in the previous paragraph, participants in the NZ ETS could also use most of the 'Kyoto Units' to meet their surrender obligations. The permitted units were: Assigned amount units (AAUs), Emission Reduction Units (ERUs), Removal Units (RMUs), and Certified Emission Reductions (CERs). However, temporary CERs and iCERS cannot be used, and neither can CERs and ERUs generated from nuclear projects. Consequently, compared to other emissions trading schemes, the NZ ETS is highly linked to the international markets and will be a price-taker. The Sustainability Council called for the existing international emission units established under the Kyoto protocol to be used instead of the New Zealand Units. Allocation of emission units Under the Labour Government's initial proposal, allocation of NZUs would have been by a mix of auctioning and "grandfathering" (free allocation to existing emitters based on historic emissions). Forestry, transport, energy and industry would have had to obtain units by auction. Industries defined as 'trade-exposed' would have received a free allocation of 90% of their 2005 emissions. Agriculture would have received an allocation of units equivalent to 90% of 2005 emissions. In the final version as set out in the Climate Change Response (Emissions Trading) Amendment Act 2008, forest owners with pre-1990 forests were to receive a fixed one-off free allocation of units. Transport (Liquid fossil fuels), stationary energy and industrial processes would not receive any free allocation of units. Trade-exposed industry & energy would receive a free allocation of 90% of 2005 emissions annually to 2018. From 2019 to 2029 the free allocation would phase out at the rate of a 1/12 (8.3%) reduction each year. Agriculture would receive a free allocation of 90% of 2005 emissions each year to 2018. From 2019 to 2029 the free allocation would phase out at the rate of a 1/12 (8.3%) reduction each year. Fishing would receive a free allocation of 50% of 2005 emissions each year from July 2010 to January 2013. Effectiveness of price incentive for emission reduction Professor Jonathan Boston, Director of the Institute of Policy Studies (New Zealand) at Victoria University of Wellington, commented that the 2008 NZ ETS will be less effective in reducing emissions because of political compromises such as the delayed sector entry dates and the extended period of free allocation of emissions units. Dr Suzi Kerr, an economist and Senior Fellow at Motu Economic and Public Policy Research, commented that the NZ ETS would