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What is your view on the
Regulation in Carbon markets is important, and the
regulation of NZUs?
Government is looking to strike a balance that’s fit for the
specific features of the NZ ETS secondary market.
The Market Governance work programme wil look to
address these ongoing matters, I cannot discuss the
contents of that work programme today.
Do you agree that the NZU It’s useful to monitor and learn from other jurisdictions with
Carbon market should align ETS regimes that are similar to New Zealand’s. At the
with Australia/UK/EU?
same time, it’s important to recognise New Zealand’s
unique characteristics, such as the role forestry (which is
a factor in other ETSs, albeit not to the same extent as
New Zealand), and to craft solutions that are fit for our
Scheme.
What is your view on the
Futures product development is often referenced as a
ASX’s proposed NZU
sign of improving market maturity. I am also mindful of the
futures product?
need to monitor new products coming to market and MfE
officials will assist with this.
What is the government’s
Australia’s climate-related disclosure requirements are stil
position on aligning with
under consideration by their Parliament. Officials wil
Australia’s climate-related
undertake a review of capital markets settings later in the
disclosures?
year once we have more certainty over the proposed
Australian legislation and information from New Zealand’s
existing regime.
9(2)(f)(iv)
9(2)(f)(iv)
What’s the government
I am keen to strengthen the VCM and unlock private
position on the NZ VCM?
investment in high integrity domestic mitigation that
delivers wider biodiversity benefits, supports businesses
meeting their climate goals and contribute towards New
Zealand’s NDC. The Government is currently forming its
work programme around the VCM.
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9(2)(g)(i)
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Appendix 2: Briefing: NZ ETS Market Governance, issues
and options to progress
Refer to at achment for copy.
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Appendix 3: Table comparing the New Zealand, Australia, United Kingdom, and European
Union carbon markets
New Zealand
Australia
United Kingdom
European Union
Nature of market
Beginning in 2008, the NZ
The Australian Safeguard
Beginning in 2021, the UK
Beginning in 2005, the EU
ETS covers al sectors of
Mechanism (SMC) and
ETS covers the domestic
ETS covers the maritime,
New Zealand’s economy
Carbon Credit Unit (ACCU)
aviation, power/energy, and
domestic aviation,
apart from agriculture.
Schemes cover the waste,
industrial production sectors. power/energy and industrial
domestic aviation, transport, The UK was previously in
production sectors.
The NZ ETS has generated
and industrial sectors of the
the EU ETS but the
NZD $3.5 bil ion since
economy. Although they
domestic scheme was set up 9(2)(g)(i)
auctions began.
have undergone significant
following the UKs departure
reform in recent years, they
of the EU.
were first introduced in 2015
and 2013 respectively.
9(2)(g)(i)
9(2)(g)(i)
Auctions are “reverse”,
meaning that the
government pays to
incentivise emissions
reduction projects. As a
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result, the Australian carbon
market does not generate
revenue for the government.
Market infrastructure
The NZ ETS register is
We recently met with
The UK ETS maintains a
The EU ETS maintains a
operated by the
Australia’s Clean Energy
central registry.
centralised registry.
Environmental Protection
Regulator (CER), an
Authority.
independent statutory
Both auctions and
EU ETS auctions are
authority that administers
secondary market trading
conducted by the European
Auctions are conducted by
regulatory schemes
are managed by the
Energy Exchange (EEX).
NZX, on contract to MfE.
including the ACCU
Intercontinental Exchange
Scheme. From that meeting, (ICE). Participants may also EEX also provide a platform
Secondary market trading
we understand the CER is
trade OTC.
for secondary market
occurs “over the counter”
currently in the process of
trading, alongside ICE,
(OTC), bilateral y between
delivering a new, modern
ENDEX, and Nasdaq.
two parties, and on three
digital register, that wil be
privately provided
able to hold several different
platforms/exchanges
unit and certificate types,
(Jarden, Carbon Match and
including ACCUs.
EMS Tradepoint).
Following an independent
review of the ACCU scheme
in 2022, the government is
implementing al 16 of the
review’s recommendations.
Part of this included a new
Australian register which will
have the potential to enable
connectivity with trusted
digital carbon trading
platforms. The CER also
plans to consult publicly to
help determine the need and
scope for the establishment
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of a government funded
platform/ exchange.
We understand from
stakeholders that Australia’s
current privately provided
exchanges lack the
functionality of New
Zealand’s three
exchanges/platforms.
Market regulation
The framework for
ACCUs are classified as
UK Al owances (UKAs) are
European Al owances
monitoring trading in the
financial products, and some classified as financial
(EUAs) are classified as
NZU market is limited.
participants require a licence products.
financial instruments.
to buy and sel in the market.
There is no dedicated
Secondary market
The European Commission
monitor of market behaviour,
participants trading over the is responsible for regulating
no market-wide standards,
ICE must meet the
EUA trading on the
regulation or code of
requirements of ICE
secondary market.
conduct, and no specific
regulations.
market enforcement agency.
NZUs are not treated as
financial products.
Furthermore, unlike
Australian ACCUs, which
can be used for both
compliance and voluntary
cancellation, NZ regulations
don’t al ow ful transferability
of NZUs
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