NZU Market Trends & Price History
Carbon prices have been on a wild ride. Understanding the history helps you interpret the present and prepare for an uncertain future.
Price History
The Early Years (2008-2010)
When the NZ ETS launched, prices were modest:
- 2008-2009: Around $20-25
- Market finding its feet
- International linkage provided price reference
- Relatively low trading volumes
The Collapse (2011-2015)
International carbon prices crashed, dragging NZUs down:
| Year | Price Range | Notes |
|---|---|---|
| 2011 | $15-20 → $6 | Collapse begins |
| 2012 | $1-6 | Bottom falls out |
| 2013 | $1-3 | Prolonged depression |
| 2014 | $2-5 | Sluggish |
| 2015 | $5-8 | Early recovery signs |
The cause: floods of cheap international credits (ERUs, CERs) of questionable quality entered the NZ market. Supply overwhelmed demand.
Many questioned whether the ETS would survive. Forest planting stalled. Investment confidence evaporated.
Delinking and Recovery (2015-2019)
New Zealand severed links with international markets in 2015. Prices gradually recovered:
| Year | Price Range | Notes |
|---|---|---|
| 2015 | $5-8 | Post-delinking stabilisation |
| 2016 | $12-18 | Steady recovery |
| 2017 | $17-22 | Growing confidence |
| 2018 | $20-25 | Continued strength |
| 2019 | $24-29 | Pre-COVID momentum |
The domestic-only market gave clearer price signals, but uncertainty remained about long-term policy direction.
COVID and the Surge (2020-2022)
The biggest move came post-COVID:
| Year | Price Range | Notes |
|---|---|---|
| 2020 | $25-35 | Auctions begin, COVID disruption |
| 2021 | $35-70 | Rapid appreciation |
| 2022 | $55-88 | Peak in November at ~$88 |
Drivers included:
- Zero Carbon Act signalling commitment
- First NZU auctions introducing price floor
- Compliance demand outpacing supply
- Growing climate policy ambition
- Carbon farming boom
Correction and Uncertainty (2023-2025)
What goes up…
| Year | Price Range | Notes |
|---|---|---|
| 2023 | $45-75 | Volatility, policy changes |
| 2024 | $48-65 | Below auction reserve |
| 2025 | $40-65 | Trading below auction floor |
The 2022 peak was followed by:
- Policy uncertainty under new government
- Increased auction volumes (subsequently reduced)
- Questions about forestry-based offsets
- Emitter stockpiles reducing immediate demand
- Auctions failing to clear (spot prices below reserve)
Recent Developments (2025)
As of early 2025:
- NZUs trading at NZ$60-64/tonne — a 40% discount to the $68 auction floor
- Market described as “very, very quiet” with minimal volatility
- Auctions unlikely to clear while spot prices remain below reserve
- Government reduced 2025-29 auction volume from 45 million to 21 million NZUs
This volume reduction aims to address oversupply, but the large stockpile of units already in circulation continues to weigh on prices.
What Drives Prices
Policy Settings
Government decisions matter most:
Supportive for prices:
- Lower caps (less supply)
- Higher auction reserve prices
- Stronger emissions targets
- Reduced free allocation
Negative for prices:
- Higher caps (more supply)
- Policy uncertainty
- Exemptions and carve-outs
- Signals of weakening commitment
Supply and Demand Balance
Supply factors:
- Forestry allocations (major source)
- Auction volumes
- Stockpiled units entering market
- Pre-1990 deforestation
Demand factors:
- Fuel/energy sector emissions
- Industrial emissions
- Economic activity
- Compliance deadlines
Market Psychology
Beyond fundamentals:
- Sentiment and confidence
- Speculation
- Herd behaviour
- Response to news and announcements
Carbon markets are thin enough that psychology matters.
Current Market Context (2025)
Where We Are
- Spot prices: $60-65 per NZU
- Auction reserve: $68
- Recent auctions: Not clearing (prices below reserve)
- Trading volumes: Moderate, below peak
- Sentiment: Cautious, waiting for direction
Key Uncertainties
- Government policy direction — Will current settings continue?
- Forestry rules — How will LUC restrictions affect supply?
- Agricultural pricing — When and how will ag emissions be priced?
- International factors — Will NZ link to other markets?
- Climate ambition — What will future targets require?
Future Outlook
Nobody knows where prices will go. But consider scenarios:
Bull Case (Prices Rise)
- Government tightens caps
- Forestry registrations slow (LUC restrictions)
- Economic recovery increases emissions
- International pressure for stronger action
- Net-zero 2050 target drives long-term demand
Bear Case (Prices Fall)
- Policy weakens or stalls
- Surplus units flood market
- Economic downturn cuts demand
- Agriculture exemptions continue
- International offsets allowed
Base Case (Range-Bound)
- Policy roughly unchanged
- Supply and demand roughly balanced
- Prices oscillate around current levels
- Gradual recovery over time
Most analysts expect modest appreciation over the long term, but with significant volatility along the way.
Analyst Views
Auckland-based carbon brokerage Jarden has suggested there’s an “increased likelihood that the carbon price tracks toward NZ$100/tCO₂e by 2030,” driven by emissions cap tightening and net-zero commitments.
Crown forecasts suggest potential for a significant drop in the NZU stockpile by 2026, which could support prices — though uncertainty around forestry supply makes predictions difficult.
Implications for Forest Owners
For Those Considering Carbon Farming
- Don’t assume prices will stay at current levels
- Don’t assume prices will return to 2022 peaks
- Build financial models with conservative assumptions
- Understand your breakeven price
For Current Participants
- Diversification across time (staged selling) reduces timing risk
- Some exposure to upside is valuable
- Holding requires confidence in long-term direction
- Selling locks in known value
Long-Term Perspective
Carbon pricing is fundamentally tied to climate policy. As long as:
- Climate change remains a priority
- New Zealand maintains emissions reduction commitments
- Forests remain a recognised sink
…there will be a market for NZUs. The price level is less certain than the market’s existence.
Historical Performance vs Other Assets
For context, how have NZUs compared?
| Asset | 10-Year Return | Volatility |
|---|---|---|
| NZUs | ~500%+ (from 2015 lows) | Very high |
| NZ Shares (NZX50) | ~70-100% | Moderate |
| NZ Property | ~50-100% | Moderate |
| Term Deposits | ~20-30% | Very low |
NZUs have outperformed — but with rollercoaster volatility that’s not for the faint-hearted.
Getting Price Information
Free Sources
- Carbon News NZ
- Interest.co.nz carbon price chart
- MfE auction results
Paid Sources
- CommTrade
- Jarden carbon desk
- Broker market reports
Government Sources
- MfE auction announcements
- Climate Change Commission advice
- MPI forestry data
Key Takeaways
- Prices have been highly volatile — $2 to $88 and back
- Policy is the primary driver
- Current prices below 2022 peak but above historical average
- Future direction uncertain — scenarios vary widely
- Long-term fundamentals arguably positive — climate policy continues
- Don’t try to time the market perfectly — diversify selling over time