For a while, it looked like the government had unfucked the ETS, at least insofar as unit settings were concerned. They had to be forced into it by a court case, but at least it got done, and when National came to power, it learned the lesson (and then fucked the ETS in other ways). But now, it looks like He Pou a Rangi is going to fuck it up all over again, proposing a huge increase in auction volumes:
The commission found that the government could increase NZU auction volumes by 13.6m units for the 2026-2030 period, compared with last year’s estimates.The full advice is available here, and while their reasoning on surplus reduction does not seem unreasonable, it is also risky, because the government won't be able to reduce 2028 volumes if later data shows they're wrong. As for industrial allocations being lower than budgeted, we should be banking this as emissions reductions, rather than immediately giving them away to allow further pollution. But because the government doesn't count the cost of its Paris NDC liability, there's no financial argument for that (and instead a clear financial argument for more auctions to raise revenue to waste on landlord tax cuts and higher salaries for politicians).That was largely because surplus units were coming down faster than expected. In addition, industrial allocation of units was forecast to be lower than expected due to plant closures, lower production and updated baselines.
In short, this is a mistake. We should be taking every excuse to grind emissions down, and to grind down the total liquidity in the ETS. And it almost makes you wonder whether National's recent crony appointments to the commission are affecting its advice.
