Why we have the ETS

Under the Kyoto Protocol, New Zealand agreed to reduce its greenhouse gas emissions back to 1990 levels by 2012 or pay for any excess.

The Government has chosen the Emissions Trading Scheme (ETS) as the least-cost way of putting a price on emissions and creating an incentive for all of us – especially businesses and consumers – to change our behaviour.

Our choices

An ETS moves the cost of emissions onto those who cause them. It creates a market around reducing emissions, and so provides us with more flexibility than a simple carbon tax. Twenty eight other countries already have an ETS and schemes also operate in some Australian and US states.

The ETS makes it worthwhile to:

  • reduce emissions
  • invest in clean technology and renewable power generation, and
  • plant trees.

Our clean green brand

As well as helping New Zealand do its fair share in cutting emissions, the ETS will strengthen the country’s clean green brand – an important issue for a small trading nation like New Zealand as international markets and consumers increasingly demand environmentally friendly products.

The global effort

New Zealand is engaged in developing a comprehensive climate change regime to follow the Kyoto Protocol. We are one of 126 countries associated with the Copenhagen Accord. Expert opinion is that an international carbon market will continue to develop whether or not there is a binding United Nations-led regime.

The ETS will be reviewed in 2011 to assess how it is working and what our trading partners are doing about climate change.

Last updated: 16 December 2011