Emissions trading

I use geographic data and discrete choice modelling to investigate private land-use decisions in the context of prominent New Zealand land institutions and environmental policies. Land-use conversions involving gains and losses in planted forests and…

Society depends on services and benefits provided by ecosystems. Yet, many of our actions affect ecosystems in ways that undermine long-term human wellbeing. Although ecosystems provide many services to society, many of these services are…

This new Motu Research paper examines a range of options for reforming industrial free allocation: changing the eligibility criteria, changing the calculation methodology, substituting alternative measures, or accepting and managing emissions leakage. Further research is…

Changes to the New Zealand Emissions Trading Scheme (NZ ETS) in June 2020 create incentives for landowners to establish new forests and register them in the NZ ETS as either standard or permanent forestry.

From 1…

New Zealand can fund    
mitigation overseas    
and progress at home.    

Purchasing international emission reductions (IERs) can help New Zealand make a more ambitious and cost-effective contribution toward global mitigation and accelerate developing countries’ low-emission…

An ETS price    
is set by the market, but    
price safeguards can help.    

The NZ ETS cap will require a further accessory: a price collar (price ceiling and price floor). In the current…

Supply certainty    
means an ETS can set    
an efficient price.    

To date, New Zealand has focused on the “trade” in cap-and-trade. We are long overdue for our own cap on unit supply and…

This 2022 revision to Motu’s popular 2018 Guide to the New Zealand Emissions Trading Scheme provides a user-friendly description of the system’s current design features, their rationale and how they have evolved over time. It…

Smart investment needs    
Clear ETS price signals    
Set caps with price bands    

Early in 2016 Motu Economic and Public Policy Research gathered together a group of participants from diverse backgrounds and sectors…

In mid-2020, Catherine Leining and Sandra Cortés Acosta produced a series of short videos in English and Spanish explaining operational aspects of the New Zealand Emissions Trading Scheme.

Linking is risky.     
Others’ units surrendered,     
much revenue lost.     

The New Zealand Emissions Trading Scheme (NZ ETS) presents an opportunity to compare the theory of linked emissions trading with practice. From 2009…

Motu has developed a game where participants take part in a simplified emissions trading system. This was designed to give participants ‘hands on’ experience of trading.

Emissions Trading SystemParticipants manage either an electricity retailer firm or a cement…

This is the submission made by Suzi Kerr and Catherine Leining of Motu in the first round of the ETS Review of 2016.

ETS reform
must reflect a changing world.
Challenges remain.

The New Zealand Emissions Trading Scheme (NZ ETS) broke new ground in ETS design. Drawing from analysis of core policy documentation, this paper examines the rationale, outcomes, and outlook…

Changes in the cap   
affect emissions and prices.   
With tool, knowledge blooms.  

The New Zealand Emissions Trading Scheme (NZ ETS) Cap Explorer tool was created to help individuals understand how NZ ETS design features and drivers of greenhouse…

Changes in the cap   
affect emissions and prices.   
With tool, knowledge blooms.  

The New Zealand Emissions Trading Scheme (NZ ETS) Cap Explorer tool was created to help individuals understand how NZ ETS design features and drivers…

Emissions trading    
must continue to evolve    
in line with the times.    

This year will be pivotal for designing New Zealand’s climate policy portfolio in the lead-up to the Paris Agreement, which kicks off in 2021. Emission pricing…

The Government’s consultation document requests input on how to adapt the design of the New Zealand Emissions Trading Scheme (NZ ETS) so it can more effectively support New Zealand’s transition toward a net-zero-emission economy. Our…

This paper examines the interaction of different policies used to control two types of agricultural pollution. Pollution control policy is efficient when both pollution types are controlled by taxes, although a tax increase on one…

The fourth ICIS Carbon Markets Almanac provides a top-level view of global efforts to combat climate change with cap-and-trade systems. For each of the different schemes worldwide it highlights key design characteristics and includes spotlight…

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…

Few new trees planted    
Low price limited effect    
Can reform fix this?

New Zealand is the first, and still the only, country to include forest landowners as full and, in some cases, mandatory participants…

Over the past few months it has become clear that many people do not fully understand how emissions trading works in New Zealand. To help explain how the New Zealand Emissions Trading Scheme (ETS) works,…

Outline of this presentation:

Context: Climate change challenge
Context: Motu’s ETS Dialogue
Managing international emission reductions
Predictable policy and clear price signals in the NZ ETS
Managing domestic unit supply
Price safeguards
Making it happen
 Summary of key messages

New Zealand’s purchase of international emission reductions…

Cooperation    
lowers mitigation costs,    
but linking is hard.   

The New Zealand Emissions Trading Scheme (NZ ETS) was conceived as New Zealand’s gateway to the international carbon market with two objectives:

assisting New Zealand to…

Emission pricing
can have more effect when it
reaches far and wide.

When it was launched in 2008, the New Zealand Emissions Trading Scheme (NZ ETS) pioneered the design concept of implementing an emissions trading scheme…

Storing carbon down    
below ground and in the sea    
makes a better world.    

This report synthesises the current state of scientific knowledge around the issues associated with three innovative carbon reduction or removal…

Natives get rewards    
Can we make it easier?    
Birds and climate win.    

This note aims to help firms looking to offset their Greenhouse Gas (GHG) emissions. Emissions reductions from native forestry sequestration…

Opportunities for the use of Māori Land for storing CO2 (carbon farming) were investigated by Landcare Research between October 2001 and June 2002. A framework for future involvement of Māori landowners in carbon farming was…

Key messages

Some economic risks cannot be reduced at the NZ Inc. level – they can only be reallocated. Other risks can be reduced by careful design.
Consider temporarily limiting international sales to avoid extreme international prices…

 

New Zealand has had an emissions trading system since 2008, designed to assist the country in meeting its international climate change obligations and reduce domestic emissions below business as usual. The system is currently being…

Key messages

An emissions trading system is not a static institution. It should be designed to anticipate and respond to changing circumstances. Short, medium and long term needs are different.

Long term

Long-run international policy must effectively limit…

Key messages:

NZ Inc. will bear costs from compliance with or without emissions trading
Our Kyoto target,together with any supplementary domestic controls, determines how NZ affects the global environment. Emissions trading does not alter this.
Comprehensive all sources,…

Key messages:

1. Some products or processes in New Zealand may be disadvantaged in international markets because they face a carbon price, whereas competing suppliers of the same or similar products do not. This may result…

1. The point of obligation should be chosen (as much as possible) in order to:

Obtain comprehensive coverage
Minimise transaction costs; and
Provide the most clearly targeted incentives to reduce emissions.
2. The point of obligation does not affect…

This data was received by Motu as the result of an Official Information Act request (OIA16-0167) it made to the Ministry for Primary Industries. 

The data received details a number of important metrics about ETS registered…

This submission on the New Zealand Emission Trading Scheme 2015-2016 consultation on 'Other Matters' was prepared and submitted by Suzi Kerr and Catherine Leining in May 2016.

The Handbook synthesizes input from over 100 practitioners and experts from four continents, reflecting both the latest theoretical insights and best practices from existing emissions trading systems (ETSs).

As of 2016, emissions trading systems were operating…

A pioneer scheme  
The foundation for much more.  
Lessons learned? Perhaps.  

The New Zealand Emissions Trading Scheme (NZ ETS) was launched in 2008 following more than a decade of policy deliberation on how emission pricing could…

Motu Economic and Public Policy Research has compiled an interactive timeline for the development and implementation of the NZ ETS from 2005 to 2015. It is intended as an information resource for:

policy makers,
NZ ETS participants,
researchers, and
ETS…

In this analysis we consider the potential regional impacts in New Zealand of implementing the Kyoto Protocol. This is based on provisional work produced by ABARE for Ministry for the Environment in 2001 published in “Economic outcomes…

This document considers three different types of economic regret that may occur as a result of New Zealand adopting an Emissions Trading Scheme. 

It was written for the Climate Change Leadership Forum during discussion on how…

This paper describes the compilation of a preliminary input-output able for 2005/06 for use in the ESSAM (Energy Substitution, Social Accounting Matrix) general equilibrium model. A more accurate update is expected to be undertaken in…

Suzi Kerr is speaking by video to the Panamanian Government about how to include forestry in an emissions trading scheme.

NZ and Panama have some strong similarities - around 4 million people, small industrial sector and…

New Zealand in general and our farmers in particular have a strong interest in how global agriculture is included in any international agreement on climate change. In NZ, 48% of greenhouse gas emissions are from…

Policies to reward carbon sequestration on private land have been designed with the expectation that they will stimulate land-use change wherever carbon farming is the most profitable land use. However, the decision process to adopt carbon farming,…

In Kyoto in 1997, the US government agreed that between 2008 and 2012 it would limit average annual emissions of greenhouse gases (GHGs) to seven percent below 1990 levels. As participants in the climate policy…

An auction of carbon permits is the best way to achieve carbon caps set by international negotiation to limit global climate change. To minimize administrative costs, permits would be required at the level of oil…

This paper tackles the complex issue of how buyers and sellers within a domestic carbon credit system designed to include regenerating indigenous forest would optimally design contracts for trades of the new good, "carbon sink…

The possibility of international trade in credits for greenhouse gas (GHG) emission reductions is a key “flexibility mechanism” built into the December 1997 Kyoto Protocol for international GHG reduction. The Protocol allows ntities in Annex…

Without effective developing country (DC) participation in climate mitigation, it will be impossible to meet global concentration and climate change targets. However, DCS are unwilling and, in many cases, unable to bear the mitigation cost…

Issues surrounding Annex I trading – the trading of greenhouse gas emissions among industrialized countries under the Kyoto Protocol to the Framework Convention on Climate Change – comprise the central theme of this collection,which offers…

This article synthesizes the key conceptual insights from economics for the design of international policies to reduce deforestation and forest degradation and increase reforestation (known as REDD+) as part of the international climate change mitigation…

There are many choices within the design of an emissions trading system. In this paper we focus on one specific aspect - the point of regulation for the energy sector. This choice affects transaction costs;…

The textbook economists' model of a tradable permit system cannot usually be applied perfectly at either the domestic or international scale because of the difficulty and/or expense of defining allocations to and monitoring emissions of…

We use a multi-industry general equilibrium model of the New Zealand economy to analyse the macroeconomic implications of an unexpected fall in the carbon price. Previous research has shown that a lower carbon price produces…

In Kyoto in 1997, the US government agreed that between 2008 and 2012 it would limit average annual emissions of greenhouse gases (GHGs) to seven percent below 1990 levels. As participants in the climate policy…

In Kyoto in 1997, the U.S. government agreed that between 2008 and 2012 it would limit average annual emissions of greenhouse gases (GHGs) to seven percent below 1990 levels. As participants in the climate policy…

An auction of carbon permits is the best way to achieve carbon caps set by international negotiation to limit global climate change. To minimize administrative costs, permits would be required at the level of oil…

The allocation of permits is an important design aspect of an emissions trading scheme. Traditionally, governments have favoured the free allocation of greenhouse gas permits based on individual historical emissions ("grandfathering") or industry benchmark data.…

Produced as New Zealand Treasury Working Paper 05/02

This paper provides an overview of key issues involved in the choice among market-based instruments for climate change policy. Specifically, it examines the potential net benefits from shifting to a…

This working paper was prepared for the Ministry for the Environment.

The purpose of this project is; to identify and assess possible rationales for government action, in addition to general climate change policy and during the period…

The Government's proposed Emissions Trading System (ETS) is overall an impressive piece of policy development. The design embodies much of the best international thinking: it responds to lessons learned from economic theory and from the…

Where used effectively, ecological taxes have the potential to make appropriate environmental decisions an automatic part of every economic decision. They are flexible to different needs and changing conditions. They induce people to use their own information and…

Under the Kyoto Protocol the European Union (EU) has agreed to limit its average annual greenhouse gas emissions to eight percent below 1990 levels during the period 2008 to 2012. Each Member State of the European Community…

The possibility of international trade in credits for greenhouse gas (GHG) emission reductions is a key "flexibility mechanism" built into the December 1997 Kyoto Protocol for international GHG reduction. The Protocol allows ntities in Annex…

This report was produced for the Ministry for the Environment

Trade and environment issues are economically important, emotionally laden, and complex in the face of scientific and legal uncertainties. These issues are of particular interest to New Zealand because…

This paper supplements the Final Report for the Study Project “Designing Options for Implementing an Emissions Trading Regime for Greenhouse Gases in the EC”. Background information on the Study is contained in the February 2000 Final Report of…

New Zealand's per capita greenhouse gas emissions are usually calculated by taking total emissions as reported under the Kyoto Protocol or the United Nations Framework Convention on Climate Change and simply dividing by population. However…

This report was also published by the World Bank and is available here.

Motu and partners were contracted by the World Bank through its Partnership for Market Readiness (PMR) initiative to "Draft a proposal for the…

A presentation to Aotearoa Wave and Tidal Energy Association (AWATEA). 

The options for mitigation are many and varied. Understanding the climate implications of any action is really hard. Only private actors really know what can be done and…

No country has previously attempted to include either agriculture or forestry in an emissions trading system. The New Zealand government is planning to include both.

This paper describes how they plan to do it, what some…

The textbook economists' model of a tradable permit system cannot usually be applied perfectly at either the domestic or international scale because of the difficulty and/or expense of defining allocations to and monitoring emissions of…

This paper tackles the complex issue of how to include regenerating indigenous forest in a domestic carbon credit system. The paper specifically addresses New Zealand conditions but most of the issues and conclusions are relevant…

This paper tackles the complex issue of how buyers and sellers within a domestic carbon credit system designed to include regenerating indigenous forest would optimally design contracts for trades of the new good, "carbon sink…

How do we expect the New Zealand Unit prices (NZU) and the Kyoto unit prices to relate to each other?
How does this relationship change when future use of Kyoto units becomes uncertain (i.e. when ‘de-linking’…

There are many choices within the design of an emissions trading system. In this paper we focus on one specific aspect – the point of regulation for the energy sector. This choice affects transaction costs;…

Motu has extensive research programmes in the areas of emissions trading to address greenhouse gases and nutrient trading for water quality. This Motu Note provides an introduction to both fields and surveys interactions between nutrient…