Carbon credit price meltdown in NZ..14c a tonne!..Australian CO2 tax compensation flowing to emitters
The cost of carbon credits fell to just 14 cents a tonne late last month, taking the annualised cost imposed on New Zealand business well below $10 million.
It is a far cry from the $25 a tonne forecast when the emissions trading scheme (ETS) was created.
The ETS, which mirrored schemes overseas, was designed to put a price on carbon to encourage reduced emissions of greenhouse gases. But carbon prices have collapsed, partly due to the economic crisis in Europe, and partly due to ETS changes designed to reduce the cost to business and keep the New Zealand economy competitive.
At 14 cents a tonne, the cost to New Zealand businesses has now become insignificant. Some market sources wonder if the costs of running the ETS are now greater than the cost to businesses of buying the carbon credits they need to surrender under the scheme.
Westpac’s carbon dealing desk said certain imported European carbon credits can now be bought for 28 cents and emitters have to surrender only one credit each year for every two tonnes of carbon they emit.
The ability to surrender one credit for every two tonnes of carbon emitted was to have been a temporary position, as emitters got used to living with a price on carbon. But last year the Government extended that indefinitely.
New Zealand carbon credits are selling for around $2.50 – and some emitters choose to surrender them – but they are expected to be only a small portion of the carbon credits that big emitters surrender.
The breakdown of the 2012 carbon credits surrendered by the likes of petrol companies and big industry will not be available until the middle of the year. But several market sources told Sunday Star-Times they expected the vast majority to be cheap European imports, with many emissions reduction units (ERUs) bought from Russia and Ukraine.
In 2011, 16.34 million credits were surrendered in New Zealand, of which more than 70 per cent were cheap imported units, including ERUs.
Market sources say they believe the 2012 figures will show as much as 90 per cent of credits surrendered are cheap, imported credits.
The cost could be a little higher than 14c a tonne for very large emitters. Westpac said buying in bulk on the illiquid market would add a few cents to the price.
Australia’s highly emitting brown coal power generators will reap $2.3 billion to $5.4 billion in windfall profits from carbon price compensation, an analysis by a leading energy market expert has found.
While brown coal power plants based in Victoria’s Latrobe Valley will get billions in compensation, the analysis suggests they have so far been able to pass on all of their extra costs of the carbon price – thus turning the compensation into pre-tax profit.
The analysis carried out by Bruce Mountain, director of consultants Carbon + Energy Markets, looked at half-hourly spot prices for electricity sold from four Victorian brown-coal fuelled power plants – Hazelwood, Yallourn, Loy Yang A and Loy Yang B – over the first six months of the carbon price.
a tale of 2 countries..new zealand.. australias neighbour..with a CO2 price of 14c a tonne..australias price is at $23 a tonne..its not even a blip on the balance sheet of a company..its nothing..its insignificant..its a fail..and then to australia where we have the “polluters” becoming rich from compensation handed out for being taxed for CO2 emissions..this is madness ..and completely defeats the reason to do it..and its not even needed anyway..whatever australia saves in emission numbers for a year we aive back to the world in 4 days of supplies of coal to china..its a scam and a sick joke..on us..