Sept 19 (Reuters) - Spot permits in the New Zealand carbon market fell 1.1 percent this week to close at NZ$4.45 ($3.62) on Friday, with traders looking ahead to the outcome of Saturday’s general elections.
The New Zealand Units (NZUs) traded between NZ$4.40 and NZ$4.50 throughout the week, eventually settling in the middle of that range, down 5 NZ cents from last Friday.
“Some market participants feel underwhelmed by the prospect of another three years of carbon under a National government and the run-up to tomorrow’s general election has not driven any particular volatility in the NZU price,” online trading platform Carbon Match wrote in a note to clients.
The latest polls suggest the incumbent National party will maintain power, which would mean no immediate change to the emissions trading scheme.
The opposition Labour party has campaigned promising rule changes that would drive up NZU demand and strengthen prices in a bid to make the scheme more efficient in cutting emissions, whereas. National prefers a low CO2 price that does not interfere with economic growth.
Some traders said there could be an initial downward trend in prices if National wins the election, but in the longer term, expectations are still that prices will go up because NZ emitters will lose access to cheap U.N. offsets, costing around 10 NZ cents each, from next year.
“Our view is that post-election the market will focus on the upcoming emission year and has no choice but to rally,” said brokers OM Financial. (Reporting by Stian Reklev in Beijing; Editing by Joseph Radford)