New Zealand will review the provision of free climate pollution credits to local industry in a move to stop over-allocations to some businesses and encourage decarbonisation, the government said on Thursday.
Currently, New Zealand provides free climate pollution credits to businesses whose international competitiveness is affected by the country's Emissions Trading Scheme.
However, some businesses are receiving more support than needed as their emissions costs are based on old data, the Ministry of the Environment said.
"From 2024, our biggest polluters will receive only the pollution credits they need – making sure they play a major role in meeting the government's second emissions budget," Minister of Climate Change James Shaw said in a statement.
"The changes will remove a major obstacle to innovation, to industrial decarbonisation and the proper functioning of our carbon market," he added.
As well as basing allocations on new data, the minister will have the ability to review allocations where there is evidence of over-allocation. Allocations will be reviewed every 10 years.
New Zealand is targetting net zero emissions by 2050 excluding agriculture emissions, which are being targeted by a separate scheme.