Submission on the Review of the New Zealand Emissions Trading Scheme
Dr Elena Aydos and Dr Sven Rudolph, Scientific Advisor on Climate and Energy Policy at Institut fuer Kirche und Gesellschaft (IKG), have collaboratively authored a submission in response to the public consultation on the Review of the New Zealand Emissions Trading Scheme (NZ ETS) by New Zealand’s Ministry for the Environment - Manatū mō te Taiao. The submission emphasizes the importance of driving greenhouse gas emissions reductions through the NZ ETS and makes a series of recommendations for a significant review of the NZ ETS. These proposals are designed not only to achieve sustainable reductions in gross emissions, but also to uphold principles of social justice and climate justice.
While the authors acknowledge the important role of forestry in helping New Zealand meet its emissions targets and commitments, they argue that the crediting of large volumes of forestry NZUs under the NZ ETS is actually deteriorating the incentives to reduce gross emissions from traditional polluting sectors. This is also affecting the government’s capacity to control the overall limit of industrial emissions through the cap. A critical aspect of the submission therefore involves the proposition for the establishment of a distinct scheme dedicated to sustainable emissions removal activities. By doing so, the NZ ETS would be best placed to achieve the overarching goal of gross emissions reduction. This change may take several years to implement. In the short-term, the submission recommends a number of transitional measures, including the review of the phase-out rates for free of charge industrial allocation, quantitative restrictions on the forestry NZUs that can be used for surrender obligations, and the vintaging of forestry NZUs, including those units in the stockpile.
The authors also advocate that the distributional effects of higher energy prices on households should be primarily mitigated by earmarking auction revenues. In line with current practices in California and proposals for the new European ETS2, the authors recommend a combination of an equal per capita redistribution (carbon dividend) for the most part and a small-share targeted regressivity compensation for the poorest. The submission also refers to recent studies in Germany that have shown that a per capita equal climate dividend can mitigate the biggest part of the ETS regressivity. Learn more.
The University of Newcastle acknowledges the traditional custodians of the lands within our footprint areas: Awabakal, Darkinjung, Biripai, Worimi, Wonnarua, and Eora Nations. We also pay respect to the wisdom of our Elders past and present.