Govt tweak prompts crash in confidence in carbon market
ANALYSIS: A sudden policy shift earlier this month wiped $1.6 billion from New Zealand’s carbon market and left investors wondering whether the damage came from intent or incompetence.
What’s at stake? Confidence in the Emissions Trading Scheme as a credible price signal to cut emissions and finance forestry and low-carbon investment.
Background A late-night move to loosen the legal link between New Zealand’s carbon market settings and the Paris Agreement triggered a sharp price fall and a draft industry letter calling for stability.
Main players Climate Change Minister Simon Watts, broker Lizzie Chambers of Carbon Match, Māori forestry adviser Te Kapunga Dewes, and fund manager Paul Harrison of Salt Funds Management.
New Zealand’s Emissions Trading Scheme (ETS) was always meant to be the workhorse of climate policy. In simple terms, it put a price on pollution. Big emitters such as fuel companies and power generators had to hold one New Zealand Unit, known as an NZU, for every tonne of greenhouse gas they
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Key points
What’s at stake? Confidence in the Emissions Trading Scheme as a credible price signal to cut emissions and finance forestry and low-carbon investment.
Background A late-night move to loosen the legal link between New Zealand’s carbon market settings and the Paris Agreement triggered a sharp price fall and a draft industry letter calling for stability.
Main players Climate Change Minister Simon Watts, broker Lizzie Chambers of Carbon Match, Māori forestry adviser Te Kapunga Dewes, and fund manager Paul Harrison of Salt Funds Management.
