The document summarizes New Zealand's Emissions Trading Scheme (ETS) and discusses international linking. It describes the ETS's phases and evolution over time, from initially linking to Kyoto to becoming domestic-only. It also discusses the government now setting emission budgets and limiting supply in the ETS to prepare for future linking. The document reflects on both parties being responsible for environmental integrity if linking and the need to balance domestic policy with international cooperation.

1. New Zealand Emissions Trading
Scheme
International linking
Past experience and future prospects
IEA workshop 17 May 2022

2. Some quick basics about the NZ ETS
Designed to encourage emission reductions and forest removals:
Some features of the NZ ETS:
• Forestry removals a large source of supply
• Broad coverage of emissions except for
agriculture
• Kyoto link originally seen as integral part of ETS
• Unlimited holding, trading and banking
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3. Four different phases:
• 2008–2012 part of a functioning
international system
• 2013–2014 delayed disconnection from
Kyoto
• 2015–2020 domestic-only with fixed price
option
• 2021– new rules including caps and
auctioning
Evolution of the NZ ETS
Connecting and disconnecting
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4. Prices show these changes over time
Long term price path for New Zealand emission units – NZD currently USD 0.63
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5. Preparing the NZ ETS for
future linking
Government now sets domestic emission
budgets
Government must publish Emissions
Reduction Plan
Law requires volumes must be limited
Legal responsibility on Government to ensure
environmental integrity
A process to manage supply in the ETS
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6. The current unit supply settings
Millions of NZUs
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0
5
10
15
20
25
30
35
40
2022 2023 2024 2025 2026
Auction excluding CCR Industrial allocation CCR

7. Auctioning 2021 and 2022
Shows 2021 and first quarter of 2022 – there have been five quarterly auctions
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$30
$40
$50
$60
$70
$80
$90
Closing Price - NZ$ Auction price

8. Some reflections
Loss of policy control – need to be able to
make changes within a linking agreement
Both Parties will be responsible for
environmental integrity in future:
Integrity of reductions
Accurate accounting
Need to balance:
Domestic policy and the role of emission
pricing in our economy
The benefits of international cooperation
Over-supply takes time to work out of the
system
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9. Pātai | Questions?
Pātai | Questions?