H2 Companies prefer the price of NZUs to float with a price cap.
If the price of NZUs are capped the NZ ETS will not operate efficiently.
Company D and J state that if the NZ ETS is linked to other markets then it is best to apply a cap on the maximum price NZUs can trade at.
Instead, the market itself would be the enforcer with emitters wholesaling to customers and brokers NZUs priced though a competitive process.
The null hypothesis that companies prefer the price of NZUs to float with a price cap was rejected.
Forty-two percent (42%) of respondents said the price of NZUs should float with a price cap, arguing that a cap will protect the New Zealand economy from extremely volatile international carbon prices.
Government will allocate 55 million NZUs within CP1 to owners of pre-1990 forests under a Forestry Allocation Plan.
If owners of post-1989 forest land join the ETS they will be entitled to receive NZUs for the increase in carbon stored in their forests as they grow.
Because NZ's total emissions were already 26% above its 1990 levels in 2006, the most likely scenario is that the supply of NZUs will be consistently insufficient to meet demand and therefore the carbon price will be consistently set by the international price.