Steep emission reductions are required to meet the Paris Agreement objectives; to the extent that it is feasible to delay further, costs will only increase. These economic considerations are part of the reason why global leaders came together to craft and then ratify the Paris Agreement. To meet the 2°C target of the Agreement with 50–66 per cent probability at least cost, and taking into account the current commitments made by countries in the period to 2030, modelling suggests that carbon dioxide emissions will need to reach net zero by 2060–80s, and that total GHG emissions would have to reach net zero between 2080 and 2001(Rogelj et al. 2016)._{Moreover, these analyses assume benign technological developments in the second half of the century that will allow so-called ‘negative emission technologies’ to turn the world’s emission profile negative. If these technologies do not develop then even greater emission reductions will be required.} Unsurprisingly, economic analysis shows that delaying action, and hence reducing emissions over a shorter time frame to meet the same climate objective, necessitates much more costly and disruptive change, if indeed this is possible at all.(den Elzen et al. 2010)

To help meet the temperature targets of the Paris Agreement, and/or to reflect the economic damage that emissions otherwise cause, numerous countries have developed emissions pricing policy values. These are the emissions prices that these countries consider as needing to be taken into account in policy and investment appraisal. They are derived in one of two ways. In some cases, they reflect an explicit attempt to quantify the damage that an additional tonne of emissions will cause, with the intention that investments or policies should proceed only when the benefits of an intervention exceed all of its costs, including the costs associated with additional emissions exacerbating climate impacts. On other occasions, they are set with the intention of ensuring that emissions fall on a trajectory that is consistent with either domestic policy targets or the temperature goals of the Paris Agreement. While there is often a high degree of uncertainty over how these values are derived using either approach, Figure 3 shows that they imply a profile for emissions prices that is much higher than those currently seen in the New Zealand ETS.