Reforming industrial allocation in the NZ ETS

Overview

The Government is reviewing industrial allocation (also known as free allocation) in the New Zealand Emissions Trading Scheme (NZ ETS).  

Industrial allocation is the provision of free emissions units (NZUs) to industries considered emissions-intensive and trade-exposed (EITE). Its purpose is to reduce the risk of emissions pricing driving EITE firms, and their production and associated emissions overseas.

Read our proposal on reforming industrial allocation in the New Zealand Emissions Trading Scheme [PDF 1.5MB]

Why we are consulting

Current levels of industrial allocation are likely to be unsustainable in the context of New Zealand’s future emissions budgets. There is also evidence that some activities are receiving more NZUs than is necessary to reduce the risk of their relocation overseas. 

We are looking at updating industrial allocation policy by: 

• updating allocation calculations with new baseline years  

• reassessing eligibility with new baseline years and updating the eligibility criteria  

• making other minor improvements such as streamlining processes and the reporting of allocation data.  

We are also gathering public feedback on what shape industrial allocation might take in the future.  

We want to hear your feedback on our policy proposals.