Carbon credit supply might need to be cut as efficient furnace comes online

Posted: 15 May 2024

When NZ Steel's new electric arc furnace starts working in around 2027, hundreds of thousands of tonnes worth of permits to pump out carbon dioxide that the old furnace would have needed to cover its coal use will be up for grabs.

These could be sold to other emitters, lowering pollution prices and lowering incentives for other companies to go cleaner, says the ministry.

But the deal with Labour to help fund the furnace was not done when the auction volumes were set for 2025-29. The unexpected win could lead to more 'surplus' carbon credits being available in the carbon market than expected, at lower prices, lowering incentives for companies to cut greenhouse gases, according to the ministry's consultation document.

Read more on RNZ.