Price floor for carbon not good for New Zealand

Restricting prices at the lower end of the carbon market would be self-defeating, says BusinessNZ.

The price on European carbon credits have fallen recently, leading some to call for a floor on the carbon price in New Zealand.

But BusinessNZ Chief Executive Phil O’Reilly says that would harm New Zealand’s interests.

“New Zealand’s emissions trading scheme lets companies reduce their emissions within a market system - with a price ceiling to protect New Zealand companies’ international competitiveness.

“Now, with recent low carbon prices, some want a price floor as well.

“However this would be counterproductive. It would increase the price we pay for carbon, raising new competitiveness problems for New Zealand businesses. Meanwhile, it would not necessarily encourage more emissions reductions and would be complex to set up and administer.

“But it would definitely introduce uncertainty for investors and harm prospects for ongoing growth of the carbon market.”

Mr O’Reilly said there was no need for hasty interventions in the design of the emissions trading system and the market should be left to do its job.