The collapse in international carbon prices over the past year has seen emitters switch from domestic to imported sources to meet their obligations, figures released yesterday indicate.
In the emissions trading scheme's first surrender period, which covered the second half of 2010, 98 per cent of the units surrendered to the Government were units which it had previously given out, mainly to forest owners. Money flowed from domestic energy users, via the oil and power companies, to the forestry sector.
But in the second surrender period, covering all of calendar 2011, 70 per cent of the units surrendered were imported and had been generated under one or other of the mechanisms of the Kyoto Protocol.
In 2010 64 per cent of the units surrendered were New Zealand units that had been allocated to foresters, but their share of the market shrank to less than 13 per cent last year.
This shift in the composition of units used for compliance under the ETS is likely to reflect the slump in international carbon prices from around $19 a tonne in the middle of 2011 to $7 by year's end, reflecting conditions in Europe which is much the largest source of demand in the global carbon market.
