Slowing of ETS recommended by Review Panel

  • Nick Smith
Climate Change Issues

The Government today released the Emissions Trading Scheme Review Panel’s report – Doing New Zealand’s Fair Share – that recommends the implementation of the scheme be slowed down.

“This is a good report on which to base future decisions on the ETS. Climate change policy comes down to a difficult choice between how much and how quickly we want to reduce emissions and how much households and businesses are prepared to pay. The report is consistent with the Government’s climate change policy goal of New Zealand doing its fair share on this global issue,” Minister for Climate Change Issues Nick Smith said.

“The current ETS legislation has the energy, transport and industrial sectors stepping up to a full obligation in 2013. The Report’s recommendation to slow this by phasing it in three steps in 2013, 2014 and 2015 would ease the price impact on households and businesses. The Report notes this slower timetable would not detract from investment in low-carbon technologies like renewable energy generation as they have quite long lead times.

“The recommendation to slow down the entry of agriculture by a more gradual introduction is also well considered. The Government does not support the introduction of agricultural emissions into the ETS before 2015. The Government also needs to consider the advice of the Agricultural ETS Advisory Committee on the practical implementation challenges. Agricultural emissions will only be included if practical technologies are available to enable farmers to reduce their emissions and more progress is made by our trading partners on measures to reduce emissions.

“It is significant the report and the bulk of the submissions to the review support most features of the ETS including the significant changes the Government made around allocations in 2009. These are working well, have broad support and enable industry to plan for the future with certainty.

“This report confirms the Government’s confidence in the ETS as the most effective way to reduce emissions at least cost. The scheme has seen a marked shift from deforestation to afforestation and from thermal to renewable electricity generation. Net emissions are down and New Zealand is on track to comfortably meet its Kyoto Protocol obligations.

“Climate change is a global issue in which the Government is calibrating New Zealand’s approach relative to our key trading partners. Australia is particularly significant given the extent that our economies are integrated. The Review Panel’s approach fits neatly with the Australian Government’s carbon pricing proposals introduced to its Parliament this week. While New Zealand has started earlier and more softly, the two schemes will be closely aligned in 2015. This review positions us well to advance the joint officials working group announced by both Prime Ministers towards linking the two schemes for the period beyond 2015.

“We are advancing the detailed work on the 61 recommendations. There are both upside and downside fiscal implications in different recommendations that will need to be considered. Changes to the scheme would require legislation and the Government will finalise its policy once the detailed work is complete.”

The Emissions Trading Scheme Review Report is available at