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‘I Know What I Must Do. It’s just …!’Justice in Emissions Trading Design and the Recent Reforms in New Zealand journal article

Elena Aydos, Sven Rudolph, Achim Lerch

Carbon & Climate Law Review, Volume 14 (2020), Issue 2, Page 118 - 127

New Zealand's Zero Carbon Act passed parliament in 2019 with near-unanimous support, setting a new greenhouse gas emissions reduction target to net zero by 2050. At the centre of this commitment are the plans to strengthen the New Zealand Emissions Trading Scheme (NZ ETS). The NZ ETS started with predominantly unjust design features and is now undergoing a significant reform. Getting the details right is not only key to New Zealand's success in reaching its statutory commitments and enabling ambition under the Paris Agreement, but also to ensure that the NZ ETS becomes sustainable and fair. Greenhouse gas cap-and-trade (GHG CaT) program design has been predominantly guided by and analyzed from a traditional environmental economics perspective, with a focus on efficiency and effectiveness. Justice criteria, on the other hand, have been largely neglected. The article contributes to the scientific research on truly sustainable GHG CaT by surveying concepts of justice and proposing a comprehensive set of justice criteria for the design of GHG CaT which can be used to evaluate program design at an early stage of development as well as guide structural reviews of existing GHG CaT. Based on these criteria, the current design of the NZ ETS is evaluated. The analysis reveals that the NZ ETS so far has suffered from major design flaws. While there are promising signs that the scheme will become fairer in the near future, there is still scope for improvement for it to fully comply with ambitious and comprehensive sustainability criteria.

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