8 Jul 2015

NZ carbon market hots up

2:28 pm on 8 July 2015

The New Zealand carbon market is hotting up with rising prices and volumes.

In one big deal, up to 1 million tonnes of carbon credits are being offered by forest owners via the carbon trader OM Financial.

The offer consists of a 200,000 tonnes initially, followed by another 800,000 tonnes if the price is right.

One million tonnes would be ten times the typical daily turnover of OM Financial.

The activity comes as the Government pledges to lower greenhouse gas emissions by 2030.

This would require greenhouse gas emitters such as petrol companies to either reduce emisions or buy more credits from carbon-absorbing sectors like forestry.

Senior OM Financial executive Nigel Brunel said the Government initiative had had some impact but it was not the main factor.

"I certainly think the announcement by the Government yesterday of its target has had some impact on the market," he said.

"But it is just another ingredient in the overall market and the biggest fundamental is it is a domestic-only scheme - emmiters have to buy and prices have been rising."

Mr Brunel said cheap overseas units were no longer available, and that strengthened the hand of local suppliers like foresters.

This has pushed New Zealand carbon credits from $1.40 a tonne in 2013 to almost $7 now.

Get the new RNZ app

for ad-free news and current affairs