Levi Gibbs

Published: August 11, 2023

Submitting To: Ministry for the Environment (MfE)

Issue for Business: The Government has decided to review the Emissions Trading Scheme. Their aim is to rebalance the ETS to account for more gross emission reductions. This was set out in the Emissions Reduction Plan and inform by recommendations from the Climate Change Commission. 1.) The ETS has severely damaged confidence in the carbon market. One objective ought to be to restore such confidence. 2.) We recommend that the Government promptly rules out retrospective changes to current NZU rights, providing stability and predictability of the ETS regime for businesses and investors. 3.) Any changes need to be grounded in key principles: flexibility, stability, cost-effectiveness, simplicity and optionality. 4.) We recommend conducting a comprehensive quantitative analysis to determine the level of gross emission reductions intended up to 2050 before any options are decided. 5.) This should include an assessment of the costs and benefits of each option in rebalancing the ETS towards more gross reductions. 6.) Alongside the assessment of current options, we recommend assessing non-ETS measures aimed at managing and controlling afforestation. 7.) We would like to see a comprehensive assessment of all aspects impacting afforestation economics and potential planting. 8.) This should include undertaking a comprehensive assessment of the potential amount and types of land suitable for afforestation in the permanent exotic forestry category. 9.) We recommend to account for constraints beyond the ETS. 10.) We do not support any option at this stage due to the lack of detail and inadequate acknowledgement of non-ETS measures that could address the stated problem.

Outcome: This marks the beginning of the ETS review. Future changes are expected in the future.