An Emissions Trading Scheme fit for purpose

Published: August 13, 2018

Forestry Minister Shane Jones and Minister for Climate Change James Shaw have today opened consultation on improvements to the Emissions Trading Scheme (ETS); New Zealand’s main tool for reducing greenhouse gas emissions. The ETS encourages businesses to reduce their emissions by putting a price on them. The fewer emissions they create, the fewer ETS units they have to pay for.

“The ETS has a vital role to play in New Zealand meeting its climate change targets, but the way it currently operates means it’s not doing that,” Shane Jones said. 

“Getting the ETS right could drive the planting of 340 million trees over the next 10 years – double the amount that would be planted if the ETS was left in its current state.

“This is one of the most important levers the Government has to incentivise the planting of trees to help reach our Billion Trees programme’s goals.

“We want to fix the ETS to make it more streamlined, accessible and flexible and give users more confidence and certainty,” Shane Jones said. 

“A net zero emissions target by 2050 is currently being considered in the Zero Carbon Bill process but, in the meantime, we need to make sure the ETS is improved so that it is a credible and well-functioning scheme to help us meet our emissions targets,” James Shaw said.

“Businesses have told us that they haven’t had clear and consistent information on which they can assess the value of an NZ ETS unit and, therefore, how it could affect their bottom line. So one of the proposed improvements is a consistent, transparent way of making decisions about the supply of ETS units.

“A single dedicated website with all the Government’s information about the NZ ETS is proposed so that businesses have the information they need.

“Another proposed improvement is businesses being able to see how many ETS units will be supplied over the next five years.

“What we’re talking about is putting a cap on the number of ETS units, and managing that cap over time.

“As part of the consultation, the Government is interested in hearing stakeholders’ opinions about exploring the possibility of a change to the $25 fixed price option.  

“The Government is committed to making sure the ETS delivers a stable, reliable carbon price that provides the incentive to reduce emissions and is in step with carbon prices in other countries,” James Shaw said. 

Shane Jones said improvements to the ETS would remove barriers to forestry owners participating in the scheme and make things like complex accounting requirements simpler for calculating carbon stored in forests. 

“Growth in the forestry sector is potentially one of New Zealand’s largest and most effective options for off-setting emissions. The ETS needs to encourage new forests and discourage deforestation. 

“We’re putting forward a number of improvements to help foresters make informed and confident decisions about how to maximise the carbon stored in their forests over the long term,” Shane Jones said.

The proposed ETS improvements are very technical but it is important that all New Zealanders know the reformed ETS will be doing its job in contributing to a more sustainable economy.

“We are aware everyone wants to know whether agricultural emissions are going to be part of the ETS. The Interim Climate Change Committee, set up earlier this year, is currently considering that question and the Government will make a decision on agriculture next year.

“We also know that participants in the ETS will want to know how many ETS units will be supplied to the market.  We will be talking to stakeholders about this and other details in 2019.  But, in the meantime, we want businesses to get a sense of where we’re going with the ETS,” James Shaw said. 

Consultation runs from now until 21 September, with stakeholder meetings at a number of locations around the country.

Submissions and more information can be made via the ETS consultation website:

The discussion document for improvements to the ETS framework can be viewed here.

The discussion document for the forestry improvements to the ETS is here.

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