The blame for the recent failure of the New Zealand Emission Trading Scheme auction can be laid squarely at the feet of the Climate Change Commission along with the previous Labour Green Government, reflecting a series of manufactured crises rather than a fundamental issue with the market, according to the Climate Forestry Association (CFA). Source: Timberbiz
The quarterly ETS auction failed to attract any bids, following a partial clearance of units in March raising NZ$190 million and the unprecedented failure of all four auctions under Labour/Greens in 2023.
Climate Forestry Association chief executive Andrew Cushen says the continued uncertainty in the market highlights the ongoing impacts of years of meddling by the previous Government.
“What we are seeing play out is a natural response to the regular fiddling with settings, endless reviews and constant changes, which reflected a culture of interference from the Labour Government, the former Minister for Climate Change and the Climate Change Commissioner,” Mr Cushen said.
“Although participants in the market are understandably gun-shy after so long without any clear direction for the ETS, today’s auction doesn’t affect the fundamentals. At its heart, the ETS is a market mechanism, and it is designed to deal with short-term issues like the ones we’re seeing.
“Despite not clearing today, that shouldn’t mean we lose faith in what is essentially our most successful – and our one-and-only – tool for meeting our climate commitments and reducing our emissions.”
Mr Cushen says that the Coalition Government really couldn’t be clearer that it supports the stable, long-term operation of the ETS in its current form.
“Last week, at Fieldays, both Forestry Minister Todd McClay and Climate Change Minister Simon Watts restated the Government’s commitment to climate action and recognised that a strong and stable ETS is our most effective tool for achieving our climate targets,” Mr Cushen said.
“It is widely recognised that the market is currently significantly undervalued. Consistent policy settings and a long-term commitment to stability – like that signalled by the Government – are needed to bring back confidence in the sector and certainty in the market.
“The Emissions Trading Scheme needs a strong and rising market price. This will enable the local investments in reductions and removals that are essential to meeting New Zealand’s climate targets.”
Mr Cushen said despite the Government’s signals, it could reinforce those assurances by clearing up some areas that have created confusion in the market.
“The suggestion of a lowering price floor contained in the latest Ministry for the Environment consultation, which was presented without any obvious rationale, was not at all helpful for the market and the broader sector,” Mr Cushen said.
“To really draw a line under this period of market uncertainty, the Government should announce that this suggestion will be dropped, and no further work done on its development.
“Ultimately, the efficient and stable functioning of the ETS will support the climate action we need to meet our international targets, and ensure Kiwi taxpayers are not left footing the bill for ex-pensive offshore mitigations.
“We were very pleased to see the Government back up its commitments on the ETS last week and hope to see them take more definitive action around the consultation, ahead of the next auction.”
