WELLINGTON, Feb 17 (Reuters) - New Zealand carbon prices rose on Friday, but fell below European permit prices for the first time since July after strong gains in Europe due to planned legislative changes.
Spot permits under New Zealand’s emissions trading scheme were seen trading around NZ$7.95 ($6.60), brokers said, compared with the previous week’s price around NZ$7.65. Weekly traded volumes slipped to 200,000 from 250,000 last week.
The European market surged on Thursday on speculation that prices would rise in the coming months on a European initiative to bolster prices.
Market participants said the European rally wiped out the price spread between NZUs and European CERs, adding that NZU prices slipped slightly below CERs for the first time since July, according to Point Carbon charts.
Brokers said the spread reversal would curb recent selling of New Zealand credits to swap into cheaper European credits, as investors would eventually be attracted to relatively lower NZU prices.
“A lot of the NZU selling has been a spread trade, so now that it’s fallen below CERs, you wouldn’t expect that to continue too much,” one broker said.
The spread reversed after NZUs traded as much as $1.30 higher than CERs earlier this year.
EU allowances rallied as much as 9 percent to an eight-week high around 9.11 euros on Thursday, jumping on news that European lawmakers on a key parliamentary committee had agreed to support measures that would raise carbon prices.
In the secondary market for U.N.-backed carbon credits, spot CERs jumped more than 10 percent to an 4.7 euros, also their strongest in eight weeks.
Each permit represents a tonne of greenhouse gas emissions. The scheme is designed to help curb output of emissions blamed for causing global warming.
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$1 = 1.2050 New Zealand dollars By Naomi Tajitsu in Wellington and Stian Reklev of Point Carbon News; Editing by Richard Pullin