New videos explain emissions trading and how it helps NZ reduce climate change

Nov 7, 2017

New Zealand’s 2017 election renewed debate about how emissions trading can support New Zealand’s transition to a successful low-emission economy.

To help explain how the New Zealand Emissions Trading Scheme (NZ ETS) works, Motu Economic and Public Policy Research is releasing seven short videos answering questions asked by students relating to climate change and the NZ ETS.

The videos answer the following questions in simple language:

  1. What is emissions trading?
  2. How does emissions trading affect me?
  3. We’ve had an ETS for years, so why are emissions still going up?
  4. Can the ETS be fixed?
  5. What can we do about dodgy carbon credits?
  6. Is the ETS enough?
  7. Wouldn’t a carbon tax be better?

The videos star students from the Wellington region alongside Dr Suzi Kerr, an international emissions pricing expert and co-leader of the 2016 World Bank and International Carbon Action Partnership report 'Emissions Trading in Practice: A Handbook on Design and Implementation'.

Dr Kerr is supported by Catherine Leining, who served as a negotiator in the New Zealand delegation to the UNFCCC negotiations, helped to design the NZ ETS and has over twenty years of experience in climate change policy work.

“Emissions pricing is an essential part of the solution to climate change,” said Dr Kerr. “It is not the only part, but it is designed to encourage and make it easier for anyone who uses products that produce greenhouse gas emissions to change their behaviour. This includes not only large industrial producers, but anyone who drives a petrol-powered car, eats red meat, or concretes their driveway.”

Many of the students were concerned that the NZ ETS hadn’t reduced New Zealand’s emissions.

“In the past there were some big shortcomings with the NZ ETS, the key one being that the price of units was too low to make a difference,” said Ms Leining. “We need politicians to come to a consensus to limit the number of units available domestically, which will increase the price for emitters and drive emissions downward.”

Another important question, and one which was raised in the recent election, was the difference between an emissions trading scheme and a carbon tax.

“An emissions trading scheme and a carbon tax have much more in common than most people realise,” said Dr Kerr. “We’ve studied the mechanisms for years, and I really believe there is no need to change emission pricing instruments for New Zealand to progress toward net-zero emissions. Both instruments can target the same emitters and generate effective price signals.

“With auctioning, the NZ ETS can also generate revenue for the government, which can be returned to the Kiwi economy in the same way as carbon tax revenue,” said Dr Kerr.

In 2017, Motu was rated tenth in the world for climate change work internationally and second for think tanks outside of Europe and North America in the standardised Think Tank Rankings by the International Center for Climate Governance.

Since 2016, Motu has led the development of a proposal for reforming the NZ ETS to better support New Zealand’s transition to a low-emission economy. More information is available at the Motu website.

Directed by Wellingtonian Jess Feast, the videos (including a compilation of all seven questions) are now available on the Motu website and on the Motu YouTube channel. This research was undertaken through Motu’s programme “Shaping New Zealand’s Low-Emission Future,” which is funded by the Aotearoa Foundation.