Emissions Trading Scheme basics

The New Zealand Emissions Trading Scheme is the system in which New Zealand Units (NZUs) are traded. Effectively, one NZU is the right to emit one tonne of carbon dioxide, or the equivalent amount of certain other greenhouse gases.

What’s the point?

The purpose of the scheme is to reduce the amount of greenhouse gases emitted in New Zealand. This is done by charging those who emit greenhouse gases while doing certain activities.

Who is involved? How will it work?

Most New Zealanders won’t participate directly in the scheme. They may notice a small increase in energy prices as organisations that emit gases pass on their increased costs.

People and organisations who do participate directly will do so in different ways:

  • Some will have to surrender NZUs to the Government – for example, companies that mine natural gas, as this will emit greenhouse gases when it is used.
  • Some will earn NZUs from the Government – for example, owners of forests that absorb greenhouse gases.
  • Some will be given NZUs by the Government – for example, companies that might face significant increases in energy costs, and be unable to pass these costs on to their customers.

These groups and others can then trade NZUs, as those with spare NZUs sell them to those who have to surrender NZUs.


Last updated: 16 December 2011