$71 carbon price has found zero buyers across six straight auctions

A price with no buyers

The last six government carbon auctions have failed to sell a single unit, and over three years only two of 24 auctions have cleared at all. That is not a market misfiring. It is a market that no longer exists.

The reason is simple arithmetic. The government’s auction floor sits at $71 per unit, while the same NZ units trade on the secondary market for well under that. At the 3 March 2026 auction, the Ministry for the Environment’s own monitor report recorded zero bids and zero units transferred while the secondary market closed at $43.90 the same day, a gap of more than $27. The 1.3 million units on offer rolled over to June, which then failed to attract a single bidder for 2.6 million units.

As ACT leader David Seymour put it, “no rational buyer will pay the Government’s price, when the same units are significantly cheaper on the secondary market.” He is right on the mechanics, whatever you make of the politics.

The cost businesses pay anyway

Here is the part that matters for anyone running a business. The scheme failing to function as a market does not mean the cost disappears. The ETS obligation still applies to fuel importers, electricity generators and industrial emitters, and those costs pass straight through to every business that buys petrol, diesel, power or freight.

At a carbon price of around $55, ACT estimates the ETS costs an average household roughly $478 a year. For transport operators, manufacturers and energy-intensive businesses, the exposure is proportionally larger. Meanwhile the government banks zero auction revenue, with ACT putting the forgone take at around $195 million.

That is the lose-lose at the heart of the current settings. Businesses carry the effective carbon cost through higher input prices, the government collects nothing, and the price signal that is the entire point of an emissions trading scheme never fires.

Locking in the gap to 2031

Faced with a floor nobody pays, the government’s response in August 2026 was to extend the price floor schedule out to 2031, with the floor rising to $75 in 2027, $84 in 2029 and $93 by 2031. With the monthly NZU spot index sitting at $54.65 in August, roughly $16 below the asking price, the gap between Wellington’s number and the market is not closing. It is being written into law.

The cost of that is not abstract. Because failed auctions cancel unsold units, real supply is being destroyed. At the December 2025 auction, 5.2 million unsold units were permanently cancelled rather than carried forward.

ACT’s pitch, and its catch

ACT’s climate policy, unveiled on 5 September, would repeal the Zero Carbon Act, scrap the Net Zero 2050 target, remove the minimum auction floor, tie New Zealand’s emissions cap to a trade-weighted average of major trading partners, and return net auction revenue as a Carbon Tax Refund. Seymour frames it plainly: “A small trading nation can’t ignore climate policy, but overdoing it backfires and puts unnecessary costs on Kiwi businesses and households.”

But removing the floor is not a clean fix. Because so many units have been cancelled, the Climate Change Commission warns the scheme could swing from today’s glut to a shortage as early as 2028. Commission chief executive Jo Hendy has flagged “a potential future unit shortfall, which is concerning but uncertain,” noting that “annual auction settings can’t solve the bigger design challenges with the NZ ETS.” Scrap the floor and the price could collapse now, then spike later, the opposite of what ACT wants.

Confidence, not carbon, is the real problem

The deeper issue is trust. When the government uncoupled the ETS from New Zealand’s international pledges in November 2025, the market price plunged overnight from about $50 to as low as $33. Officials then considered cancelling auctions altogether to manufacture scarcity. Repeated policy lurches have made rational participation impossible, which is why, as Mike Hosking observed, “why on Earth would you turn up and pay the Government money?”

Tonight’s auction will almost certainly deliver another round of zeros. The lesson for business is that the scheme needs fundamental redesign, not another year of a floor nobody meets. Until that happens, firms keep paying a carbon cost that funds nothing and signals nothing.

Sources

• Carbon Auction Farce Why ACT Will Cut The Carbon Tax (2026-09-07)
• David Seymour on ACT’s promise to cut the carbon tax and scrap net zero (2026-09-08)
• ACT unveils election climate policy, vows to scrap net zero target and repeal Zero Carbon Act (2026-09-06)
• NZ ETS Interim Auction Monitor Report: 3 March 2026 Auction (2026-03)
• NZ ETS Interim Auction Monitor Report: 3 December 2025 Auction (2025-12)
• Government extends the carbon price floor to 2031 even though nobody is buying at it (2026-08)
• Annual updates to emission unit limits and price control settings (2026-08-05)
• Climate Change Commission warns of potential unit shortfall in NZ ETS by 2028 (2026-04-24)
• Government considered cancelling carbon auctions after policy changes tanked prices (2026-08-20)
• Mike’s Minute: Why didn’t the government drop the carbon auctions? (2026-09-04)