Climate change and emissions trading: The journey of Aotearoa New Zealand

RESET Network collaborator, PMI Chile held an enriching and well-attended capacity-building session on the lessons learned during the implementation process of the Emissions Trading System in force in New Zealand. Catherine Leining, a research associate at Motu Economic and Public Policy Research and part of the RESET Network management team, was in charge of recounting the experience of the oceanic nation, whose journey began in 2008 with the implementation of this carbon pricing instrument, without a previous pilot phase, which has involved numerous subsequent adjustments. As she explained, the process has required flexibility and adaptability in the face of a changing political and economic environment, which has also led to fluctuations in the price of the tonne of carbon emitted, from 20 to 88.5 New Zealand dollars.

“It seems to me that an emissions trading system is a tool that is better adapted to market changes than others,” Leining said. She added that this instrument can be adapted to smaller markets without losing effectiveness, allowing progress in mitigation at a lower cost, although he acknowledged that social co-benefits “may take time.”

Leining stressed that these systems do not respond to “one size fits all” or “an exact formula.” Therefore, it is essential to design them tailored to each country or jurisdiction, considering the characteristics of its productive sector and market.