Why is the Government destroying the ETS?

The Herald reports:

The Government’s decision to prevent the carbon price from rising in line with market expectations is costing taxpayers half a billion dollars.

As at the end of February, the Crown accounts were $486 million more in the red than forecast by the Treasury in December due to the carbon price plummeting. …

Cabinet’s surprise decision to prevent the carbon price from rising saw it fall from $85 in December to a low point of around $53, before rising a little to $59 at the time of writing.

The gyration is primarily concerning because it risks eroding trust and confidence in the ETS – an important tool relied upon to incentivise companies to lower their emissions.

If the ETS is allowed to function properly, it is by far the cheapest and most effective way to reduce emissions. We have had the ETS for 15 years now. The Government should no longer be setting a cap on the ETS price.

If there is a concern about the impact of the ETS on the cost of living, then the answer is to give money back to households through a climate dividend from ETS revenue.