InSights

New Zealand Carbon Market Primer

This introductory market primer on the New Zealand Emission Trading System ( NZ ETS). Launched in 2008, NZ ETS is a central policy for climate change mitigation in the country. Governed by the Climate Change Response Act 2002, the scheme covers almost half of New Zealand’s GHG emissions. Sector wise, NZ ETS encompasses forestry, stationary energy, industrial processing, liquid fossil fuels, waste, and synthetic GHGs. The forestry sector has a distinct feature where it is obligated to surrender emissions along with an opportunity to earn New Zealand Units (NZUs) for emissions removal.

Currently, biological emissions from agriculture have reporting obligations without surrender obligations. A carbon price will be levied on agricultural emissions by 2025, either through the NZ ETS or a separate pricing mechanism.

This report explains the markets dynamics and gives a glimpse of its functioning, recent performance and estimates for annual price and unit estimates for the period ending 2030.