New Zealand's second quarterly carbon allowance auction of 2024 failed to clear today, with no bids because prices in the secondary market have been below the regulated auction price floor of NZ$64 ($39).
A total of 4,075,700 New Zealand emissions units (NZUs) were left unsold, including 550,700 remaining from the previous auction in March, which sold 2,974,300 units out of the 3,525,000 offered.
No company participated in the 19 June auction, which compares with 16 in the previous sale. This was the first time that no bids were received since the auctions started in 2021. All available units will be rolled over to the next auction on 4 September.
The secondary market closed at NZ$49 on 18 June, the New Zealand Stock Exchange (NZX) and European Energy Exchange (EEX) — which jointly operate the country's Emissions Trading Scheme (ETS) auction — disclosed on 19 June. Prices fell below NZ$45 and neared one-year lows at the end of May, then recovered to around NZ$55 in early June before falling back again, according to data from trading platforms emsTradepoint, CommTrade and Carbon Match.
Policy uncertainty and an increasing oversupply have been affecting NZU prices in recent months. New Zealand's government has until September to decide whether it will follow advice from the country's Climate Change Commission (CCC) to reduce auction volumes to address the oversupply.
"If there is no announcement on CCC recommendations before the September auction then that will also likely see no sales," said NZX-listed investment fund Carbon Fund's managing director Paul Harrison.
All auctions of 2023 failed, with a total of 23mn unsold units being cancelled as a result.
