Response 646217788

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Submitter details

1. Submitter name

Individual or organisation name (Required)
Ail Advisory

Summary of proposals

1. Do you think the decisions on NZ ETS unit settings announced in December 2022 had any impact on NZ ETS market behaviour?

Please select one item
Yes
No
Unsure
Please explain your answer here
In not following the Climate Change Commission's pricing advice, particularly on the CCR strike price, the NZU market lost confidence and market participation collapsed.

Should NZ ETS unit settings for 2024 and 2025 be updated?

2. Do you think that the proposed update to auction volumes to reflect a change in forestry emissions outside the NZ ETS is sufficient to allow unit settings for 2024 and 2025 to be updated?

Please select one item
Yes
No
Unsure

3. What other special circumstances, if any, do you think exist that might enable updating NZ ETS unit settings for 2024 and 2025?

Please write your answer here
Failure of the March 2023 auction

4. If there are special circumstances, do you think updates to NZ ETS unit settings for 2024 and 2025 are justified and should be made?

Please select one item
Yes
No
Unsure

5. Do you think that updates to NZ ETS unit settings for 2024 and 2025 should occur if NZUs from the cost containment reserve are sold at the June NZ ETS auction?

Please select one item
Yes
No
Unsure
Please explain your answer here
This is consistent with the latest advice from the CCC.

Updating NZ ETS limits for units

6. Do you think the Commission’s updated estimates of forestry emissions outside the NZ ETS are accurate?

Please select one item
Yes
No
Unsure

7. Do you think that an update to calculations, and a corresponding reduction in auction volumes, should be made to reflect this updated estimate?

Please select one item
Yes
No
Unsure

8. Do you think that reductions in auction volumes and limits should occur to reflect the identified discrepancies between emissions reported in the Greenhouse Gas Inventory and the NZ ETS?

Please select one item
Yes
No
Unsure

9. Do you think the status quo approach to stockpile reduction should be retained?

Please select one item
Yes
No
Unsure

10. Should a new sub-step be added this year to address projected impacts on surplus stockpile liquidity rather than addressing it through annual updates to estimates of surplus stockpile liquidity?

Please select one item
Yes
No
Unsure

11. Should adjustments to auction volumes be made to address historic actions?

Please select one item
Yes
No
Unsure

Update price control settings for units

13. To what extent do you believe that increasing the CCR trigger price would influence NZU prices?

Please write your answer here
Increasing the CCR trigger price significantly will have the effect of reducing the number of auction units thus increasing competition and at the same time not adding to the NZU surplus.

14. What do you think of the approach of setting price controls with reference to prices required to deliver gross emissions reductions?

Please write your answer here
Agreed. The ETS must incentivise gross emission reductions and net emissions reductions.

15. What do you think of the proposed auction price floor settings?

Please write your answer here
The option reserve price has to be option 4 at a minimum.

16. Do you think the cost containment reserve should be disabled by having no reserve volume?

Please select one item
Yes
No
Unsure
Please explain your answer here
The CCR should be retained to deal with exceptionally high market prices by having an exceptionally high strike price. However, if the CCR strike price is to be set low (as it is now) then it would be better to disable the reserve altogether.

17. If retained, do you think the cost containment reserve should consist of one or two tiers?

Please select one item
One tier
Two tiers
Please explain your answer here
This is consistent with the latest advice from the CCC.

18. If a technical adjustment is included as part of the stockpile reduction component of auction volumes, should this technical adjustment amount be included in the total cost containment reserve volume?

Please select one item
Yes
No
Unsure
Please explain your answer here
This is consistent with the latest advice from the CCC.

19. If a multi-tier cost containment reserve is progressed, how should the volume of units in these tiers be decided on?

Please write your answer here
Follow the latest advice from the CCC.

20. What do you think of the proposed cost containment reserve trigger price settings?

Please write your answer here
I agree with Option 5. This is consistent with the latest advice from the CCC. Impacts will be minimal and should be dealt with outside of the ETS.

21. Are there further impacts at these prices that should be considered?

Please select one item
Yes
No
Unsure

22. What role should price controls play in containing the level of impacts, and what price control settings would be required for this?

Please write your answer here
ETS pricing should be set completely independently of the level of impacts. The impacts should be dealt with outside of the ETS. This is consistent with the latest advice from the CCC.

23. If prices reached those presented in the cost containment reserve trigger price options above, do you feel that you have options to change behaviours or make new investments to address the impacts?

Please select one item
Yes
No
Unsure

24. Could you change behaviours or make new investments to mitigate the impact of higher prices on yourself?

Please select one item
Yes
No
Unsure