HOW WE GOT HERE
New Zealand’s Emissions Trading Scheme
After a decade of discussions, New Zealand launched its Emissions Trading Scheme in 2008. It was designed as the primary tool to achieve emissions reduction targets under the Kyoto Protocol.
International markets set the domestic price of New Zealand units, as a way to contribute to its effectiveness.
New Zealand’s initial commitment to the Protocol was to stabilise net emissions at 1990 levels. However, the lack of restrictions
on the types of units that could be used to satisfy New Zealand’s commitment led to trading in substandard carbon credits.
In 2011, the newly elected National Government banned what it called “hot air” international carbon credits from being used within
New Zealand’s scheme. As a result, New Zealand’s units are now high quality and credible, and the scheme is one of the most
advanced in the world.
In 2012, New Zealand declined to commit to the Protocol’s second commitment period, instead deciding to set emission reduction targets independently. This meant New Zealand could no longer access Kyoto markets and, in 2015, it de-linked from the market and now operates an independent scheme.
Now, global commitments to reduce gross emissions have increased materially as a result of the Paris Agreement,
which took effect in 2016.
196
The Paris Agreement was adopted by 196 parties in Paris, on 12 December 2015. The united states withdrew from the agreement in 2020 but rejoined in 2021.
2ºC
The Paris Agreement’s goal is to keep worldwide temperatures from rising more than 2°c by 2100
30%
New Zealand has committed to reducing emissions 30% below 2005 levels by 2030
The Paris Agreement
The Paris Agreement’s goal is to keep worldwide temperatures from rising more than 2°C by 2100 and pursue efforts to hold the increase to 1.5°C. As of August 2023, 195 states and the European Union have signed the Agreement, representing nearly all countries in the world.
The United States stated its intention to withdraw from the Agreement in 2017. Subsequently, a United States Climate Alliance (USCA) formed with 16 members to date that have reaffirmed independent commitment to the country’s obligations under the Paris Agreement. The USCA currently represents approximately 40% of America’s population and 46% of its 2016 GDP.
The major early requirement of the Paris Agreement is to report Nationally Determined Contributions (NDCs) and report their progress towards these NDCs every five years.
The NZ Emission Trading Scheme
Emission units are allocated (free, earned, or auctioned) into the emission trading scheme (ETS) market.
Within the ETS market, emitters and removers trade NZUs.
The Carbon Fund participates in auctions and trades NZUs with the emitters and removers in the ETS market.
Investors can access this market by investing in the Carbon Fund. Investment can be made in three ways: directly via this website, through the NZX, or through an Authorised Financial Advisor.
Emission units are allocated (free, earned, or auctioned) into the emission trading scheme (ETS) market.
Within the ETS market, emitters and removers trade NZU’s.
The Carbon Fund participates in auctions and trades NZU’s with the emitters and removers in the ETS market.
Learn More Here
Want to know more about Emissions Trading Schemes? Need to understand how a low emissions economy works? Or just need a guide to New Zealand’s plans? You can find everything you need and more with the resources below.
EMISSIONS TRADING SCHEME
How does the Emissions Trading Scheme help New Zealand reduce climate change? Here is a video to help understand a bit more.
Source: Motu
LOW EMISSIONS ECONOMY
How should New Zealand transition to a low emission economy? Watch this video.
Source: Productivity Commission
ZERO
CARBON ACT
Read here about the idea developed by Generation Zero for a law to put New Zealand on track to zero carbon by 2050.
NZ EMISSIONS TRADING SCHEME
Read this guide to New Zealand’s Emissions Trading Scheme to find out how it works, and what the future might hold.