Emissions Trading Scheme review

Kiwis are invited to have their say on the New Zealand Emissions Trading Scheme (NZ ETS) and the NZ ETS permanent forest category, with public consultation closing August 11.

“It’s important we have the best tools available to us to cut carbon pollution,” says climate change minister James Shaw, adding that true decarbonisation can only be achieved through measures like improving public transport, incentivising EV uptake, increasing energy efficiency, and supporting clean-tech industries.

“The NZ ETS is our main tool for meeting our domestic and international climate change targets. It puts a price on carbon emissions, charges polluters for every tonne of carbon they emit, thereby sending price signals to producers, consumers, and investors to pollute less,” he says.

“We are asking, can the NZ ETS work any better? And if so, how?”

Shaw says the Climate Change Commission has advised the NZ ETS may not be incentivising emissions reductions at source and that it is cheaper for most companies to just buy emissions units, rather than invest in ways to cut pollution.

The NZ ETS review will focus on the benefits, trade-offs, and risks of changing the NZ ETS to incentivise gross emissions reductions.

Options range from using existing levers within the NZ ETS to increase the price of carbon, to incentivising reductions and forestry plantings through separate markets, Shaw explains.

Forestry minister Peeni Henare says there’s a need to consider how the NZ ETS can provide the necessary price for both gross emissions reductions while continuing to incentivise tree planting.

Environment minister David Parker says there is potential for the NZ ETS to lead to wider environmental and health benefits, through encouraging alternative transport, such as cycling and public transport.

Forestry is estimated to contribute up to 95 million tonnes of carbon dioxide removals between 2021 and 2030 towards New Zealand’s first Nationally Determined Contribution target.

Under current policy settings, between 0.97 and 1.44 million hectares of additional afforestation out to 2050 are needed to meet New Zealand’s climate change targets.

Henare says there’s an opportunity to better support the establishment of long-term indigenous forests through enabling permanent exotic forests to transition to indigenous forests over time, having economic, emissions and biodiversity benefits.

A report on the consultation outcome will be provided to Government.

Click here for more information.