In Point Carbon, Nigel Brunel of OM Financial that brokered the deal in early February, said 50,000 New Zealand Units (NZUs) traded at NZ$20 (€8.16, US$11.16) . He could not reveal the identity of the parties, but said the seller was a forestry company. The NZUs are 2008 vintage, with delivery to occur as soon as the units are allocated by the government.

This delivery is expected to happen within a few weeks, but the 2008 allocation plan for forestry – the only sector participating in the scheme so far – has not yet been finalised by the Ministry of Agriculture and Fisheries.

Brunel told Point Carbon the trade was made at a 20-per cent discount to UN-issued certified emissions reductions (CERs) at the time. “A discount was felt to be fair. While the NZUs are quality credits the market is new, illiquid and not transparent,” he said.

The CER market, on the other hand, is liquid and fungible with several regional carbon scheme, such as the EU market and the proposed Australian system. NZUs can primarily be used domestically, though there is a possibility to convert them to assigned amount units (AAUs) – the Kyoto protocol’s governmental carbon credit – and sold to foreign buyers.

The NZ parliament adopted the emissions trading scheme last September, but the new government has put the scheme under review. While replacing the scheme with a carbon tax is on the agenda, this is unlikely. Senior cabinet ministers, while not wishing to pre-empt the outcome of the review, have made it clear that they expect changes to the scheme will be in the nature of fine-tuning.

Forest owners greeted the sale with keen interest but are looking for an improved price, says Earnslaw One environment manager Peter Weir.
He told Carbon News that owners of post-1989 forests who have opted into the ETS are delighted that the carbon market has finally “sparked”.
“All forest owners have long sought payment for the environmental services delivered by plantation forests, and this is now a reality for post-1989 owners,” he said.

“The buyer's timing was impeccable as carbon prices appeared to bottom out four weeks ago, just as this transaction occurred, with a significant price recovery having subsequently occurred in both the EU ETS and in CDM markets.”

Setting a benchmark price was important for the New Zealand ETS, Weir says. New Zealand forest owners are looking at an improved price for carbon, with carbon having recovered from 9.5 euros a tonne to 13 euros, before settling at 11.30 Euros.

“While log exporters traditionally undertake trades in US dollars, the fact that carbon price benchmarking in New Zealand is being undertaken in Euros rather than US dollars is giving forestry company CFOs and bankers alike some much-needed comfort, in that pricing in euros is dampening much of the exchange rate volatility seen in the latter,” said Weir.

At least two “significant” owners of post-1989 forest are seeking to engage with Japanese emitters with a view of selling New Zealand sequestration units offshore as AAUs, he says. Contact with these potential buyers was developed in association with New Zealand Trade and Enterprise.

Forest Owners’ Association chief executive David Rhodes says his members have welcomed the first sale of NZUs, but many are still waiting for more certainty around the ETS before registering their forests.

“It is a positive signal and, given the economic times and the fact that this sale involves NZUs in a small market, the price is relatively encouraging,” he said.

But while some significant forest owners have registered their forests, Rhodes says that many are waiting for the emissions trading scheme review to be completed and for greater certainty around the allocations of credits before committing to the process of registering.

Sources: Point Carbon and Carbon News