The first auction under the revamped Emissions Trading Scheme was held on Wednesday effectively creating a market around the price of carbon in New Zealand for the first time.
The auction, managed by the NZX working with the European Energy Exchange and intended to be held quarterly, is a new way for the government to sell ETS units to buyers.
The process limits the volumes of units being sold, and the amount available to be auctioned off will fall over time in line with the government's targets for reducing emissions.
"It's a bit like any sort of auction where sometimes there's a reserve, so if it's above the reserve it goes through and settles, if it's below the reserve, then obviously the units that the government are offering wouldn't go into the market, and they'll be held over to another time," NZX chief executive Mark Peterson said.
Bidding began Wednesday morning at 9am with the auction due to be completed by midday.
"I liken it a little bit to how money supply is managed by the Reserve Bank where cash is entered into the market through effectively a process there and then trading occurs off the back of it, and risk management occurs off the back of it," Peterson said.
"So, in some respects the emissions units are another form of currency in a way but just designed to create a market mechanism around the price for carbon."