Previous Govt to blame for ETS auction failure

Previous Govt to blame for ETS auction failure

Thursday 27 Jun 2024

The blame for the failure of last week's Emission Trading Scheme auction can be laid squarely at the feet of the Climate Change Commission along with the previous Labour Green Government, reflecting a series of manufactured crises rather than a fundamental issue with the market, according to the Climate Forestry Association (CFA).

The quarterly ETS auction failed to attract any bids, following a partial clearance of units in March – raising NZ$190 million – and the unprecedented failure of all four auctions under Labour/Greens in 2023.

Climate Forestry Association chief executive Andrew Cushen says the continued uncertainty in the market highlights the ongoing impacts of years of meddling by the previous Government.

“What we are seeing play out is a natural response to the regular fiddling with settings, endless reviews and constant changes, which reflected a culture of interference from the Labour Government, the former Minister for Climate Change and the Climate Change Commissioner,” says Andrew Cushen.

“Although participants in the market are understandably gun-shy after so long without any clear direction for the ETS, the auction doesn’t affect the fundamentals. At its heart, the ETS is a market mechanism, and it is designed to deal with short-term issues like the ones we’re seeing.”

“Despite not clearing, that shouldn’t mean we lose faith in what is essentially our most successful – and our one-and-only – tool for meeting our climate commitments and reducing our emissions.”

Andrew Cushen says that the Coalition Government really couldn’t be clearer that it supports the stable, long-term operation of the ETS in its current form. “Last week, at Fieldays, both Forestry Minister Todd McClay and Climate Change Minister Simon Watts restated the Government’s commitment to climate action and recognised that a strong and stable ETS is our most effective tool for achieving our climate targets,” says Andrew Cushen.

“It is widely recognised that the market is currently significantly undervalued. Consistent policy settings and a long-term commitment to stability – like that signalled by the Government – are needed to bring back confidence in the sector and certainty in the market. The Emissions Trading Scheme needs a strong and rising market price. This will enable the local investments in reductions and removals that are essential to meeting New Zealand’s climate targets.”

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Source: Climate Forestry Association via Scoop

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