NZ Treasury backs tighter carbon market rules -media

Published 04:07 on June 3, 2015  /  Last updated at 04:07 on June 3, 2015  /  Asia Pacific, New Zealand  /  No Comments

New Zealand could cut more greenhouse gas emissions by amending its carbon trading scheme to increase NZU prices, Treasury has told the government according to Carbon News.

New Zealand could cut more greenhouse gas emissions by amending its carbon trading scheme to increase NZU prices, Treasury has told the government according to Carbon News.

Treasury does not often comment publicly on the government’s climate policy, but Carbon News quoted two policy documents from last year that have been released under the Official Information Act.

“If ministers want to further reduce emissions, we would recommend increasing prices in the ETS by introducing a price floor, removing the two-for-one rule, or reducing free allocations,” one of the documents said.

In recent years, NZ emitters have met their targets under the ETS by using UN-issued offsets trading at below 10 NZ cents, and the scheme has not been driving investments to cut emissions.

As of May 31 New Zealand companies can no longer use international units, but the domestic permits trade at around NZ$5.25 ($3.77) – around half the EU’s carbon price and a third of California’s.

Removing the 2-for-1 rule or introducing a price floor are likely to be among the options put on the table when the ETS is up for review later this year.

However, similar changes were strongly recommended by a government-appointed expert panel in 2012, when the ETS was last reviewed, but the government chose to ignore the advice, preferring instead to keep the carbon price low.

“New Zealand’s primary mechanism for reducing greenhouse gas emissions – The Emissions Trading Scheme – has been repeatedly weakened and the country’s emissions continue to rise,” Jan Wright, the parliamentary commissioner for environment, said in a statement Wednesday.

In a submission to the government on New Zealand’s future emissions target, she said the country relied almost exclusively on carrying over surplus Kyoto units to meet its 2020 goal.

“It is critically important that this situation does not arise again. Buying units offshore allows for us to have a more ambitious target, but the units must represent real greenhouse gas reductions,” Wright said.

By Stian Reklev – stian@carbon-pulse.com