What the crit­ics say

Element - - Business -

Crit­ics of the ETS em­pha­sise that roughly half of the coun­try’s green­house gas emis­sions (from agri­cul­ture) are not part of the scheme, only a max­i­mum of half of the re­main­ing half are paid for, due to the ‘two-tonnes-forone-credit’ ap­proach, and that most of the ma­jor items are dis­counted by a fur­ther 60-90% through the use of free al­lo­ca­tions.

This means New Zealand’s ac­tual ‘price on car­bon’ cur­rently only ap­plies to a very small per­cent­age of the coun­try’s emis­sions. And be­cause the NZUs are sim­ply cre­ated by the government, rather than gen­er­ated through ac­tiv­i­ties that re­duce green­house gas emis­sions, they can­not be traded in­ter­na­tion­ally.

An­other area of con­tro­versy is that the New Zealand ETS cur­rently has no ‘cap’: a max­i­mum level of emis­sions al­lowed across the whole econ­omy. Crit­ics ar­gue that the lack of a cap un­der­mines the en­tire emis­sion re­duc­tion pur­pose of the scheme, be­cause in the­ory the government can dish out as many NZUs as it likes.

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