Why we have the NZ ETS

Under the United National Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol , New Zealand has commitments to reduce its greenhouse gas emissions.

The Government has chosen the New Zealand Emissions Trading Scheme (NZ ETS) as its primary tool to reduce emissions, as it is the least-cost way of reducing emissions. The NZ ETS puts a price on emissions and therefore creates a financial  incentive for all New Zealanders – especially businesses and consumers – to change our behaviour. The NZ ETS provides an incentive to:

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

Our choices

An emissions trading scheme 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 a national emissions trading scheme, while a number of other countries, including China and South Korea, plan to launch a national scheme in the coming years. A number of state-level emissions trading schemes, including California, have also been launched in North America.

Our clean green brand

As well as helping New Zealand do its fair share in cutting emissions, the NZ 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 actively participates in international UNFCCC negotiations, with an aim of reaching a post-2020 global climate change agreement that will bring all major emitters, developed and developing, within the same legal framework.

New Zealand is also exploring opportunities to directly link with other domestic carbon markets, and develop a linked carbon market in the Asia-Pacific region.

Last updated: 19 April 2013