On March 15, 2023, the New Zealand Unit (NZU) auction suffered a significant failure, with the auction closing with no trades made. This event was a disappointment for the New Zealand government, which had been hoping the auction to be successful and contribute to its efforts in combating climate change.
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.