Submission on the Reforming industrial allocation in the New Zealand Emissions Trading Scheme consultation document

The Federation supports industrial allocation (IA) as a means of reducing the risk of the NZ ETS price driving emissions intensive trade exposed (EITE) firms, their production, and their associated emissions overseas. This emissions leakage would have negative social and economic impacts in New Zealand and could even result in increased global emissions if this production is replaced by another country that is less emissions efficient or operating without a capped ETS. 

When submitting on this consultation document, we would like to note the wider context of regulatory uncertainty in New Zealand. There have been many recent legislative and regulatory changes to not only the NZ ETS and climate change more generally, but also wider policy changes to areas such as industrial relations, immigration, freshwater management, and the Resource Management Act. We are growing increasingly concerned that many of these policies are being designed in silos without regard for the combined impacts on small and medium businesses (including but not limited to farms) and the wider context of business uncertainty these changes are fostering. This regulatory uncertainty has been amplified by the COVID-19 pandemic and the resultant disruption to international supply and logistic chains.