S01E04 - The ETS: A Struggling Approach to Reducing Emissions?
Yup, it sure is struggling
Summary
We discuss the emissions trading scheme (ETS) and its role in reducing greenhouse gas emissions. The interview explores the purpose of the ETS, how it works, the issue of carbon credits and forestry, and the challenges of pricing agricultural emissions. The ETS is supposed to work by putting a price on greenhouse gas emissions to drive climate change mitigation.
Highlights
0:00-0:31: Introduction to the topic and interviewee’s background as an economist at Berl, an advisory organization in New Zealand.
1:03-2:41: Explanation of the emissions trading scheme (ETS) and its purpose in reducing New Zealand’s emissions to meet the Paris climate agreement goals.
5:45-6:30: Discussion on the pricing of carbon credits and the issue of stockpiling in the ETS, as well as the limited coverage of agricultural emissions.
8:05-9:01: Highlighting the importance of pricing emissions to encourage industries to reduce their carbon footprint and the need for a comprehensive approach to climate change mitigation.
10:02-11:21: Examining the dilemma of pricing emissions and the potential impact on local food prices, global competitiveness of farmers, and the overall economy.
13:07-14:03: Emphasizing the significance of New Zealand’s environmental reputation and the potential consequences of not taking action to reduce emissions.
Key Insights
The emissions trading scheme (ETS) is a key tool for New Zealand to reduce its emissions and meet its commitments under the Paris climate agreement. It puts a price on greenhouse gas emissions and encourages industries to find cleaner alternatives.
The ETS aims to reach net zero emissions by 2050 and focuses on domestic climate action. It allows industries to emit a certain amount of emissions but requires them to purchase carbon credits (NZUs) for anything emitted above the limit.
Forestry plays a crucial role in the ETS as it sequesters carbon and generates carbon credits. However, the current modeling suggests there may be an oversupply of carbon credits, and not all emissions, such as agricultural methane, are priced.
The ETS is just one component of a comprehensive approach to climate change mitigation. It needs to be part of a wider system that includes pricing agricultural emissions and addressing the global impact of emissions.
Pricing emissions presents a challenge as it may increase costs for industries, particularly farmers, potentially affecting local food prices and the country’s balance of trade. Balancing economic considerations with environmental goals is crucial.
New Zealand’s reputation as a clean and green country is important for its exports. Adhering to the ETS and taking action to reduce emissions is not only essential for meeting international commitments but also for maintaining market access and value of products.
The impacts of climate change are already being felt globally, and New Zealand’s commitment to the ETS signifies its dedication to addressing the issue. Pricing emissions is essential to account for the external costs and drive the right decisions for a sustainable future.