COMMENT:

There is a gaping hole in New Zealand's main mechanism for addressing climate change, the emissions trading scheme.

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It bedevils other carbon pricing schemes as well. It is how to protect emissions-intensive but trade-exposed (EITE) sectors from potentially lethal competition — whether that is in export or domestic markets — from international competitors which do not face a carbon price.

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The risk, in the jargon, is "leakage". That happens when carbon pricing results in production moving to countries with higher emissions intensity but lax environmental standards.

The

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