New Zealand will start the planned review process of its emissions trading scheme late in the year so that it can take into account the country’s post-2020 pledge for Paris, a government spokesman said Wednesday.
Law requires the scheme to be reviewed periodically and the next review is due this year, but the government has yet to announce a timeline for the process.
“The NZ ETS Review is scheduled to start in late 2015. It will take into account the implications of New Zealand’s INDC on the NZ ETS,” a spokesman for Climate Change Minister Tim Groser told Carbon Pulse.
New Zealand is expected to submit its INDC for Paris around mid-year.
The spokesman said the exact timing and scope of the review had yet to be decided.
Critics have said design flaws have left the ETS inefficient, with prices too low to stop carbon emissions from spiraling.
But the National party government has been reluctant to tighten up the scheme unless the world’s major emitters commit to a new global climate change treaty, causing some observers to speculate the ETS review won’t be finalised until after the Paris conference in December.
Among the issues that will be considered during the review is the rule that emitters only have to surrender permits for every second tonne of CO2e they emit, the so-called ‘2-for-1’ rule, which observers say hampers market demand and keeps prices down.
The government is also expected to consider whether to increase supply through regular auctions to compensate for the loss of access to UN offsets after New Zealand decided to not sign up for the second Kyoto commitment period.
It may also consider bringing agriculture into the scheme. Agriculture accounts for nearly half of New Zealand’s greenhouse gas emissions, though the government has so far kept it out of the ETS, saying there is no technology available for the sector to cut its emissions.
By Stian Reklev – email@example.com