NZETS Review Document Published

Consultation on the Government’s proposed changes to the New Zealand ETS

In 2011, an independent panel reviewed the ETS to consider how it should evolve over the next five years. The Panel consulted widely, receiving more than 150 submissions from the public, businesses and NGOs.

The Panel recommended that the Government provide for a gradual transition to full obligations in the short term, but give businesses certainty about when they will face the full cost of their emissions. The Panel also recommended that the Government change aspects of how forestry is treated in the scheme, especially in regard to pre-1990 forests. The ETS also needs to reflect developments on the international front.

A consultation document (PDF, 4.47 MB) has been published setting out the proposed changes and a number of regional hui and public meetings have been scheduled to discuss the proposed changes.

The Government wishes to consult on the following questions:

1. What do you think of the overall package of amendments the Government is proposing to make to the ETS as outlined in the consultation document?
2. Should the Government adjust the level of compensation to pre-1990 forest landowners in light of the introduction of offsetting?
3. If the Government was to adjust the level of compensation, which of the three options for adjusting the second tranche of allocation, as outlined in this document, do you prefer and why?
   1. a full removal of the second tranche of pre-1990 compensation for all eligible landowners
   2. a reduction of the second tranche of pre-1990 compensation for all eligible landowners
   3. a removal of the second tranche of pre-1990 compensation only for those landowners who take up offsetting.
4. If a reduction of the second tranche is your preferred option (option 3b) what do you consider the most desirable way to do this and why?

http://www.climatechange.govt.nz/consultation/ets/

 

 

Is the EUETS working?

To a large extent the EUETS is working in the sense that the 1990 minus 20% target will be met. Why? In part due to the the ETS and also in part slowing economic growth. These are said to be the major drivers behind meeting the target.

So what is wrong? The oversupply of EUA has increased the supply to a point where prices have dropped. The current price according to point carbon surveys is such that carbon pricing is no longer part of an investment decision by emitters. In this sense the EUETS has failed and the regulator needs to reduce the supply of credits. Otherwise the emissions reductions achieved will only be temporary.

How do they do this? In the first place implement more stringent targets such as the 1990 minus 30% that has been mooted. The issue is to implement proper process this will take 18 months, and with Poland objecting may be longer. So an interim ‘set aside’ of some 1.6bn EUA – or some ‘significant number’ has been implemented.

The recent announcements of EU emissions data being less that projected for 2011 have further exacerbated a projected oversupply to 2020 and that has reduced prices to recent lows.

When will the EU regulator act to provide quantifiable measures to restore the carbon market so carbon returns to being part of investment decision making?

Is the case for a 2020 target of 1990 minus 30% compelling?

In the face of announcements that the EU emissions in 2011 fell short of expectations – from twitter Emissions covered by the #EUETS were 1.7 billion tonnes in 2011, down 2.45% on the previous year: http://ow.ly/a1v0t

Is it time to implement the minus 30% option and have a real ETS or have the targets been met already?