As industrial allocation is targeted at emission-intensive and trade-exposed activities, only a minority of New Zealand emitters receive industrial allocation.
In 2019, 77 firms received industrial allocated units. Fewer than 15 of these firms were NZ ETS participants, compared to about 275 total NZ ETS mandatory participants (excluding the over 2000 voluntary NZ ETS participants from the forestry sector).
Some of these firms received free allocation for only one or two activities out of several emitting activities for which they have to surrender units, because not all their activities meet the eligibility criteria.
The remaining industrial allocation recipients were firms that do not participate directly in the NZ ETS but receive units because they are affected by costs that are passed through from their use of fuel or electricity. Many of these firms are small horticultural producers (growers of cut roses, cucumbers, capsicums and tomatoes).
Industrial allocation contributes to unit supply in the NZ ETS
Industrial allocation is a relatively small proportion of unit supply in the NZ ETS. In 2016, the total number of units provided through industrial allocation in the NZ ETS was 4.3 million.
The total number of units surrendered from sectors other than forestry was 19.5 million (i.e. industrial allocation amounted to about 22 per cent of annual unit demand).