1 Overview

The New Zealand Emissions Trading Scheme (NZ ETS) is part of the Government’s response to global climate change. It is the primary means by which New Zealand will meet its obligations under international agreements such as the Kyoto Protocol. Under the NZ ETS, some businesses will have a legal obligation to surrender ‘emission units’1 to cover their direct greenhouse gas emissions or the emissions associated with their products. The consequential need to acquire these units will effectively put a price on emissions of these greenhouse gases.

The surrender obligations of the NZ ETS will apply to emissions from stationary energy and industrial processes from 1 July 2010. From this date, obligated firms will be required to surrender emission units to cover their emissions.

The Government intends to give some emission units (called ‘free allocation’) to the most adversely affected firms. This allocation will be targeted at firms that face a significant increase in costs and have a limited ability to pass these costs on to customers. In other words, it will be targeted at those firms that are conducting activities that are both emissions intensive and trade exposed (ie, to international trade which means both imported goods which are made in countries which do not have a price on carbon, and goods exported to countries that have no price on carbon).

In December 2009, the Government launched a consultation on the development of regulations for the allocation of emissions units to industrial sectors under the New Zealand Emissions Trading Scheme. The consultation document, entitled Development of Industrial Allocation Regulations under the New Zealand Emissions Trading Scheme:

  • sought notification of instances where submitters were undertaking activities likely to be eligible for allocation
  • included draft activity descriptions for review and comment
  • proposed requirements for data to be submitted under Gazette notices to establish eligibility and allocative baselines.

The Government received 57 submissions in response to the consultation document (by 5 March 2010). A list of organisations and people that responded to the consultation document is included in Annex 1.

This document summarises the key issues raised by submitters in response to the consultation document. Not every detail raised in submissions is provided in this summary, given that many were points of clarification or addressed other relatively minor aspects. Such details have nevertheless been considered in decision-making (generally with the refinement of the activity definitions with relevant firms).

Given that many submissions covered similar issues, these have been grouped in this summary into the following categories:

  • activities
  • electricity allocation factor
  • revenue rules
  • emissions rules
  • other issues.

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1 A ‘New Zealand Unit’ or other unit created under the Kyoto Protocol.