Industrial Manufacturers Face Challenges In Cutting Emissions

As anticipated, the fourth and final carbon auction for 2023 has failed to clear.

In last week's auction, around 15 million New Zealand Units (NZUs) were on offer, which included NZUs carried over from the preceding three unsuccessful auctions this year.  The clearing price did not meet the minimum price settings, resulting in the cancellation of the entire allocation for 2023.  For further detail on how the auction process works, you can refer to our article -  'Understanding NZETS auctioning: The basics and upcoming changes'.

The outcome of this year's failed auctions results in a shortfall of approximately $900 million in revenue for the new coalition government.  Unlike the previous government, which intended to allocate this revenue to emission reduction initiatives, the newly elected administration had earmarked these funds for bolstering its promised tax cuts.

As for what lies ahead, we must 'watch this space'.  There is a possibility that the price of a NZU might experience a significant increase in 2024, contingent on a number of factors, including whether the new government commits to maintaining the existing settings of the New Zealand Emissions Trading Scheme (NZETS).

If you would like further information on the above or you would like to be updated on all matters related to the NZETS, we invite you to connect with our team of climate change and emissions trading experts by visiting our climate change and sustainability page.