Carbon Price Information Releases New Zealand's Position under the Kyoto Protocol

Page updated 6 May 2009

Documents relating to the establishment and annual revision of the price for Kyoto-compliant emission units ('carbon price') used to value New Zealands position under the Kyoto Protocol in the Financial Statements of the Government of New Zealand.

In May 2005 Treasury used a weighted average of the value of recent forward trades in Kyoto-compliant certificates ($US6/tonne) sourced from the World Bank Report 'State and Trends of the Carbon Market 2005'. This methodology and price was confirmed as appropriate by the Allen Consulting Group (see the June 2005 report below) and subsequently met the accounting standards required by Audit NZ.

In 2006 Treasury engaged Geoff Sinclair, a UK-based economic consultant, to provide an updated figure for the carbon price. The figure derived was $US9.65/tonne. This was peer-reviewed by the Allen Consulting Group. The Sinclair report and the Allen Consulting Group peer review of the Sinclair report (both August 2006) are available below.

The Treasury closely followed Mr Sinclair's methodology in the 2007 update of the carbon price. The price estimate based on current market conditions and practices as at 30 June 2007 was US$11.90. This was peer reviewed by the Allen Consulting Group and was considered to be robust.

Due to increased demand for carbon price information, an interim update was produced to reflect current market conditions and practices as at November 2007. The figure derived was €11.13. No report has been published below, as this update uses the same methodology and data sources as the 30 June 2007 report.

Treasury updated the price estimate to €12.50 based on current market conditions and practices as at 30 June 2008. This was peer reviewed by the Allen Consulting Group and was considered to be robust.

Treasury carried out an interim update to reflect market conditions as at 31 December 2008. The price of €10 was calculated by taking the mid-point price of the trades in primary CERs (consistent with the pricing methodology) as reported by Point Carbon for December 2008.