[UNCLASSIFIED] Hon James Shaw Minister of Climate Change j.shaw@ministers.govt.nz 13 July 2023 Tēnā koe Minister Shaw I’m writing to you, and to other members of the Climate Response Ministerial Group, about the advice that He Pou a Rangi Climate Change Commission submitted in March this year to you, as the Minister of Climate Change, on the unit limits and price control settings for the New Zeala. [...] In summary, the Commission’s 2023 NZ ETS settings advice recommends: • reducing the limit on the number of units available for auction • raising the trigger prices for the cost containment reserve and auction reserve price • changing to a two-tier cost containment reserve. [...] If the Government’s intentions or commitment to climate policy and the NZ ETS are unclear, this leads to volatility in the emissions price. [...] Following the announcement of the Government’s last decision on NZ ETS settings in December 2022, the spot price of New Zealand Units (NZUs, the unit of trade in the NZ ETS) immediately weakened. [...] While the Government’s first emissions reduction plan recognises the central importance of the NZ ETS to Aotearoa New Zealand’s efforts to decarbonise, it now appears that the Government is not prepared to follow through and operate the NZ ETS accordingly.
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