part of it for a while.

These new fees could be a concern for owners of older forests. As trees age, their growth slows, and they don't absorb as much carbon. This means the credits you earn might not increase much, but you'll still need to pay the fees. If carbon prices were to drop, the income from your credits might not cover these costs.

To read more about the new fees you can check out our blog post here

Biodiversity Credits

Biodiversity credits are a new concept that's being explored by the Ministry for the Environment. These biodiversity credits are being considered to encourage landholders to protect and enhance the natural ecosystems on their land. Unlike carbon credits, which are for carbon capture, biodiversity credits would recognise and potentially reward the conservation of native species and habitats.

While biodiversity credits are not part of the ETS, they could complement it. They represent a potential new income stream for landholders who are investing in the natural environment.

The discussion is still ongoing about how these credits should work, with the consultation having closed in early November. It's an area worth keeping an eye on, as it could impact decisions about land use and conservation in the future.

To learn more about CarbonCrop’s views on the Biodiversity Credit, check out our blog here.

Registration delays

There's currently a backlog in processing ETS registrations. This means it might take longer than usual to get your forest registered and start earning credits. It's a waiting game, but being aware of this delay helps you plan accordingly. If you applied in 2022 you are likely to receive news of your forest’s registration this year. If you applied in 2023, you are unlikely to hear back about your registration this year.

While the registration delay might be frustrating, it’s not something you have to worry about, as the credits are not lost. You will simply be awarded back dated credits from 2023 when your forest is accepted.

The Election

With the election results in, it’s clear that New Zealand is in for a governmental shift. This could mean a change in policy and potentially some changes to the Emissions Trading Scheme (ETS).

As discussed in the webinar, the good news is that National voted for the Climate Change Response Act, and the statement was that they support the targets. Their pre-election policies suggest a nuanced approach to forestry, advocating for the protection of high-value agricultural land while promoting reforestation of marginal lands. National have also indicated that they would look to expand recognition of on-farm sequestration, a move that could bring in changes for soil carbon and native vegetation.

The ETS, though not without its critics, has been effective and it remains a cornerstone in our decarbonisation efforts. With the consultation for the ETS review closed earlier in the year without immediate outcomes, it has been left for the new government to take action and any dramatic changes seem unlikely in the short term.

It’s important to note that none of this is guaranteed and there are still a lot of unknowns, and while National has proposed policies we don’t know what the outcomes will be.


Watch the full webinar in the video above for more information, and subscribe to the CarbonCrop Youtube Channel to stay up-to-date with future CarbonCurious webinars.

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