The biggest polluters will have to do more to help meet climate targets because of changes the Government is making to decade-old settings that have allocated far too many free climate pollution credits to New Zealand’s largest emitters, Climate Change Minister James Shaw announced today.
“Tackling climate change is a priority for the Government. Our emissions reduction plan relies on everyone playing their part, including our biggest emitters, who until now have been given enough free pollution permits to avoid having to make meaningful emission reductions,” said James Shaw.
“When the Emissions Trading Scheme (ETS) began it was decided that some companies would receive up to 90 percent of their pollution credits for free. The purpose of this was to protect these companies from more lightly regulated competitors outside of New Zealand. However, the baseline used to decide how many credits each company would receive is exactly the same today as it was 12 years ago.
“Over the last decade, major polluters have changed how they do business and are now receiving many more credits than they need. The government at the time said it would begin phasing down the free allocation of credits from 2013, slowly driving up the cost of pollution. However this did not happen, meaning we’ve been stuck with an out of date system that has directed large amounts of taxpayers’ money towards big polluters, while keeping emissions higher than they should be. Allowing this to continue would be incompatible with the climate targets we have set – so we’re stepping in to fix it.
“From 2024, our biggest polluters will receive only the pollution credits they need – making sure they play a major role in meeting the Government’s second emissions budget. The changes will remove a major obstacle to innovation, to industrial decarbonisation and the proper functioning of our carbon market. Together with our plan to phase out free allocation over time, this will push the big polluters to make a larger contribution towards meeting our goal of building a net-zero future.
“Today’s announcement builds on the work we have already done to make the ETS fit-for-purpose, including reforms that have put a proper price on pollution and raised about $4.5 million for climate action.
“A well-functioning ETS that puts a proper price on pollution is a critical tool in our climate action toolbox. But it cannot do the job alone. The actions and initiatives in the Emissions Reduction Plan will ensure we meet the first emissions budget and lay the foundation for future climate action,” said James Shaw.