New Zealand Emissions Trading Scheme market information portal

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NZ ETS market information portal

This landing page gives participants in the New Zealand Emissions Trading Scheme (NZ ETS) and other stakeholders a portal to NZ ETS market information.

The purpose is to make it easier to access NZ ETS-related information to support informed-decision making by participants. By providing market information clearly in a way that ensures equal access, we are seeking to ensure that participants are able to achieve compliance with their NZ ETS obligations at minimum costs.

What is NZ ETS market information?

NZ ETS market information is any information that may help NZ ETS participants to make informed decisions in relation to NZUs, particularly understanding and making forecasts of future NZU prices.

The market information is important for a well-functioning NZ ETS because it enables participants to make informed decisions regarding their emissions abatement options. Broadly, the decision that needs to be made is whether to purchase NZUs from the market or undertake abatement activities to directly reduce emissions. The NZU price is a key variable as part of this decision-making.

By providing market information clearly, in a way that ensures equal access, we are seeking to ensure that participants are able to achieve compliance with their NZ ETS obligations at minimum costs.

There are three types of market information

  • Data relating to market fundamentals - the supply and demand of NZUs now and in the future. This information is important for forming views about future NZU prices.

  • Data relating to market transactions - NZUs being transferred between accounts, typically through trades that take place on the secondary spot market. Both market participants and other stakeholders such as financial intermediaries are regularly engaged in secondary spot market trading. This information is important because it provides transparency regarding the trading of NZUs in the market.

  • Qualitative information relating to policy and regulatory changes – including policy or regulatory changes to the NZ ETS itself and in some instances other policies and legislation. This information can be important for forming views about future NZU prices.

Access data related to these three types of market information by clicking on the tabs at the top of this page.

Unit flow forecasts

If you are an NZ ETS participant, unit flow forecasts can help you make decisions about how to meet your emissions obligations.

The information below provides a forecast of the number of emissions units expected to be supplied into the New Zealand Emissions Trading Scheme and how much demand there is for units.

Forecast supply and demand breakdown for 2021 to 2025 (NZU millions)

Calendar year 2021 2022 2023 2024 2025
Unit supply issued within the cap Auction volume 19.0 19.3 18.6 17.2 15.5
Forecast industrial allocation 8.4 8.2 8.9 8.7 8.7
Unit supply earned from removals  Forecast post-1989 forestry entitlements 11.7 11.4 12.5 10.8 10.6
Forecast other removal activities 2.6 2.7 2.1 2.2 2.2
Total forecast NZU supply 41.7 41.6 42.1 38.8 37.0
Unit demand from gross emissions  Liquid fossil fuels 19.8 19.7 19.6 19.5 19.5
Stationary energy and industrial processes 15.1 15.0 14.8 14.6 14.6
Waste and synthetic gases 2.5 2.4 2.3 2.2 2.1
Unit demand from forestry Deforestation/harvesting and deregistration 1.7 4.0 5.7 11.3 13.8
Total forecast NZU demand 39.1 41.1 42.4 47.7 50.1
Supply versus demand net difference 2.6 0.5 -0.2 -8.9 -13.1
NZU stockpile 117.2 117.7 117.4 108.6 95.5

Forecast overall NZU supply and demand and NZU stockpile

Forecast overall NZU supply and demand and resulting impact stockpile

This graph compares the annual forecast of NZU supply and demand for the period 2021-2025. The graph shows an inverse relationship between demand for NZUs and the stockpile of NZUs held in private accounts.

Breakdown of forecast NZU supply and demand 

This graph shows the breakdown of annual NZU supply and demand, using the NZ ETS cap as a reference point.

This graph shows the breakdown of annual NZU supply and demand, using the NZ ETS cap as a reference point.

What the forecasts show

The forecasts in the table and graphs above show the total unit supply to the NZ ETS will decrease over the period while forecast demand for units increases.

The increase in demand is driven by forecasts of an increase in NZUs surrendered to forestry harvesting.  

Over 2021–2022, more NZUs will be supplied into the market through auctioning and forestry removals than what is required to meet participant demand (ie, the ‘net difference’ is negative).

Over 2023-2025, the reverse is projected. Demand for NZUs is projected to increase above the volume supplied. 

The impact on NZU stockpile figures are calculated on the assumption that the annual net difference between supply and demand will be met with units from the stockpile. The total stockpile volume is based on the assumption that 21 per cent of 2020 emissions surrender obligations will be met through use of the $35 fixed price options (FPO), rather than NZU surrenders. This is based on the same use of the FPO as for 2019 emissions. 

About the forecasts overall

The unit supply and demand forecasts are based on business as usual projections and are subject to change. The forecasts are based on Budget Economic and Fiscal Updates published by the Treasury and will be updated every six months in March and October or before an election. The indicators used to create the forecasts are the best that we have available at a point in time.

The methodologies used vary depending on the data available and are underpinned by certain assumptions. Unknown changes such as new Government emissions reduction policies, closure of large emissions intensive businesses or the development of a new cost-effective emissions reduction technology are not factored in.

In times of normal activity, these assumptions provide us with reasonable projections of activity. In periods of disruption resulting in changes to activity and economic shifts, some of these relationships may weaken or no longer hold. As a result, the current projections have an increased level of uncertainty mainly due to COVID-19. 

Stakeholders within the NZ ETS may also have their own sources of information or differing views on how external factors will impact emissions.  

About the forestry forecasts

Forecasts for forestry are challenging because there are many factors that influence forestry decision making in the NZ ETS. 

They include the following.

  • It is voluntary for post-1989 forester owners to register their forest in the scheme and they can choose to deregister at any time. 
  • Typically, post-1989 foresters harvest their pine plantation exotic trees around 28 years of age. However, considerations such as log price, carbon price and other external factors may influence when a forester chooses to harvest and when the NZUs are surrendered to the Crown.
  • Foresters only need to submit a mandatory return every five years but they can choose to submit a voluntary report annually. The current mandatory emissions reporting period closes in 2022. 
  • Reforms to the NZ ETS will change the carbon accounting approach from stock change to a method known as ‘averaging’. The averaging method will apply to all new post-1989 forests entering the NZ ETS from 2023. (Averaging will be optional for forests registered from 1 January 2019 to 31 December 2022, and become compulsory for all forests registered from 1 January 2023.) Forest owners who use averaging will not be required to surrender NZUs when they harvest (if they replant). Participants would instead receive fewer NZUs as their forest grows, up to a determined average level of long-term carbon storage.

The deforestation surrender forecasts assume 100 per cent compliance and that 100 per cent of post-1989 forest owners submit an annual voluntary emissions return. 

For more information on forestry visit Forestry in the Emissions Trading Scheme [MPI website].

There are three types of historical information that are relevant to market transactions.

It is important to understand that not all of these emission unit transfers represent trades in the market. Some of these unit transfers will have occurred as participants with multiple accounts move units between them, or market intermediaries aggregate or disaggregate units from individual participants prior to (or following on from) market trades.

The Government has reformed the New Zealand Emissions Trading Scheme (NZ ETS). It has done this through the Climate Change Response (Emissions Trading Reform) Amendment Act and related regulations. 

Find out about the changes

There are three types of information that are relevant to market transactions.

  • Policy changes that affect the design of the NZ ETS
  • Policy and regulatory changes that affect operational or technical elements of the NZ ETS
  • Policy changes to other relevant legislation

Information about policy changes that affect the design of the NZ ETS

These changes can directly influence supply and demand of NZUs. Such policy changes are most relevant, and information about these changes can also be viewed as information about market fundamentals.

Reforming the NZ ETS

  • Consultation on improvements to the NZ ETS was held during August and September 2018.  The first tranche of decisions to the NZ ETS based on this consultation and on the Government’s in-principle decisions made in 2017 was announced in December 2018. A second tranche of changes was announced in May 2019. Final decisions were announced in July 2019. 
  • For information regarding the proposed changes to forestry in the NZ ETS see Emissions Trading Scheme on the Ministry for Primary Industries website. For the consultation document and related information see A better Emissions Trading Scheme for forestry on the Ministry for Primary Industries website.

Information about policy and regulatory changes that affect operational or technical elements of the NZ ETS

Policy and regulatory changes that affect operational or technical elements of the NZ ETS changes are also important but they do not always impact NZU supply and demand, or in some cases only do so indirectly. Typically these changes will be more relevant for operational and practical reasons rather than due to their impact on NZU supply and demand.

Current proposed changes

  • For information regarding current proposed policy and regulatory changes see here.

Information about policy changes to other relevant legislation

Policy changes to other legislation can also be relevant in some instances. For example, the Climate Change Response (Zero Carbon) Amendment Act is relevant to the NZ ETS market as it sets the level of domestic ambition and therefore affects NZU supply and demand. Significant announcements about other policies and legislation like the Climate Change Response (Zero Carbon) Amendment Act will be made available on this website.

Other legislative changes

  • For information regarding other relevant policy changes for example the Climate Change Response (Zero Carbon) Amendment Act is available here

2020

16 June - The Climate Change Response (Emissions Trading Reform) Amendment Act has now been passed into law.

2 June - Second Reading of the Climate Change (Emissions Trading Reform) Amendment Bill and final regulatory decisions for NZ ETS settings and NZ ETS rules for auctioning.

2019

The phased removal of the one-for-two transitional measure will result in full obligations for activity occurring during 2019. Note, forestry has always faced full surrender obligations.

1 January -  Surrender obligations across all sectors reaches 100% (last stage of the phased removal of the one-for-two transitional measure)

31 March -Final day for annual non-forestry emission returns for calendar 2018

18 April Release of Improvements to the New Zealand Emissions Trading Scheme: Summary of consultation responses

30 April - Final day for applying for provisional and final industrial allocations

16 May  - Second set of non-forestry changes to the NZ ETS announced Find out more

31 May -  Final day for non-forestry surrenders covering calendar 2018

24 October - Climate Change (Emissions Trading Reform) Amendment Bill introduced to Parliament

 5 November - First Reading in Parliament of Climate Change (Emissions Trading Reform) Amendment Bill

2018

21 September - Consultation on the NZ ETS improvements including forestry closed. Thanks for sharing your views. Find out more

12 December - First set of forestry and non-forestry changes to the NZ ETS announced.  Find out more

About the NZ ETS

To find out about the aim of the NZ ETS and how it works see About the NZ ETS

If you would like to learn more about why market information is important and how it relates to the NZ ETS, see this report

For how the NZ ETS fits within the wider climate change work programme see The transition to a low-emissions and climate-resilient Aotearoa New Zealand.