• Carbon remains under pressure but in that lies the opportunity.
Carbon remains under pressure. Domestically it’s still mainly from emitters arbitraging the 2019 Fixed Price Option (FPO) with some forest owners applying the same principle when exiting the ETS. Whilst it becomes less attractive under $26, our view is some will still do it down to $25.50 when push comes to shove.
NZUs are not yet suffering from an expected hit to GDP (and therefore less emissions) from Covid-19, which we have seen in other carbon markets such as Europe. However, our forestry sector is under pressure…