The Emissions Trading Scheme (ETS) is introduced in September 2008 as a key tool to reduce national emissions and meet the international obligations. It requires all sectors to report their emissions and purchase or surrender New Zealand Unit (NZU) to the government. NZU is equivalent to one tonne of CO2 worth of greenhouse gas emissions. ETS creates incentive to reduce emissions by investment in green technologies and emission reduction activities. ETS has many measures, currently in place, to achieve NZ goal of 2030 with a limited impact on participants. Of them that:
- Non-forestry participants surrender only one NZU for every two tonnes of emissions
- The option to buy NZUs from the government for a fixed price of $25/NZU
- Free credits to emission intensive and trade exposed businesses
Adjustments have been made to ETS throughout the years. In mid 2015, the ETS allowed only domestic NZUs for surrender which increased the NZU price more than 20%. The last review of the Emissions Trading Scheme (ETS) aims to align the scheme with the 2030 goal. Some legislative changes are expected out of the review. The biggest change will be reflected on the one-for-two surrender obligation as it is expected to phase out before 2021. For years, participants from liquid fossil fuels, industrial processes, stationary energy and waste sectors surrender only 50% of their emissions. This measure will be removed gradually over the course of three years starting January 2017. The slow change is expected to give the market time to adapt to the new legislation with minimal impact on NZU price.
Below is an interactive chart for the price of NZU. The data available starts from January 2010 till today.