Research on emissions and the New Zealand Emissions Trading Scheme

The Ministry for the Environment (now the Ministry for Cities, Environment, Regions and Transport (MCERT)) commissioned NZIER to investigate the effectiveness of the Emissions Trading Scheme (ETS) on gross greenhouse gas (GHG) emissions reductions. The research was done in two parts: a qualitative part via stakeholder interviews and a quantitative part via updated marginal abatement cost curves (MACCs).

Abatement potential in the MACCs was divided into three groups: low-cost measures (including negative-cost measures), mid-cost measures and high-cost measures. Relative to 2020, the 2025 MACC shows a larger share of abatement potential in the low-cost zone, a smaller share in the mid-cost zone, and a slightly larger share in the high-cost zone. More GHG abatement can now be considered low-cost.

However, MACCs do not account for the full costs facing decision-makers, including transition costs (the physical and personnel costs of making changes) and opportunity costs (alternative uses of time and money, which may produce more value for businesses). The ETS was only one of several factors that encouraged businesses to make decarbonisation decisions, but it was typically not the primary driver.

Access the report on the MCERT website here.