Tuesday, February 27, 2024

Winds of change blow for nation’s biggest polluters

Climate Change Minister, James Shaw says the nation’s biggest polluters will have to do more to help meet climate targets under changes to New Zealand’s decade-old Emissions Trading (ETS) Scheme.

“From 2024, our biggest polluters will receive only the pollution credits they need – making sure they play a major role in meeting the Government’s second emissions budget,” said Minister Shaw.

“The changes will remove a major obstacle to innovation, to industrial decarbonisation and the proper functioning of our carbon market. Together with our plan to phase out free allocation over time, this will push the big polluters to make a larger contribution towards meeting our goal of building a net-zero future.

“Today’s announcement builds on the work we have already done to make the ETS fit-for-purpose, including reforms that have put a proper price on pollution and raised about $4.5 million for climate action.”

Mr Shaw said a well-functioning ETS that puts a proper price on pollution was a critical tool in New Zealand’s climate action toolbox but it could not do the job alone.

“The actions and initiatives in the Emissions Reduction Plan will ensure we meet the first emissions budget and lay the foundation for future climate action,” he said.

He said the decade-old ETS settings had allocated far too many free climate pollution credits to New Zealand’s largest emitters.

“Tackling climate change is a priority for the Government. Our emissions reduction plan relies on everyone playing their part, including our biggest emitters, who until now have been given enough free pollution permits to avoid having to make meaningful emission reductions.”

“When the Emissions Trading Scheme (ETS) began it was decided that some companies would receive up to 90% of their pollution credits for free. The purpose of this was to protect these companies from more lightly regulated competitors outside of New Zealand. However, the baseline used to decide how many credits each company would receive is exactly the same today as it was 12 years ago. 

“Over the last decade, major polluters have changed how they do business and are now receiving many more credits than they need. The government at the time said it would begin phasing down the free allocation of credits from 2013, slowly driving up the cost of pollution. However this did not happen, meaning we’ve been stuck with an out of date system that has directed large amounts of taxpayers’ money towards big polluters, while keeping emissions higher than they should be. Allowing this to continue would be incompatible with the climate targets we have set – so we’re stepping in to fix it,” Mr Shaw said.

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