New Zealand Reduces Emission Credits by 50% to Strengthen the ETS Market and Achieve Climate Targets

• In 2025–2029, New Zealand will reduce its carbon credits from 45 million to 21 million units.
• To keep the market stable, the government keeps the reserve price and auction parameters as they are.
• The action is intended to coincide with climate objectives and rebuild trust in the Emissions Trading Scheme (ETS).

By drastically lowering the quantity of carbon credits available between 2025 and 2029, New Zealand is acting decisively to rebuild trust in its Emissions Trading Scheme (ETS). The availability of units, which stand for one metric tonne of carbon dioxide or its equivalent, would drop from 45 million to 21 million, the administration stated.

The overabundance of units has resulted in unsuccessful auctions and a declining carbon price, endangering New Zealand’s ability to meet its climate commitments.

It is anticipated that the decrease in units will raise the price of carbon, encouraging companies and people to cut back on their emissions. Although this could result in increased expenses, the government’s modeling indicates that ordinary New Zealanders won’t be significantly impacted.

An important milestone in New Zealand’s climate policy will be reached when the first auction is held in 2025 and the adjustments go into force.