CO2 - Carbon Fund units

[Davexl]

why the big move in CO2 price today? monstrous ... not sure if it is linked to NZU price or not

Not sure specifically, but there were a few CO2 orders between 20K to 50K volume today following the quarterly auction...
Bought mine at $1.69 so very pleased with the 9.4% move today. Price may settle back a bit next few days but clearly the demand was there for the auction itself...

[tommy_d]

Not sure specifically, but there were a few CO2 orders between 20K to 50K volume today following the quarterly auction...
Bought mine at $1.69 so very pleased with the 9.4% move today. Price may settle back a bit next few days but clearly the demand was there for the auction itself...

probably due to absolute basics, the secondary market price of NZUs, which the CO2 instrument effectively reflects, spiked from $51 to $59 this afternoon...
https://www.commtrade.co.nz/

[GTM 3442]

Maybe some relevance

https://www.stuff.co.nz/environment/...carbon-credits

[kiora]

"The Government said this additional pollution would be balanced out by cuts in future. It will reduce the number of units available in future years’ auctions."
https://www.stuff.co.nz/environment/...carbon-credits

Yeah right!

Supply & demand can only go one way.
What are holders going to do when unit price keeps going up?

[mfd]

"The Government said this additional pollution would be balanced out by cuts in future. It will reduce the number of units available in future years’ auctions."
https://www.stuff.co.nz/environment/...carbon-credits

Yeah right!

Supply & demand can only go one way.
What are holders going to do when unit price keeps going up?

Either pay more or reduce their emissions. Higher prices obviously increase the incentive to switch to lower carbon processes.

[gbogo]

massive demand. the government had to release more units once the auction price crossed $50, which I thought may cap the price but the Spot price had already been above $50 for some days. The demand at auction blew through the new supply and spiked to $59. This climate change stuff is getting real. The Carbon Units fund price roughly tracks the Spot market but is often trading at a 5-10% premium.

[tommy_d]

it feels like a co2 101 might be useful. Not much time sorry, but for now.. here are some key links.

if you want to track current market price for NZUs = the carbon credits in NZ that make up the bulk of the assets held by this fund, check the main market platforms, here is one, owned by Jarden - commtrade = part of OM Financial until they joined/amalgamated/whatever with Jarden - Nigel Brunel is the key player there:
https://www.commtrade.co.nz/

Carbon-match, another NZU trading platform, Lizzie Chambers is the key player - join their mailing list, you'd be silly not to:
https://www.carbonmatch.co.nz/

Note the daily NTA update and weekly-ish update on additional issuance of units into the Salt managed fund:
https://www.nzx.com/companies/CO2/announcements

Check the results of quarterly auctions of NZUs, they go live within minutes of auction close:
https://www.etsauctions.govt.nz/publ...on_noticeboard

Read the details of Salt's carbon fund (i.e. the CO2 instrument on NZX) here:
https://www.carbonfund.co.nz/

Particularly read their quarterly update, to note things like their asset mix at 30 June 2021 (87% NZUs, 5% Australian carbon assets, remainder cash - whoever mentioned european carbon allowances - head check unless they've bought them in the last two months. EU carbon speculation is harder to access than you might realise)
https://www.carbonfund.co.nz/quarterly-fund-update

Hope that's useful. Good luck to all holders.

[Meh]

Sorry for my ignorance - is the only way a retail investor can buy carbon credits is via salts Co2 NZX fund?

[STr]

Tommy_d - thanks. I have been trying to get my head around this also. To me, given it is unlikely many businesses can convert to green initiatives quickly (or will at all) - then the demand to buy CO2 offsets will just grow. And given the govt has stated they will limit supply (and then change their minds it seems ) but still, limit the supply. Doesn’t normal supply and demand mean that there is only one way this fund will go - up ? It has already increased by about 16% since I started investing in it 2 weeks ago. There has to be more to it than a one way gain? But, as I said, I am still trying to get my head around this one.

[tommy_d]

Sorry for my ignorance - is the only way a retail investor can buy carbon credits is via salts Co2 NZX fund?

anyone can open an account in the new zealand emissions trading register, and buy or sell NZUs. Difficulty is in cost, it's not that viable to buy or sell small parcels of NZUs (or even find a counter-party for a small trade), so it takes a lot of up-front capital. The fund allows exposure to NZUs without the capital outlay.

you might get lucky and trade small volumes on ems: https://www.transpower.co.nz/news/em...e-its-platform

if you have an account and register for the auctions then you can buy small parcels, i think minimum bid size if 500 though?, @ $50 a unit that's still $25k, and then you'd probably face $500 commission minimum from platforms if you tried to sell, and if you could find a small lot buyer.