New Zealand needs carbon tax to cut emissions

20/11/2024 17:30

        A study published on Wednesday showed a carbon tax is the most effective way for New Zealand to cut emissions while supporting a stable economy.
        
        While all policies caused some short-term welfare losses, a carbon tax was gentler on New Zealanders' welfare and wallets overall, said researchers from the University of Auckland after comparing the effects of three environmental policies -- carbon taxes, emissions trading schemes (ETS) and emission intensity targets -- on New Zealand's economy.
        
        Although carbon taxation may increase the cost of living, particularly by increasing food, transportation and energy prices, the revenue raised can be used to mitigate some of the subsequent burdens faced by households through income tax rebates or direct transfers to struggling families, said Emilson Silva, director of the University of Auckland's Energy Center.
        
        A carbon tax could work well alongside the current ETS under which agriculture is exempt, the researchers said.