This chapter starts with overviews of diffusion and domestic influences on climate policy and events surrounding the adoption of the New Zealand Emissions Trading Scheme (NZ ETS). It analyses factors that shaped its adoption and main design features, paying particular attention to interactions between international and domestic influences on the initial design and evolution of the scheme. The design features are: Ambition level, Allocation mechanism, Scope (sectors and gases), Linking and external offsetting, Monitoring, reporting and verification (MRV) and enforcement, Price management, and Revenue earmarking. The chapter suggests agendas for future research on diffusion and climate policy design. It shows that national characteristics, policy legacies, party politics, institutional actors and economic interests have all been to be crucial mediators of international diffusion influences. The legacy of previous political efforts on carbon pricing emerged as another important factor shaping the government's room to manoeuvre when adopting the NZ ETS.