Parker DavidHon DAVID PARKER (Minister for the Environment): Can I thank the Hon James Shaw for bringing this bill to the House. It's the first substantial reform that we've seen to the emissions trading scheme (ETS) since 2008 and it actually counters some of the measures that were passed by the last Government that effectively neutered the ETS.When the ETS was passed in 2008 the price of carbon by the time of the election was about $20 a tonne. The economy was not suffering at all but we had a price signal to reduce emissions. The effective cap on price on that was through the international linkages to the international Kyoto market. There was an oversupply of Kyoto units caused by the US withdrawal from the Kyoto Protocol but because those units had a future value because they were fungible into future emission periods that didn't cause the price of carbon to go to nothing. The Kyoto Protocol's second period never eventuated and countries including New Zealand pulled out of it and I think New Zealand was right to pull out of it. But because of that the excess units that sat in the Kyoto pool had only one home to go to in the world and that was New Zealand.The last Government who had already neutered the effectiveness of the scheme by a two-for-one scheme—so that you only needed to remit one emission unit for every two units of emissions which made no sense—further moderated it by having a $25 price cap. So effectively they caused the price cap to go to $12.50 per unit down from $20 and then they let the price collapse to close to zero because they didn't close the New Zealand system to those Ukrainian hot air units that other people have already talked about. That was an egregious mistake that was left in place by the last Government. It caused major deforestation on the volcanic plateau caused a collapse in forest planting and caused emissions to increase all of which are the opposite of what an emissions scheme is meant to achieve.Their next mistake was that they effectively muted the marginal price signal. The price signal is meant to penalise an increase in emissions and reward decreases. They did neither of those things through their changing of the free allocation methodology for industrial emitters. They then took out the 50 percent of emissions that were included in agriculture and you can see that by the end of that they had effectively dismantled the scheme even though they added in name. So this reform package actually restores it.Since we've come to power in fairness Paula Bennett took away the two-for-one deal and the price for carbon once the system was closed to international emissions units returned to $25 a tonne and the economy hasn't suffered at all for it. Because we're now closed to overseas units you actually have to have another method of setting price other than the international market and that's why this system moves to auctioning with a cost containment reserve which is set at $35. The market won't automatically move there. Indeed in response to one of the other speakers' comments I would note that post-COVID the price for a while dropped to around $20 a tonne which was a market response to the decrease in demand.This does return the ETS to some measure of authenticity and on that basis the Labour Party is pleased to support it.