An evaluation of the Emissions Trading Scheme shows the Government has “weakened the scheme to the point of ineffectiveness,” says Green Party co-leader James Shaw.
The Government released three technical reports last week, to help New Zealanders engage with a public review of the ETS.
One of those, a Ministry of Environment report into the performance of the ETS, found it provided businesses nearly no incentive to look at how to reduce their emissions.
Shaw said that with expenditure of $40m on setting up the ETS, and despite it being the Government’s main policy for tackling climate change, it was failing.
“The ETS is supposed to provide businesses with an incentive to reduce their emissions – but two thirds of businesses no longer give any consideration to the ETS when making business decisions.
The Greens are correct that the ETS is not sending a price signal to businesses that will greatly impact production of greenhouse gas emissions.
But this is more due to the collapse of the global price of carbon after the failure of Copenhagen some years ago. The agreement in Paris may see prices rise.
The cost per EU unit was 30 Euros in 2006 but by 2007 had fallen to 10 cents. So it is not just NZ that has had the challenge of a trading scheme with low prices.
However that is not to say local policy settings don’t have some impact. The 2:1 subsidy was needed to cushion the initial impact, but I think it is time for that to go.