Future NZ ETS limits and price control settings

Friday 26 May 2023

New Zealand's Ministry for Environment (MfE) last Friday released a consultation document on future NZ ETS limits and price control settings.

In what is an annual process, this consultation step follows advice from the Climate Change Commission (CCC) for the 2024-2028 period, which was submitted to the Government in March and released to the public in April.

Last year’s inaugural advice for the 2023-2027 period was ultimately largely rejected by Cabinet. NZU prices have since been on a gradual downhill trajectory, and this was further punctuated by the first NZU auction for 2023 not clearing.

There is immense pressure now on the NZ Government to support the CCC's new recommendations. CCC chair Rod Carr elaborated on the importance of this year’s advice, saying that “if the Government chooses to constrain price discovery, the NZ ETS will play a weaker role and the Government – now and in the future – is more likely to need to adjust the emissions reduction plan to include further regulations and other policies to drive emissions reductions and ensure budgets will be met.”

In addition, despite the fact that Climate Minister James Shaw supported last year’s advice from the Commission and was not reponsible for Cabinet's decision to deviate from it, Lawyers for Climate Action (LCANZI) are nonetheless now taking the Minister to court over the matter. The NZU price has fallen as low as $50 from its November high of $88.50 and uncertainty over the scheme abounds.

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Note: A pre-Carbon Forestry 2023 workshop entitled 'Professional Development for Consultants Working In Carbon Forestry Certification' on the NZ ETS for industry professionals is being run as part of the upcoming Carbon Forestry 2023 Conference on 29-30 August in Rotorua. This popular event sold out in 2023. To register at early-bird rates click here

Source: Carbon Match, FIEA

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