Consultations can be made on the Commission’s website at https://haveyoursay.climatecommission.govt.nz/comms-and-engagement/erp2/

The Commission’s draft advice is largely similar to the last advice provided, which was not followed by the government in 2022, resulting in uncertainty on the NZ Emission Trading Scheme and a subsequent significant fall in prices of NZUs.

Climate Change Minister James Shaw responded by saying that was “a bit rich coming from the party that neutered the Emissions Trading Scheme for a decade and drove carbon prices to less than a dollar”.

There is speculation the size of the price drop took the Government by surprise, and that it may take the opportunity presented by a new Climate Change Commission report to try to shore up confidence in the Emissions Trading Scheme (ETS) later this month.

The broad concern has been that the Government could seek to prevent carbon prices rising to the degree needed to effectively curb emissions, in order to avoid further worsening the cost of living, especially during an election year.

The Government did not take up a recommendation made by the Climate Change Commission late last year that it should raise the minimum price at which it issues credits and tighten their supply to further discourage emissions.

https://www.stuff.co.nz/business/131697922/carbon-credit-mistake-could-cost-government-13-billion-if-left-unfixed

https://www.podcasts.nz/what-the-heck-just-happened-to-the-carbon-market-dr-christina-hood/

As the auction is a source of funding for the government’s Climate Emergency Response Fund, its failure has a direct effect on the government’s ability to finance projects, as well as diminishing the effect that the NZU pricing mechanism is designed to cause.

The government has received a considerable amount of criticism from last year’s refusal to adopt the CCC recommendations and now with the failure of this auction.

Details of the review can be found at:

https://environment.govt.nz/assets/publications/cabinet-paper-and-minute-review-of-the-new-zealand-emissions-trading-scheme.pdf

The NZU auction is a key part of the New Zealand government’s Emissions Trading Scheme (ETS), which aims to reduce greenhouse gas emissions and encourage businesses to transition towards a low-carbon economy. The auction is designed to allow companies to buy and sell carbon credits, known as NZUs, in order to meet their emissions reduction targets.

The failure of the NZU auction on March 15 is concerning for several reasons. First, it indicates a lack of confidence among businesses in the ETS and the government’s climate change policies. Second, it suggests that there may be an oversupply of NZUs in the market, which could lead to a drop in their value and reduce the incentive for businesses to reduce their emissions.

With the NZ Government refusing to follow the Climate Change Commission’s advice there will undoubtedly be questions raised.

https://www.mpi.govt.nz/forestry/forestry-in-the-emissions-trading-scheme/news-and-changes-to-the-ets/#:~:text=for%20some%20services-,From%2012%20January%202023%2C%20fees%20charged%20for%20some%20ETS%20services,than%2010%20hectares%20of%20land.