Emissions trading in New Zealand: Introduction and context

Paper prepared for New Zealand Climate Change Policy Dialogue

Key messages:

  • NZ Inc. will bear costs from compliance with or without emissions trading
  • Our Kyoto target,together with any supplementary domestic controls, determines how NZ affects the global environment. Emissions trading does not alter this.
  • Comprehensive all sources, all gases emissions trading is feasible.
  • Emissions trading provides a lot of flexibility in how we control GHG emissions.
  • A price-based regulation that causes emitters to be faced with the opportunity cost of their decisions is needed to efficiently control greenhouse gases (GHGs) because there are so many different responses by different people at different times.
  • Emissions trading should be complemented by other policies.
  • Emissions trading is very different from a ‘projects’ approach.
  • We need to separate discussions about technical design of the system, which are important for overall impact on NZ Inc., from aspects that affect distributional considerations, which have different impacts on specific sectors and interests.