Carbon Fund welcomes the Government’s updated ETS changes

Wednesday, July 26, 2023

Carbon Fund welcomes the Government’s updated ETS auction settings

Salt Investment Funds Limited, the manager of the Carbon Fund, welcomes the
government decision to adjust the Emissions Trading Scheme (ETS) auction settings late
yesterday.

In summary, these changes include:
• Auction price floor settings will rise from the current level of $33.06 to $60 in
December 2023, with further increases thereafter.
• In December 2023, the price to trigger any release of extra NZU volumes from the
Cost Containment Reserve (CCR) will be $173 rather than the current trigger price
of $82.
• In 2024, the total CCR volume will decrease from 8 million NZUs under the current
settings to 7.7 million NZUs, and will continue decreasing in the following years.

The government has accepted most of the Climate Change Commission recommendations
from 2022 but has made earlier cuts to the volume of units available at auction thereby
smoothing out the steep rate of decline that would have otherwise been needed from
2026.

This table shows the outcome of the decision versus the existing settings:

2023 2024 2025 2026 2027 2028
NZU Auction Units
Available (millions)
15.0 14.2 12.6 10.7 9.1 6.9
Auction Unit Reduction vs
Current Setting (millions)
-2.9 -2.9 -2.7 -2.8 -2.6 N/A
NZU Minimum Auction
Price
$60.00 $64.00 $68.00 $72.00 $75.00 $79.00
Minimum Price Increase vs
Current Setting
+$26.94 +$28.10 +$29.33 +$30.55 +$30.65 N/A
Cost Containment Reserve
Trigger Prices
$173.00
$216.00
$184.00
$230.00
$194.00
$243.00
$205.00
$256.00
$215.00
$269.00
$226.00
$283.00
CCR (2023) Units available
(millions) Tier 1 & Tier 2
2.8
4.9
2.6
4.5
2.3
4.2
2.1
3.8
1.9
3.4
CCR (2023) Total reserve
Units available (millions)
8.0 7.7 7.1 6.5 5.9 5.4

More information can be found here: https://environment.govt.nz/news/government-
announces-updated-nz-ets-auction-settings/


The Carbon Fund is managed by Salt Investment Funds Limited, a wholly owned subsidiary
of Salt Funds Management Limited. The Product Disclosure Statement can be found on
www.carbonfund.co.nz

About Salt Funds Management Limited
Salt Funds Management is an award-winning boutique funds management firm, with
NZ$2billion in funds under management. Using proprietary research Salt specialises in
managing New Zealand and Australian listed equity and listed property portfolios. It
operates an active investment philosophy of seeking to invest in companies with strong
management, which operate within sound industry structures and generate superior
shareholder returns. For more information, please visit: www.saltfunds.co.nz

For more information, please contact:
Call: 09 967 7276 during normal business hours
Email: info@saltfunds.co.nz
Write to: Salt Investment Funds Limited, PO Box 106-587, Auckland, 1143