What the critics say
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.