Emissions Trading in New Zealand: Points of Obligation

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 the ability of any party to mitigate, and will usually also not affect:

• the way in which the economic burden is shared across parties in the vertical chain; or
• the incentives of parties to respond.

3. If accurate targeting of GHGs cannot be achieved at all points in a vertical chain, then the point of obligation will affect mitigation incentives and the sharing of the economic burden.