The country’s first limit on sales of domestic carbon credits has been blown, due to the high price of our carbon.
This year, the government set a limit on the sale of government permits to produce greenhouse gases. All sectors except agriculture need to buy permits – and sales were 19 million tons. The government is using rising carbon costs to encourage polluters and convert them into green fuels.
But after the auction price went up to ڈالر 50 per tonne, the government effectively backtracked on the emission trading scheme by releasing an additional 7 million units.
To keep prices from skyrocketing, the government set a ر 50 guard rail for the rest of the year. The additional release of the units began when many businesses were prepared to pay more than $ 50 to allow the release of a ton of carbon dioxide, which increased the price before that point.
The government said the additional pollution would be offset by future cuts. This will reduce the number of units available for auction in the coming years.
Price protection did not completely stop the shock. Auction participants ended up paying 53 53.85 per tonne – about 20 20.20 more than a year ago. There will be another auction in December. Since all 7 million additional units were sold this time around, there are no additional security measures in place, so bids could increase further.
This rising cost is a feature of the government’s plan to cut carbon, not bugs. It set a greenhouse budget for the entire country: not equal to 71.8 million tons of carbon dioxide in 2021.
Agriculture, which does not yet have a cap or emissions cost, is expected to produce 39 million tonnes – 32.8 million tonnes.
From there, the government deducts units that provide free emissions to exporters and exporters each year, e.g. New Zealand steel factory, Rio Tinto’s tie-point aluminum smelter and methanex chemical plants..
It released 24.4 million tons. But there are already a lot of units floating in the system, which have been shut down before the caps are put on by the big polluters and forest owners. To encourage them to trade and surrender, the government chose to sell only 19 million units, which were split into four auctions this year.
Carbon prices were expected to rise in response to the new limited supply. But to prevent prices from going too high or too low, the government introduced guard rails. The upper guard rail was set at $ 50, and an additional 7 million units could be sold if bids exceed that amount.
AUT Climate Change researcher David Hall said price stability gives businesses confidence in their decisions, such as buying expensive zero-carbon assets.
“Then there is the cause of the political economy. Politicians are worried that if the price is allowed to run, they will face election results.
Nevertheless, the purpose of this mechanism was to be rare.
For Hall, the fact that the release was only launched at the third auction shows that the Emissions Trading Scheme is not working. “If these regulators themselves are not behaving as expected, it seems very difficult. It has become more complicated.”
Hall said some auction participants do not produce carbon pollution. These can be mediators for issuers or investors who want to make a profit. “It’s hard to tell – is this speculative behavior?”
Currently 4.5 million units are to be sold in December.
“The next auction could be a real reflection of what the market is aiming for,” Hall said. “Now that there are 7m extra units, which means 7 million extra rights are excluded, that could be a substantial supply … and the price could actually come back.”
Additional sales put the country on track to reach 32.8 meters, although this will not be confirmed until then. All polluters will report next year..
It also scraps plans to reduce the existing reserves of government units to 5.4 million.
But Climate Change Minister James Shaw said he was determined to strike a balance. “Officials are currently considering the best way to achieve this, including changing the amount of units available for purchase at a future auction.”
Next year, 26.3 million units will be sold at auction, based on the Climate Change Commission’s proposed carbon budget, with another 7 million in reserve. In January, the upper price rail. Will change from $ 50 to 70., And will continue to increase every year.
By 2026, it will sit at. 110.15.
Shaw said if prices begin to be monitored after 2022, and exceed the annual carbon budget, the government will look elsewhere to find emissions savings.
This crown could plant trees on the ground, or, in theory, buy emissions savings from other countries. World Can’t agree on rules For this type of trade, however, the purpose of the UN Climate Summit in November is to discuss an arrangement.
Hall said, therefore, as well as exposing the effectiveness of the Emission Trading Scheme, Guard Rail would cost taxpayers financially.
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