Major carbon emitters – including fuel providers and electricity producers – are set to lose a subsidy that allows them to offset half of their emissions.
Climate change minister Paula Bennett’s budget announcement wasn’t a surprise – not having to subsidise major emitters without export competition will save the government a massive $365m a year, based on a carbon value of $12 per tonne.
The one-for-two subsidy was a temporary measure introduced during the global financial crisis to soften the financial blow of the ETS while businesses were struggling.
“The subsidy will be phased out over three years to give businesses time to plan and adjust, to support a more stable market,” said Bennett.
“This is a significant step in helping New Zealand meet its ambitious target of reducing emissions to 30 per cent below 2005 levels by 2030. More importantly, it will support our efforts to grow a lower-emissions economy.”
