Failed ETS Auctions Leave $1.4b Debt Hole

Failed ETS auctions are now costing New Zealanders real money. Treasury confirms that when fewer carbon units are sold than forecast, Crown debt rises. The Greens say Luxon’s climate retreat has left a $1.4 billion hole.

The Green Party has revealed Luxon’s failed climate policies have created a $1.4 billion fiscal hole, after the Government’s retreat on climate caused the carbon auctions to collapse and the cash it was banking on never arrived.

“Nicola Willis and Christopher Luxon lecture New Zealanders about fiscal responsibility and the dangers of debt while actively tanking climate policy, costing us all at least $1.4 billion more in debt,” says Green Party Co-leader Chlöe Swarbrick.

“This fiscal hole is entirely self-inflicted, with carbon market leaders themselves being clear ETS auctions are failing because Luxon’s Government has consistently undermined confidence and certainty in its climate policies.

“It means more than a billion dollars the Government had banked on to balance their budgets have not arrived in the last two years. Our questions to Willis’ office shows she knows this means the Government is taking on more than a billion dollars additional debt as a result.”

Green Party analysis of Treasury’s financial statements shows eight of the last ten quarterly carbon auctions have failed to clear since the Government took office, with only the March and December 2024 auctions actually selling any units. The $1.4 billion is the cash the Government forecast it would receive but lost because those auctions failed, across the financial years ending June 2024, 2025 and 2026.

When failed ETS auctions turn into more debt

“Luxon’s Government shredded climate policy when they came to office, telling us all to not worry about it, because the market would sort it out. Then they broke the market. Now they’ve quietly borrowed more than a billion dollars to cover their tracks.”

“Last year, the Greens found hundreds of millions of dollars in a fiscal hole the Government failed to account for with their KiwiSaver changes. Today we’re showing they’ve taken on more than a billion dollars in extra debt thanks to their active steps to undermine climate action.”

So much for the ‘good economic managers’

“If this Government can be said to have anything resembling a plan for this country, it’s not for the long-term wellbeing of our people or environment. It’s short-term tactics to line the pockets of their corporate mates.

“Can we finally stop letting the National Party pretend they’re ‘good economic managers’?” says Swarbrick.