Carbon market update

Wednesday 16 Oct 2019

Market Update - The New Zealand carbon unit remains fairly range bound, giving the impression of going nowhere fast and leaving a vague feeling of incongruity as we witness growing global concern about climate change.

This week the Governor of the Bank of England Mark Carney spoke again of the need for those who manage and invest wealth to pay closer attention to the risks their assets face from climate change, warning that a failure of companies to transition and adapt could ultimately lead to abrupt financial collapse.

Carney had previously spoken on the subject earlier this year saying that “the commitment of all actors in the financial system to act will help avoid a climate-driven ‘Minsky moment’ – the term we use to refer to a sudden collapse in asset prices.”

This is true not only of assets of the traditional fossil fuel variety but perhaps also of land-use, something that we are seeing perhaps for the first time in New Zealand as livestock farmers become ever more concerned about their ability to remain competitive in the face of stronger environmental constraints.

Carney’s point is that hiding from climate risk won’t help in the long run; that in fact it may just drive a more abrupt transition for which we are ill prepared. He further pointed out that this situation comes at a time when we need increased global investment "to get us out of this low-growth, low interest-rate trap we are in." Food for thought.

NZUs are currently bid at $24.70 and last traded a smidge above that level, best offered today at $24.80.

Source: Carbon Match - every weekday from 1-5pm.

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