11 June 2021
The Carbon Fund welcomes the Climate Change Commission’s (CCC) final advice to the New Zealand Government detailing the paths Aotearoa can take to meet its climate targets. Aotearoa has committed to reaching net-zero emissions of long-lived greenhouse gases by 2050 and reducing biogenic methane emissions between 24-47% by 2050. The Commission’s role is to provide independent, evidence-based advice to reach those targets.
It is now over to Government to decide whether to accept the advice, and to show how it will shape climate action in Aotearoa. The Government has until 31 December 2021 to set the first three emissions budgets out to 2035 and release the country’s first emissions reduction plan detailing the policies it will use to achieve the budgets.
Jarden, a New Zealand carbon credit broker have summarised what impact the recommendations could have on the ETS settings; “Regarding ETS settings, the CCC is careful to state it is not predicting where carbon prices need to be to have real emission reductions, but their modelling does suggest that to meeting the 2050 target, ETS prices need to be around $140 in 2030 (and $250 in 2050). They also state the Floor and Cost
Containment Reserve (CCR) need to be higher - the floor should (as soon as possible) move to $30 and rise 5% plus inflation per annum. The CCR should (as soon as possible) move to $70 and rise 10% plus inflation per annum. We take this to be from next year. This is not to necessarily push prices higher but to create a wider corridor to allow price discovery by the market. They do say that the current CCR level of $50 should be well above expected market prices. We would argue at $50 - it is not. They recommend (in 11) that a governance regime needs to be in place by June 2023. This will impact who and how advice is given relative to the trading of carbon units.”