Paper Raises the Spectre of Limiting use of CER in the NZETS

The New Zealand Ministry for the Environment provided a cabinet paper in December 2011 that argued CER should be restricted in the NZETS to avoid a flood of cheap CER.

Released to the public in early February 2012 the paper is available here

The NZETS currently has no restrictions on how many CER can be surrendered in respect of any obligations under the scheme. Europe by comparison in the EUETS restricts the number of CER that can be used for complying with obligations.

This has resulted in a significant spread between the EUA price (the NZU equivalent in the EUETS) and the CER price. This is not the case in the NZETS.

The availability of cheap CER has been cited as a reason for the significant drop in the price of an NZU in recent times.

Prices however are on the rise as the EUETS recovers strongly. No one has asked the obvious question. Are New Zealanders paying $25 for an NZU equivalent in their fuel and electricity prices? If they are who is profiting when the price of an NZU is $8?

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