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  1. #51
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    paywalled sorry but interesting. watch for same action at Dec auction. https://businessdesk.co.nz/article/c...-carbon-market

  2. #52
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    https://carbon-pulse.com/140627/?utm...2c47-110341541
    Two companies secured around 6.5 million, or 57%, of the NZUs sold at last month’s record-breaking New Zealand carbon auction, regulator data showed Thursday.

  3. #53
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    New Zealand releases 2022 ETS auction calendar
    Published 04:06 on October 4, 2021 / Last updated at 04:06 on October 4, 2021 / Asia Pacific, New Zealand / No Comments

    The New Zealand environment ministry has released its NZU auctioning calendar for next year, with the first sale due in mid-March.
    https://carbon-pulse.com/140257/?utm...1124-110341541

  4. #54
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    Today's ETS auction cleared at $68.

  5. #55
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    Quote Originally Posted by Sparky669 View Post
    Today's ETS auction cleared at $68.
    - European price is $110 NZ equiv.
    - More countries adding ETS system in order to meet COP obligations.
    - New floor of $70 next month here in NZ

    still feels like a near-sure thing.

    Disc: my biggest NZ holding now.

  6. #56
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    Floor is $30 in 2022, not $70

  7. #57
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    Hey guys, this one has pricked my interest as I know some very smart money is currently investing heavily into this sector. What’s your view on the share price over the next month? Potential dip on the cards and opportunity for a good entry point?

  8. #58
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    Quote Originally Posted by Ricky-bobby View Post
    Hey guys, this one has pricked my interest as I know some very smart money is currently investing heavily into this sector. What’s your view on the share price over the next month? Potential dip on the cards and opportunity for a good entry point?
    there were some neat stuff from the previous posts from people firstly drew their attention on this. Some readings were very informative. Now would be a good point as the NTA is 2.041 today while highest buy at 2.03 with lowest sell at 2.04.

  9. #59
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    Quote Originally Posted by haewai View Post
    Floor is $30 in 2022, not $70
    sorry - my bad. the CCR level is $70 - the point at which more supply is released. Usually, that would seem to create a short-term top for a market, but in this case, in 2021, it seemed to trigger a buying frenzy..

    International Carbon Action Partnership (ICAP) - New Zealand updates cap and price control settings (icapcarbonaction.com)

  10. #60
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    Here are some random thoughts and stats. Welcome any corrections or criticisms.

    * From 2019 data, non-agricultural emissions were 39.3 million tCO2e, forestry accounted for 27.4 mtCO2e, resulting in a net non-ag emissions of 11.9m tCO2e. https://emissionstracker.mfe.govt.nz...4eiQCc2AHEltEA

    * ETS auctions non-CCR volume next year is 19.3m, so this is already higher than our annual emissions. Including CCR volume is 26.3m units, this represents 2.2 years worth of net emission units. https://www.etsauctions.govt.nz/

    * Non-CCR auction volume decreases each year, 18.6m in 2023, 17.2m in 2024, 15.5m in 2025.

    * NZ companies have already stockpiled a lot of NZUs, about 63m non-forestry units, or about 135m including forestry units. Some companies are hoarding many, many years of emissions to hedge future costs

    * CCR price is $70 next year and set to increase 12.5%pa every year to $110 by 2026, but this does not mean the carbon price will increase by this amount.

    * The CCC have a future projected carbon price path, but this is not necessarily what the carbon price should meet. By their own admission, they don't really know what price will trigger the required degree of change in the market to push to greener technologies. The intention is to provide a wide price range and the market can dictate what the price should be, while the CCR should theoretically be the ceiling each year.

    * Current ETS scheme has a fixed quantity of units to auction from 2021 through to 2025 (~90m), after 2025 we have no idea what will happen, and especially how agriculture could be included.

    * By 2025 agriculture is supposed to either join the ETS scheme or have their own scheme to incentive emissions reductions. Some punters have said they could absorb a 5% liability of their emissions via the ETS scheme, which would increase the market demand by ~2m based on 2019 data. Presumably their liability will increase each year which will increase demand.

    * Above data is from 2019, does not reflect company emission reductions schemes or increase in forestry over the last 2 years. In all likelihood company emissions will continue to go down (especially when NZU is $68 compared to $35 a year ago), while forestry units generated will continue to go up, therefore the net required number of NZUs should go down each year.

    * Prior to May 2021, ETS units could be bought directly from the govt ($25/t increasing to $35/t in 2020). The introduction of the auction system in 2021, along with the reports of the CCC, exposure from COP26, etc, drove up the carbon price in 2021.

    * Most companies do not buy units directly, they buy via contract with a bank - so agree to buy future units at a future price, with the price profile dictated by the bank's carbon price projection models. Current models predict a ~$3 increase over the next 2 years compared to the last auction price at $68 (ie that is the premium paid by the retailer through the bank holding the contract).

    * In May companies are required to surrender their units for the previous year, if they have not purchased enough last year to cover their liability, the March auction could have a lot of action, as could the secondary market in April.

    * Carbon Fund currently trading at NTA thus current price is predicting no growth of this fund.

    My interpretation:

    Companies are stockpiling units in a big way. Net emissions volume is less than non-CCR ETS volume so CCR will only be triggered if companies still continue to stockpile, but even then, the CCR price next year is $70 compared to closing Dec auction cost of $68, so I don't see the price exploding next year.

    Carbon price could continue to rise in the coming years but I don't think it will in a big way. The explosion of carbon price this year was related to the introduction of the Auction system, companies seeing the writing on the wall in terms of emissions liability, company board requirements to hedge future carbon prices and hold a number of year's worth of NZUs to appease shareholders, by the end of 2021 emissions budgets have been developed by many companies highlighting their need to stockpile units, and debt was also cheap this year so great time to stock up on credits compared to future years where interest rates will be higher.

    Changes in legislation and which colour the govt is could vastly change the landscape and significantly impact the value of the carbon price and this fund. National could reverse or slow down some of the ETS, resulting in a reduction in carbon price. If Labour need to go into a coalition with Greens again, and Greens ever grow a pair and hold Labour to account, Labour could become more aggressive in the ETS scheme.

    Conclusion: Don't buy.
    Last edited by Mya; 09-12-2021 at 11:02 AM.

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