Since winning power in 2023, the present National regime has Fucked Around on climate change policy. They're repealed a swathe of measures to reduce transport and industrial emissions, reversed course on agricultural emissions and signalled a continued free ride for polluting farmers, promised continued pollution subsidies for industrial emitters, reduced the ambition of future emissions budgets, and decoupled the ETS from international climate goals... its a long list. And they've Fucked Around with the Emissions Trading Scheme itself, saying they were thinking about lowering auction reserve prices before hastily backing away. All of this has had an effect on the credibility of the ETS, and on emissions prices: auctions haven't cleared since December 2024, and the carbon price has crashed and remains below $50 a ton as participants have hedged against the prospect of National crashing it further (or just doing away with the whole thing and leaving them holding a pile of worthless paper).
And now He Pou a Rangi Climate Commission is warning that we're about to Find Out the consequences of all that Fucking Around, with their latest Advice on NZ ETS unit limits and price control settings for 2027–2031 projecting an ETS supply crunch (due to stockpile burning and all those failed auctions) as soon as 2028. But there's no way of fixing it. Because the obvious way - add more credits - would be taken as a further sign of the regime's lack of commitment to climate action. But doing nothing means a credit shortage, price spikes, and demand destruction by the market:
Volatile or rapidly rising NZU prices could also force emissions reductions through reduced production or plant closures (rather than incentivise investments in lower-emissions technologies), and create conditions where the Government is pressured to make ad hoc interventions in the market.In other words, the sort of deindustrialisation we've already been seeing due to high gas and electricity prices. And TBH, if that happens and knocks over large emitters, I'm happy to take the win. Sure, it's not the best way of doing it - that would be clear regulation and/or a steadily rising carbon price which incentivises emissions reductions over time - but the regime has clearly signalled that they're not interested in doing things the good way, so we're left with the bad way instead. And if your job is affected, you should know who to blame: National, for Fucking Around on this.
He Pou a Rangi can't solve this this year, because the regime basically has no credibility to make changes. So they're recommending hitting pause for a year and staying with the status quo - effectively hoping for a new government with more credibility, which might be willing and able to actually fix things. Because while we've got a short-term problem due to regime credibility interacting with stockpile reduction policy, we also have a long-term problem of too much industrial allocation, no price on agricultural emissions, and the need to decouple forestry from the ETS, which will crash the system in about a decade. National is absolutely incapable of solving that problem. A new government might be able to, if it can overcome the lobbying of all those entrenched interests. And if not, well, I guess we'll get to find out the next bad way of cutting emissions...
