Emissions Trading Scheme Reform: A Small Step, But Not Far Enough

The Emissions Trading Scheme Reform Bill is a small step towards a carbon zero Aotearoa, but further reforms are urgently needed to meet the Government’s commitments under the Zero Carbon Act. 

The Ministry for Environment calls the ETS “the Government’s primary tool for mitigating climate change”. But this tool is falling short. According to a 2018 briefing by the Ministry for the Environment, we are predicted to fall short of our Paris Agreement commitments by over 200 million tonnes of CO2. This is roughly two and a half years’ worth of national emissions. 

“We call on the government to include agricultural emissions and create a clear timeframe for the implementation of a transparent auctioning system for NZUs. These steps will expand the reach of the ETS and give businesses greater certainty in these uncertain times”, says Generation Zero spokesperson Grace Cowely.

“Without these reforms, the ETS will fail in its most important mission; reducing emissions and guiding our society towards a just, low carbon future.”

Generation Zero supports the Government’s work on reforming the ETS in order to meet its Zero Carbon Act commitments. “We urge all parties that supported the Zero Carbon Act to strengthen the ETS in order to meet the cross-party commitment to achieving a carbon zero Aotearoa by 2050.”

“We recognise that the COVID-19 crisis has caused significant economic disruption, but we also know the economic and environmental costs of inaction on climate change. Inaction means placing a huge burden on young Kiwis and future generations to adapt to climate change while facing its worst impacts. This is simply unfair.”

“On the other hand, we now have a window of opportunity for visionary leadership for a just transition towards a zero carbon economy. The government must seize this chance and build on the Reform Bill to make the ETS more effective and transparent - for the interests of present and future generations.”

Making Industrial Allocation Work

Industrial allocation currently renders the ETS useless for reducing the carbon emissions of large emitters. The reformed reductions to the industrial allocation system remain too incremental. The rate of reduction must be increased in order to meet the targets agreed upon in the Zero Carbon Act.  Moreover, a transparent and traceable auctioning system that removes the fixed price setting for NZUs is needed to incentive businesses that are allocated NZUs to reduce their emissions. We support the Government’s commitment to implement an auctioning system for carbon credits to incentivise businesses allocated NZUs to reduce their emissions, as the system will drive the carbon market dynamics necessary for mitigation. We call on the government to ensure that the fixed cap on emissions is scientifically grounded in order to realistically meet the zero carbon act agreement by 2050. Given the urgent nature of the climate crisis, the implementation of this auctioning system should be fast-tracked. 

Including Agriculture

Agriculture is an important part of New Zealand’s economy, but is also responsible for 48% of our national greenhouse gas emissions. It needs to be brought into the ETS today; not five years from now as currently stipulated in the bill.  In order to meet our commitments under the Zero Carbon Act and the Paris Agreement, we need robust and scientifically validated targets for short lifespan greenhouse gases such as agricultural methane. 

Conclusion

We urge the Government to take all necessary steps to implement the Climate Change Commission’s forthcoming recommendations immediately. 

“The Emissions Trading Scheme Reform Bill is a commendable first step towards a functional ETS that incentivises emissions reduction. However, with only 10 years left to avert 1.5°C of global warming, we know that incrementalism is not enough. We call upon our leaders to commit to urgent further reform to the ETS in the interests of a safe and liveable planet for present and future generations.”

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