The Taxpayers’ Union submitted feedback on the Government’s 2025 update to the New Zealand Emissions Trading Scheme (ETS), which sets the volume and pricing rules for carbon units. While these settings are intended to manage emissions efficiently, we argued that current interventions are distorting the market and undermining the system’s effectiveness.
We supported increasing the supply of NZUs to reduce costs and volatility, but strongly opposed price controls such as auction floors and caps. We highlighted flaws in official modelling that have led to poor decision-making and recommended a shift to a market-led approach, where the Government sets transparent volumes and allows prices to be determined by supply and demand.
Heavy-handed intervention has already led to failed auctions, lost revenue, and increased uncertainty. A properly functioning market would deliver emissions reductions at lower cost, while avoiding unnecessary economic damage caused by incorrect pricing signals and regulatory overreach.
