The New Zealand ETS is serious trouble with the price of carbon credits in Europe destroying the local scheme.The whole theory that shuffling bits of paper will save the earth is now being seen as the scam it is. New Zealand units have halved in price from May this year and are now only $11 reflecting the European price, and the Government may have to ban international credits to prevent embarrassment.
Industry leaders call for limits on imports of low-quality European carbon credits, writes Rob Stock.
A crash in carbon credit prices means the government has no option but to ban or drastically restrict the use of imported carbon credits of dubious quality, or the emissions trading scheme (ETS) could become a national embarrassment.
The price of New Zealand units (NZUs) has crashed from $22 in May to about $11 last week, stifling interest in developing carbon offsetting initiatives here, according to carbon market participants.
The price crash has been so steep that by one calculation, if the price trend continued for another 100 days, the value of NZU credits would be zero.
The reasons for the crash appear to be the unfettered ability of New Zealand emitters to import credits of dubious quality from overseas, coupled with the recent dumping of international credits by cash-strapped European industrial and utilities companies selling down their stockpiles of carbon to realise cash as the debt crisis worsens, participants in the fledgling carbon trading market say.
Big emitters here have been able to buy the UN-backed Certified Emmissions Reductions (CERs) cheaply to surrender under the ETS, gutting the price of NZUs.
As a result, those who have created NZUs – perhaps through planting timber on part of their farm – have almost abandoned the market.
The only people offering NZUs for sale appear to be certain “emissions intensive and trade exposed” emitters (known as Eite, curiously pronounced as though it rhymed with yeti) who receive NZUs as compensation for increased costs under the ETS, market sources say. And even they are not willing to accept the prices bidders are putting on the table.