The global carbon market & international emission units

International trade in greenhouse gas reductions is a large and growing market. The NZ Emissions Trading Scheme (ETS) is linked in to the international market to reduce volatility and control the impact large New Zealand companies have on prices. If the ETS was restricted to New Zealand Units (NZUs) only, one large player buying or selling could have a material impact on the price of NZUs.

Climate change is a global issue. Emissions in any part of the world have the same impact on the environment. Linking our ETS to international efforts allows New Zealand individuals and organisations to seek the best ways to help the global environment. Reducing emissions in developing countries may be a lower-cost way of achieving the same environmental goals.

Kyoto units

Some emissions trading systems are designed for Kyoto protocol compliance and others are voluntary. These have different rules for generating and using emission units. Units traded under Kyoto are often called ‘Kyoto units’. There are several different types of Kyoto unit.

NZUs can generally be converted to Kyoto units, subject to some restrictions.

For more information, see the Guide to Kyoto Units and Rules on the NZ Emission Unit Registry website.

Unit price variations

Within the global market different schemes operate, with different constraints on emission unit supply and demand. For example, the European Union emissions trading scheme (EU ETS) restricts certain types of Kyoto unit from being traded within the scheme, so the price of emission units traded within the EU ETS is usually higher than the international price.

 

Last updated: 15 October 2010