looks like carbon credits are turning out to be just like any other boom. They have halved in price as all the new plantings(many of which are carbon forestry syndicated investments) bank and then on sell carbon credits.
I remember in the 80's wild goats shot up in price from $10 a head to $100 head because of the angora hair craze, the 90's it was ostrich's with a breeding pair cost 30k and unhatched eggs 2.5k each.
More recently it has been the manuka honey boom which IMO because you can make the magic ingrediencies in a lab and add to ordinary honey to get medical grade honey it was always doomed.
And here we are carbon credits have halfed in just 3 months as the market gets flooded by those that have to sell because of all the leveraging that went on to purchase the farms and establish the forests on them
Craze's come and go. Its been happening since the Tulip bubble of 1637.
I remember as a young accountant sitting in with the partner and his client on the annual meeting of a Goat breeder, I had just finished doing the financials' for. At one point an Angora buck was valued at $1,500.
I remember asking the client in quite a bemused way, what is it that these goats produce that makes them worth $1,500?
I think breeding Deer at one point hit nearly $6,000 a head. I was told it was all about the furry stuff on their antlers that you could scrape off and it had marvelous medical benefits...like making you a superstar in bed or curing cancer and many other claims. Besides that, venison is very good for you. (Agree with that part of the story).
Plenty of people are saying this time it's different with Carbon credits or Bitcoin.
"This time it's different" is the most dangerous saying in investment speak.
Just keep an eye on the value of whatever the latest "widget" actually produces. With carbon credits its nothing but a load of hot air lol
yep that's right about deer values at one time.
They had guys jumping out of helicopters to catch them wild, also invented some cool capture technology(nets that flew off the ends of rifles when fired.
2k to 3k for a wild live female deer at the time.
Carbon credits are just a political football.....many have been sucked in based on the promising returns.
Plenty of farmers happy about their bank accounts given the land prices the carbon syndicates have been paying for marginal sheep and beef country
Not really following this market, but from the posts above it sounds like we managed to resolve the problem of overforestation in NZ already. No need for politicians to hurt their brains :) ; It sounds even we managed to extort one buck or two from greedy foreigners who just wanted to exploit our land for carbon forests.
Well done, team!
So - what is the next bubble we can create and exploit?
those carbon syndications are all leverage with bank debt......always having to sell credits as there only liquid asset to turn into cash to pay interest......lower the carbon credit price and now much higher interest rates to service the more credits they have to sell to service loans......I see one of the larger syndication is doing a bond issue at 8.5%....prospectus says money to keep buying and developing carbon forests......me thinks the money is to keep the bankers happy.....house of cards anyone
I was reminded today that 4 of Nz largest carbon emitters formed a company in 2019 to purchase thier land and grow trees to offset carbon costs. I suppose that means they no longer need to buy the ever growing number of carbon credits on the open markets
anyone I know who looks at this objectively, immediately sees the scam. I guess if you can get in, get out, make money, and leave the true believers holding the bag, all good
Just had a look - NZX:CO2 lost just shy of 1/3rd its value in the last week.
That is the problem - its an artificial construct, not really based on anything and when the blows the other way, there is trouble.....
Quote from: Sideshow Bob on Jun 27, 2023, 01:53 PMJust had a look - NZX:CO2 lost just shy of 1/3rd its value in the last week.
That is the problem - its an artificial construct, not really based on anything and when the blows the other way, there is trouble.....
Yeap a chap I won't name pointed me in the direction of CO2 a while back and after looking at it I said it fails a number of my investment criteria hurdles including it produces nothing and there's no dividend. Nothing but a load of hot air was my conclusion and uninvestable. In other words, its pure speculation, not investment per se. I appreciate him bringing it to my attention as even old dog's are open to new idea's, but they have to be good ones.
To be fair I think the shares were about $1.50 at the time so there was money to be made for those prepared to speculate and get in and out quick when the tide changes.
I am fairly well versed in the carbon world having been a forestry investor for a couple of decades.
Never bought into the whole carbon idea as I always believed it was way to much of a political football than anything else.
The carbon syndications have paid huge money for the farms and taking up to 3 years to fully plant these farms due to demand on seedling resources being way beyond whats available.
One syndicate I know of has invested $20m ($13m from investors and $7m from the bank).
Now bank interest rates have shot up and farm loans sit around the 10% mark.
You gain very few carbon credits in your first 3 years unless you opt into averaging out which spreads you credits evenly over a certain period.
I have no doubt cost of establishment of forest has risen substancailly and I do hear that many of the larger farms have under estimated pest damage (hare goat deer) and have had to 10's of thousands seedling replants on many farms the following year.
I also have no doubt a lot of the pressure on the carbon price is due to the syndicates selling to pay increasing interest payments, increasing establishment costs and ongoing costs.
Interesting times when you have to pay the bank interest with cash and your only source for doing so has halfed in value in 3 months.
Not sure the bond issue on one of these syndicates is very attractive at 8.5%
Quote from: snapiti on Jun 27, 2023, 05:11 PMI am fairly well versed in the carbon world having been a forestry investor for a couple of decades.
Never bought into the whole carbon idea as I always believed it was way to much of a political football than anything else.
The carbon syndications have paid huge money for the farms and taking up to 3 years to fully plant these farms due to demand on seedling resources being way beyond whats available.
One syndicate I know of has invested $20m ($13m from investors and $7m from the bank).
Now bank interest rates have shot up and farm loans sit around the 10% mark.
You gain very few carbon credits in your first 3 years unless you opt into averaging out which spreads you credits evenly over a certain period.
I have no doubt cost of establishment of forest has risen substantially and I do hear that many of the larger farms have under estimated pest damage (hare goat deer) and have had to 10's of thousands seedling replants on many farms the following year.
I also have no doubt a lot of the pressure on the carbon price is due to the syndicates selling to pay increasing interest payments, increasing establishment costs and ongoing costs.
Interesting times when you have to pay the bank interest with cash and your only source for doing so has halved in value in 3 months
But but but but but but but but but but......
Ah the zound of my La Rhone 9J being vired up on my Vokker Triplane, a nine cylinder radial to boot! I must keep it in shape, ready for the day I am called up to return to the Great Var....
But but but but but but but but, look at the CO2 market trading volume..
https://stocknessmonster.com/charts/co2.nzx/
The CO2 unit price plunge vrom 180 to 120. Volume increase yes, but total volume traded looks to be no more than one million. Zizing that chart up via my monocle, looks like an average price of $1.50
1,000,000 x $1.50 = $1,500,000
Taking your Zydicate profile: $20m ($13m from investors and $7m from the bank).
10% bank interest of $7m is $700,000
Total CO2 unit sales during the 'panic period' vill pay the interest bills vor a couple of Zyndicates vor the whole year. How many vorestry zyndicates are in NZ again? Doesn't zound like an industry panic story to me.....
And I haven't even touched on the zubject of demand. I have to buy carbon credits to keep my Vokker Triplane running. Over 300 vere built. Theenk of that carbon credit demand once all of these Triplanes return to the air!
RB
Quote from: snapiti on Jun 26, 2023, 02:10 PMAnd here we are carbon credits have halved in just 3 months as the market gets flooded by those that have to sell because of all the leveraging that went on to purchase the farms and establish the forests on them
An alternative view on the carbon credit crisis. The government has kneecapped demand.
https://www.newsroom.co.nz/sustainable-future/property-rights-wrongs-and-the-emissions-trading-scheme
"The supply of NZUs has boomed, but demand has remained relatively low. This was predictable enough. Businesses participating in the ETS must acquire NZ Units to cover their emissions,
or they can avoid paying for NZ Units by investing in emissions reduction"
RB
Quote from: Red Baron on Jun 28, 2023, 09:30 AMBut but but but but but but but but but......
Ah the zound of my La Rhone 9J being vired up on my Vokker Triplane, a nine cylinder radial to boot! I must keep it in shape, ready for the day I am called up to return to the Great Var....
But but but but but but but but, look at the CO2 market trading volume..
https://stocknessmonster.com/charts/co2.nzx/
The CO2 unit price plunge vrom 180 to 120. Volume increase yes, but total volume traded looks to be no more than one million. Zizing that chart up via my monocle, looks like an average price of $1.50
1,000,000 x $1.50 = $1,500,000
Taking your Zydicate profile: $20m ($13m from investors and $7m from the bank).
10% bank interest of $7m is $700,000
Total CO2 unit sales during the 'panic period' vill pay the interest bills vor a couple of Zyndicates vor the whole year. How many vorestry zyndicates are in NZ again? Doesn't zound like an industry panic story to me.....
And I haven't even touched on the zubject of demand. I have to buy carbon credits to keep my Vokker Triplane running. Over 300 vere built. Theenk of that carbon credit demand once all of these Triplanes return to the air!
RB
lmao....please do your research......your link to stockmonster charts are putting up pretty pictures of CO2 fund listed on the NZX....all that fund does is track the price of carbon credits via it's NTA, nothing to do with the volume of real carbon credits being traded in the back ground.
Most Carbon farming syndicates have a cost of $30 to $40 a carbon credit.... problem with this is that is based on the lifetime of the forest.....you get fark all credits in the first five years.....given this, the plummeting price of credits and large increase in interest rates I am confident it could turn into a stack of cards.......under $40 a carbon credit and some of these syndicates are paying the bank back with funds that cost them more to produce than they are worth.......I will go on to say due to the huge upfront costs for carbon forests lack of carbon created in the first 5 years carbon credits will be costing several hundred dollars each to create......perhaps even a $1000 each