16 May 2014
May 16 (Reuters) - New Zealand has closed a loophole in its emissions trading scheme that had allowed foresters to earn several hundred million dollars in arbitrage opportunities by trading their emission permits for cheaper U.N. offset credits.
The New Zealand market pioneered emissions trading in the Asia-Pacific region when it launched in 2008, but has been riddled with controversy as critics say its lax rules means it does nothing to cut the country's greenhouse gas emissions.
Foresters who planted their trees after 1989 will no longer be allowed to use U.N. offsets to meet their obligations under the national carbon market, said a budget bill released on Thursday night.
"The purpose ... is to prevent reregistration arbitrage, which was an unintended consequence ... and arose from significant differences between the price of New Zealand units and the price of certain Kyoto units," the bill said.
The move pushed New Zealand Unit (NZU) prices up 20 percent in early trading on Friday as sellers retreated.
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