Reforming industrial allocation in the NZ ETS

Overview

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]

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 also gathered public feedback on what shape industrial allocation might take in the future.  

Webinars

Watch recordings on the proposals on Youtube.

Designing a governance framework for the NZ ETS

Reforming industrial allocation in the New Zealand Emission Trading Scheme

Transcript of Reforming industrial allocation in the NZ ETS webinar [PDF 1.5 KB]

What happens next

The results from this consultation, alongside further policy analysis, will inform advice to Ministers about policy changes to industrial allocation. These changes are likely to be progressed through an amendment to the Climate Change Response Act introduced in 2022, and later through changes to the industrial allocation regulations.

Any actual changes to allocations or eligibility are unlikely to take effect until 2024.

If you have any queries, please email etsconsultation@mfe.govt.nz.