CARBON PRICE COLLAPSE SHOULD REMIND US OF THE CARBON TAX ALTERNATIVE

The NZBR has long advocated a modest carbon tax for New Zealand at $5-$10 per tonne of CO2 rather than the current ETS for several reasons, one of which was that it would provide greater certainty for firms and households than the vagaries of prices struck in thin ETS markets. It was no surprise in 2008 to see the Australian Productivity Commission recommending much the same for Australia – see for example this 2008 media release here]

This Reuter report of extraordinary volatility this year in the international price for United Nations carbon credits is of interest in this context.  I leave it for readers to assess whether the reported record low is a welcome sign that it is much less costly to achieve given emissions targets than has been thought, or whether it reflects the inability of the authorities to indicate with any clarity how many credits will be issued.

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