Making the Emissions Trading Scheme fair, efficient and future proof

The Government has today launched two public consultations concerning reforms to important parts of our Emissions Trading Scheme (ETS).

The ETS is a key tool for supporting Aotearoa New Zealand’s efforts to reduce greenhouse gas emissions. The consultations seek to improve two important areas of the ETS: market governance and industrial allocation. 

Market governance  

We need to ensure our ETS has a comprehensive governance framework that appropriately regulates advice, trading, and market conduct in the scheme. Currently, there is no single overarching market governance framework. Without addressing these issues there is the risk of misconduct in the NZ ETS and the undermining of New Zealand’s climate goals.  

We are seeking feedback on proposals to address:

  • governance of advice 
  • governance of trading 
  • governance of market conduct 
  • appointing a regulator.  

Find out more about the market governance consultation proposals 

Industrial allocation 

The settings that determine how many emissions units are allocated by the Government to eligible industries are more than a decade old. Being allocated one emission unit by the Government provides a company with the right to put the equivalent of one tonne of carbon into the atmosphere.

Current allocations are unlikely to be sustainable in the context of New Zealand’s future emissions budgets. 

This policy needs updating to ensure it is aligned with New Zealand’s climate goals while continuing to offset the risk of exporting our emissions offshore to countries with weaker climate policies (known as emissions leakage). 

Find out more about the industrial allocation proposals 

The consultations run from 9am Thursday 8 July to 5pm Friday 17 September 2021.  

Media enquiries

Ministry for the Environment

027 231 6930