New Zealand Emissions Trading Scheme faces calls for reform and cost concerns

New Zealand’s Emissions Trading Scheme (ETS) is facing scrutiny over proposed changes and its overall effectiveness in meeting climate goals. Analysis from Energy Resources Aotearoa suggests that the Climate Change Commission’s proposed ETS settings could significantly increase costs for households and businesses. An emissions price of $170 could lead to annual increases of $200 for electricity, $150 for natural gas, and $300 for petrol.

Energy Resources Aotearoa chief executive John Carnegie argued that the proposals depart from a least-cost transition and may frontload expenses during a period of existing economic pressure. The organization is calling for more stable and predictable ETS settings to avoid market speculation.

Separately, a report from the Parliamentary Commissioner for the Environment, Simon Upton, has called for major reform of the scheme. Upton noted that while the ETS has successfully encouraged the planting of exotic forests, it may fail to reduce emissions sufficiently. There are growing calls, including from Beef + Lamb NZ, to remove forestry from the ETS to prevent an oversupply of sequestration and address the conversion of sheep and beef farms into forestry.