The New Zealand ETS – Open Problems

Abstract

Prior to the introduction of New Zealand's emissions trading scheme, there was a lot of concern about the impact of increased energy prices on trade exposed industries. New Zealand needs these firms to be competitive in a global market place, while still incentivising a reduction in CO2 emissions. It was determined that firms would be compensated for the increase in electricity prices (the level of compensation would decrease over time). However, in order to do this fairly we must be able to estimate how much electricity prices will rise due to carbon charges. In this talk, we will present some models which examine the possible impacts of carbon charges on electricity markets.