NZ ETS underperforming
Friday 19 Apr 2024
The impact of Aotearoa’s main tool in the fight against
climate change could be heightened if five sectors were better
regulated, according to a new study. New Zealand's
Emissions Trading Scheme (ETS) is being let down by several critical
sectors, according to an analysis by University of Auckland researchers
from the Business School’s Energy Centre.
The scheme, which is designed to cut emissions and encourage economic
growth, could have a much greater impact on the country’s
emissions reduction goals, say the researchers. Their study shows that
five key sectors—agriculture, transport, energy, petroleum and
diesel, and waste—are underperforming.
While the ETS effectively reduces emissions on a broad
scale, the researchers: Dr Le Wen, Associate Professor Stephen
Poletti, Dr Selena Sheng and Simon Tao, say it's failing to spur
economic expansion and curtail emissions simultaneously.
In their paper, Enhancing New Zealand’s emissions
trading scheme: A comprehensive sector-level assessment for a stronger
regulatory framework, the authors explored the emission
reduction potential of the ETS by sector.
Compared to emission trading schemes utilised in China and the EU, which
have received extensive academic attention, the researchers say relevant
analyses regarding the NZ ETS is scant. “We wanted to
understand where the scheme’s effectiveness comes from and where
it’s lacking,” says lead researcher, Business School PhD
candidate Simon Tao. “We show that the ETS could better
stimulate the economy and reduce greenhouse gas emissions if the
planning authorities focus on those five key sectors.”
The study points out that the energy, waste and agriculture
sectors are key to New Zealand’s economy and major
sources of emissions. Because cutting investments in these areas to
reduce emissions could slow economic growth, Tao says the Government
should look at ways to lower emissions while encouraging growth through
investing in innovation and energy alternatives like hydrogen.
Meanwhile, the authors say the agricultural sector’s greenhouse
gas emissions rank first among all industries’ emissions. At the
same time, they say practical, impactful solutions to curtail emissions
from this sector haven't been available.
“There’s an assumption that market participants will comply
with their emission reduction commitments, but that’s a hard task
when no substantial initiatives are available,” says senior
research fellow Dr Selena Sheng.
“One option may be to instate a fixed carbon price
ceiling. We also argue that regulators can impose tax on those
sectors in the agricultural industry where emissions exceed the
average.”
The researchers say the Government could also focus on creating a
dedicated agriculture-focused technology hub. This, says Sheng, could
help promote the adoption of innovative mitigation technologies and
practices among farmers, fostering progressive and sustainable changes.
Source: University of Auckland
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