Edition 81, August 2010

New Zealand emissions trading scheme moves to next phase

New Zealand emissions trading schemeThe New Zealand Emissions Trading Scheme (NZ ETS) is a national all-sectors all-greenhouse gases emissions trading scheme that has moved to the next phase of implementation. The scheme has enjoyed bipartisan support having been first legislated in September 2008 by the then Labour government, and amended in November 2009 by the current National government.

Although the NZ ETS covers all sectors, individual sectors of the economy have different 'entry dates' when their obligations to report emissions and surrender emission units have effect. Forestry, a net sink which contributed net removals of 19% of NZ's 2008 emissions, entered on 1 January 2008. The stationary energy, industrial processes and liquid fossil fuel sectors (45% of 2008 emissions) entered the NZ ETS on 1 July 2010. Methane and nitrous oxide emissions from agriculture (47% of 2008 emissions) are scheduled to enter the scheme from 1 January 2015.

Tradable emission units will be issued by several methods. The fishing sector will receive a free allocation of units on a historic basis, 90 per cent of their 2005 emissions. Pre-1990 forests will receive a fixed free allocation of 60 emissions units per hectare. Allocation to emissions-intensive industry, and agriculture will be provided on an output-intensity basis. For these two sectors, there is no 'cap' as there will not be a set limit on the number of units that may be allocated. The number of units allocated to eligible emitters will be based on the average emissions per unit of output within a defined 'activity'.

A transition period will operate from 1 July 2010 until 31 December 2012. During this period the price of New Zealand Emissions Units (NZUs) will be capped at NZ$25. Also, one unit will only need to be surrendered for every two tonnes of carbon dioxide equivalent emissions, effectively reducing the cost of emissions to NZ$12.50 per tonne.

The NZ ETS is Part 4 of the Climate Change Response Act 2002, which has the purpose of reducing emissions from business-as-usual-levels and fulfilling New Zealand's international obligations under the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol.

For more information visit http://www.climatechange.govt.nz/

This page was generated on 20 August, 2010