The Government is consulting on updates to the New Zealand Emissions Trading Scheme, focusing on auction limits and price controls for upcoming years. These settings determine how emission units are sold and influence the cost of reducing emissions.
We oppose auction price floors and caps, which distort the market and reduce efficiency. Our submission recommends limiting government involvement to setting the total unit volume in line with international obligations, allowing the market to achieve emissions reductions at least cost.
Price controls have caused auction failures, reducing revenue and creating uncertainty. Over-intervention can force expensive emissions reductions, while a properly functioning ETS ensures the most cost-effective approach and avoids unnecessary economic harm.
