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Home >> Climate change

The New Zealand ETS & climate policy

The New Zealand Emissions Trading Scheme is designed to control emissions, primarily by putting a price on carbon pollution. Emissions trading is based on the successful system set up to limit sulphur dioxide emissions in the 1980s to deal with the serious effects of acid rain. Emissions trading schemes now operate in the EU, Switzerland, China (7 regional schemes), California, Quebec, 9 North-East US states and Kazakhstan as well as New Zealand - visit the ICAP ETS map to see details and scope of each of these schemes and others scheduled to begin in the future.



The challenge for New Zealand is to reverse the trend since 1990 of increasing emissions, projected to reach between 40-50% above 1990 levels by 2020 even though we have an unconditional 2020 target of -5% against 1990 levels, an effort rated 'Inadequate' by an independent assessment. The introduction of the ETS in 2008 has had little impact on emissions, with a surge in 2013-2014 as the carbon price in New Zealand dropped to the lowest levels in the world. Deforestation in those years alone added 11.5 MT. 2013 was a bad year for agricultural emissions, too, as the North Island drought pushed up the number of livestock killed (NZ counts emissions from animal products (milk & meat) when they are processed). By 2020 forestry will switch from absorbing to emitting carbon as forests planted in the 1990s are harvested.



Under the ETS, each sector of the economy reports their emissions annually. For example, fuel suppliers like BP & Shell report the emissions related to their sales of petrol, diesel and jet fuel and energy companies like Contact & Genesis report emissions from the operation of coal and gas-fired power plants. The costs of buying carbon credits for the fuel and energy sectors are passed on to their customers through fuel and electricity prices. Industries such as cement, aluminium and steel manufacturing must report all emissions but only need to pay for between 10-40% of those emissions. Agricultural emissions are reported by Fonterra, Silver Fern Farms, Alliance, Ravensdown Fertiliser and other processing companies but these emissions do not have to be paid for - agriculture is only required to track and report emissions. Use the interactive graphic above to track emissions from year to year (use the slider to move between years).



One factor in the poor performance of the ETS since it's introduction has been a lack of focus on climate change by the Government. This is illustrated across all of Government since 1996 by the number of official communications (press releases, speeches and related public relations output). Climate change communications from the Government peaked in 2007 and have declined since, with the present time seeing the lowest level in 15 years. How can we make progress on this issue when our political leadership doesn't talk about it?