What is the ETS?

The Emissions Trading Scheme (ETS) is New Zealands way of meeting our international obligations (Kyoto Protocol) around climate change.  The ETS puts a price on greenhouse gases to provide an incentive to reduce emissions and to encourage tree planting.

Kyoto Protocol:

The Kyoto Protocol is an international agreement addressing the problem of climate change. It sets binding targets for developed countries that ratify it, aimed at limiting the amount of greenhouse gases each country emits.

New Zealand's Obligations:

  • reduce net emissions below business-as-usual levels;
  • comply with our international obligations, including our Kyoto Protocol obligations.

For New Zealand, the Kyoto Protocol sets targets for reducing greenhouse gas emissions and targets have been set for New Zealand to achieve by 2012. (NZ Target: 62m Tonnes CO2/annum).

The ETS

The ETS incentivises land owners to grow forests (absorb CO2) and penalises the heavy indutrial sector from producing emissions (producing CO2)

Emitters

Emitters produce CO2 from their industrial activities. They must purchases carbon credits annually to offset these emissions.

Forestry

Forests absorb CO2 as they grow. Forest owners earn annual carbon credits for every tonne of CO2 that their forests absorb.

Carbon Market

Emitters have annual liabilities and have to purchase NZU’s from forestry owners whose trees absorb CO2- at the market rate.