New Zealand Emissions Trading Scheme EPA facts and figures

August 19, 2014

The EPA released 3 reports on the NZETS recently http://www.epa.govt.nz/e-m-t/reports/ets_reports/annual/Pages/default.aspx

Of 45.5 million tonnes or emissions units surrendered for the 2013 compliance year, only 227,000 were NZUs. The balance were UN offsets predominantly ERUs. As of 1 July 2014 there were some 140 million NZUs sitting in private accounts.

The surrender of 45.5 million in 2013 was dominated by the forestry sector with foresters opting out of the NZETS and deforestation accounting for nearly 27m of the 45.5m.

In 2014 the picture is likely to change with a budget rule outlawing the use of non NZU for forest owners to exit the scheme or deforest. Forest-owner have correspondingly become unwilling to part with their NZU when they are now required  to replace like with like. For May 2015 total surrender will also be a lot lower – perhaps < 20 million. Emitters retain the right to use ERU (and CER) right up until mid 2015.


Carbon Tax Repealed

July 26, 2014

Abolition of the Carbon Tax

The Australian Government has abolished the carbon tax.

The carbon tax repeal legislation received the Royal Assent on Thursday, 17 July 2014 and the bills as part of this package are now law, with effect from 1 July 2014.

Abolishing the carbon tax will lower costs for Australian businesses and ease cost of living pressures for households.

http://www.environment.gov.au/climate-change/repealing-carbon-tax

 


NZETS Gaming prohibited

May 22, 2014

The New Zealand Government budget delivered May 15 prohibits forest owners from exiting the NZETS by surrendering non NZU units. Designed to prevent arbitrage by forest owners selling NZU for $3 then surrendering ERU or CER thereby taking a significant margin and existing the scheme the legislation gave no warning to stamp out a practice that is becoming more widespread.

You can still use Kyoto units (including Emission Reduction Units) for harvesting and deforestation of forest land registered in the NZ
ETS; and for repaying over-allocated units until 31 May 2015. You can also resell them to industrial emitters and pre-1990 foresters who are deforesting until 31 May 2015, or sell them to overseas buyers.

for more information refer to the Sustainable forestry bulletin #50

http://www.mpi.govt.nz/Default.aspx?TabId=126&id=2260


Permanent Forst Sinks Initiative PFSI – scheme review

May 18, 2013

We attended a consultation round on the PFSI this week – Sustainable Forestry Bulletin Issue 44 – May 2013

If you are a participant in the PFSI as a forest owner or purchaser of PFSI AAU we strongly suggest you attend the consultation.

Given the recent changes at DOHA and the New Zealand Government’s decision to opt out of CP2 and join nations in a group outside the Kyoto Protocol the Government triggered a notice period to allow PFSI participants to opt out. Notice of opting out must be completed on the correct form by the 30th June 2013

The opting out of CP2 means that in 2012 the Government will not be able to issue AAU to PFSI participants. The reason why AAU were issued in the first place is the PFSI was a revision of the Forest Act 1949 and preceded the NZETS legislation that created NZU units and the ETS to comply with the Kyoto Protocol CP1.

The Government wishes to continue the PFSI post 2015 and will therefore have to issue a different type of credits – but which type? Or should a new type be created?

The consultation meeting in Christchurch was interesting in the facts and opinions offered:

The facts:

  • 88 Projects approved in CP1, 20,000ha under covenant and 1.2m AAU issued
  • Significant co benefits of the PFSI including biodiversity, erosion control, water quality improvement, flood mitigation and cultural benefits
  • Most applications occurred in 2011-2013
  • Indigenous forest dominated in later years comprising 90% of the applications by area

Opinions

There were various discussions on the value of AAU with international units in the cents. However sellers reported PFSI AAU being seen has having integrity and achieving prices above those of an NZU or other kyoto units (CER 0.40, ERU 0.14)

Discussion focused on how these high quality offsets could be differentiated? Discussion covered revisions to the NZEUR and traceability of projects to allow purchasers to see the projects that resulted in the credits being created.

Opinion was divided on what unit should be issued, given all units are supposed to be fungible but this in practice has been rarely correct. A PFSI unit was preferred ahead of issuing NZU on the basis buyers could distinguish the quality at a glance – gold standard CER was raised as an example of this.

EITG view is that irrespective of the unit issued purchasers will need to be educated – whether is a gold NZU or a PFSI unit neither will be immediately understood. This of course is a common theme in New Zealand’s marketing of any product – compare with the ‘kiwifruit’ and then the gold version of the same

PFSI participants need to move quick to get submissions in for 5th June to allow Ministers to receive advice and create policy. Those opting out need to move before the 30th June.


Doha Decisions on Kyoto Surplus Explained by Carbon Market Watch

March 25, 2013

At COP 18 in Doha at the end of 2012, Parties decided how to deal with the large surplus of Assigned Amount Units (AAUs) from the first Kyoto commitment period (CP1) and how to prevent the accumulation of new surplus in the second commitment period (CP2) of the Kyoto Protocol.

Carbon Market Watch just released a policy brief that explains the decisions that were taken in Doha and examines their implications. You candownload the Carbon Market Watch policy brief here. For a shorter article that explains the issue to people not as familiar with the topic, see theCarbon Market Watch newsletter article from March 2013.

The compromise adopted in Doha has two main elements relating to surpluses from the first and second commitment period.

1.    The decision does not limit the carry-over of surplus AAUs from CP1 but puts limits on their use in CP2. It also makes it impossible for countries without a reduction target in CP2 to sell their surplus to countries with a reduction target. In other words, Russia and other countries with surplus that do not join CP2 will not be able to sell units to CP2 countries. To underline their climate commitments, several countries made political declarations that they will not buy AAU surplus from CP1 in CP2.

2.    Countries also decided to restrict the initial assigned amount (the number of AAUs a country initially receives for CP2) in order to avoid the build-up of new surplus. This amendment makes it impossible for countries to accumulate new surplus AAUs. This amendment may set an important precedent for future decisions on target setting.

The decisions on use restrictions of AAU surplus that were taken in Doha are complex. The newCarbon Market Watch policy brief  tries to explain the issues in a balanced way and discusses the impacts of the Doha surplus decisions on the second commitment period and beyond.

Please do not hesitate to send us comments or questions.

Thank you!
Anja Kollmuss on behalf
ofCarbon Market Watch


Consultation on the application of carry-over for New Zealand Emission Trading Scheme Participants

March 4, 2013

The New Zealand Government is seeking feedback on the application of the international carry-over rules within the New Zealand Emissions Trading Scheme (ETS). These rules place a restriction on the number of certain types of units which can be carried over from the first Kyoto Protocol commitment period (CP1, 2008–2012) and be valid for use subsequently. This does not impact on NZUs.

International carry-over rules require units which are not carried over to be cancelled. We anticipate the carry-over of units will occur after the 31 May 2015 ETS surrender deadline. However the Government is consulting on this issue now to provide greater certainty to ETS participants and to allow them to plan their compliance purchasing and surrendering appropriately.

The Government must decide to what extent, if any, New Zealand’s 2.5 per cent international carry-over entitlement for Certified Emissions Reductions (CERs) and Emission Reduction Units (ERUs) is extended to individual account holders.

Information received through this consultation process will allow the Government to better assess the potential impacts on account holders of the various options set out in the consultation document. We recommend that any NZEUR account holder with Kyoto units in their account read through the consultation document. The consultation will be open from Monday 4 March to 5 pm Friday 29 March.

Further information

For information regarding Kyoto units and rules

For information regarding access to international units from 1 Jan 2013


Z Energy in Row over NZETS Charges

February 5, 2013

Confirming a long held belief that energy companies and power companies are charging more than it costs them to meet the NZETS, OceanaGold has refused to pay Z for its diesel citing the fact it is is being overcharged for the carbon content.

In Australia it was made clear by the regulator that it would not tolerate overcharging for carbon, the same sort of comment was made by the New Zealand Commerce Commission. However its been clear to commentators for some time that after the collapse of NZU prices the consumer is still paying much more for their emissions than the real cost of carbon credits. Someone therefore appears to be profiting from this. Is that wrong?

According to the New Zealand High Court, no. In the following release from Scoop http://www.scoop.co.nz/stories/BU1302/S00151/z-energy-in-stoush-over-cost-of-ets.htm the judge appears to see nothing wrong with Z action.

It seems that someone has missed the point that the energy suppliers justified price increases on the back of the NZETS, were warned not to profit, and are alleged to have done just that!

New Zealand consumers should be used to this sort of treatment though, the power companies have been repeatedly chastised for overcharging consumers for electricity. Any action? Not that we can see, and will it be the same in this case?


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