Government does U-turn on ETS settingsFriday 28 Jul 2023
It’s also decided to raise trigger prices for the cost containment reserve in the scheme, while lowering the cap on the number of the units that can be auctioned within the system over the next five years. That meant there’d be some 17.6 million fewer units to be auctioned, encouraging unit holders to use what they’d stockpiled over time. The changes, kicking in at auction on December 6, will come with the introduction of a two-tier cost containment reserve (CCR) trigger price, with the Tier 1 price rising from $82 to $173. “The CCR is a mechanism designed to keep the carbon price from rising too high,” Climate Change Minister James Shaw said. “We believe the new settings will prevent market participants from trying to hit the ceiling price, thus releasing more units, and will instead allow the market to operate in a more sophisticated manner.” Auction price floor settings, meanwhile, would rise from the current level of $33.06 to $60 in December. Shaw said the new settings would help New Zealand meet its domestic and international climate targets, while putting policy in “lock step” with recent advice given by the commission. More >> The Forest Owners Association says the government’s reset of the Emissions Trading Scheme (ETS) auction settings will stabilise the carbon market and set New Zealand on a positive trajectory to achieve its net-zero target by 2050. The carbon market tanked after the government tightened ETS settings in December 2022. Carbon unit prices plummeted from a healthy $88 per unit to just $33. FOA president, Grant Dodson, says the government’s adoption of the Climate Change Commission’s advice will incentivise forestry and wood processing investors and ensure the carbon market is operating as intended. “Plantation forests absorb more than half the nation’s carbon dioxide emissions from the atmosphere each year and continue to be New Zealand’s only cost-effective solution for reducing our net emissions.” “The latest announcement goes some way in ameliorating the effects recent ETS decisions have had on the carbon market, and show the government is taking its greenhouse gas emission obligations, and forestry’s role within that, seriously,” Grant Dodson says. “Re-stabilisation of the carbon market will help restore foresters’ confidence in the ETS and ensure that meaningful investments in the fight against climate change continue.” Grant Dodson says while the latest decision is a conducive one, New Zealand could still be at risk of failing to achieve its net zero emissions target if the latest suite of options in the ETS reform are approved. “Trees are New Zealand’s solution to mitigating and overcoming climate change. Options three and four in the reform could see forestry generated NZUs given a differential or lower value to an emissions reduction NZU, which would achieve little more than complication.” More >> Source: Stuff, Forest Owners Association | ||
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