Improving Emission Pricing in New Zealand

This briefing note was for GLOBE-NZ prior to the September 2017 election. GLOBE-NZ is a cross-party group of MPs in the New Zealand Parliament which forms a national chapter of GLOBE-International. The purpose of GLOBE-NZ is to inform participating MPs on global environmental issues including in particular climate change. To that end it convenes briefings for members by recognised experts, receives authoritative reports to share, and explores the development of national climate policies around the world. The New Zealand chapter has existed since October 2015, and, prior to the 2017 election, was composed of 33 MPs from across all seven parties represented in Parliament at that point. It has an Executive Committee of six MPs.

This paper considers how New Zealand might achieve more effective emission pricing by either

1. reforming the New Zealand Emissions Trading Scheme (NZ ETS),
2. replacing the NZ ETS with a carbon tax, or
3. complementing the NZ ETS with a carbon tax.

New Zealand is not yet on a pathway toward net zero domestic emissions. Decision makers will need to weigh carefully the balance of investment between overseas mitigation which may cost less per tonne in the near term, and domestic mitigation which offers a longer-term payback and domestic co-benefits as New Zealand moves toward net zero domestic emissions.