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David Parker

4 December, 2007

Climate change legislation introduced

Wind turbine construction
Wind turbine construction

Legislation to provide New Zealand with two important tools to respond to the challenges posed by climate change was introduced to Parliament today.

The Climate Change (Emissions Trading and Renewable Preference) Bill establishes a New Zealand Emissions Trading Scheme and legislates for the government’s preference for new renewable electricity generation.

“The Labour-led government believes New Zealand must play its part in the global fight against climate change,” Finance Minister Michael Cullen said today. “We want New Zealand to be the world’s first truly sustainable nation and we are committed to providing the sensible leadership to make that happen.

“The Emissions Trading Scheme establishes a market which provides incentives to reduce greenhouse gas emissions. It will do so while maintaining economic flexibility, equity, and environmental integrity at least cost in the long term,” Dr Cullen said.

Different sectors will be phased into the scheme over the next five years, and the assistance to help industry and agriculture adjust to the scheme will continue to 2025. The government is also developing proposals to assist households.

“Since announcing the scheme in September, the government has relaxed the penalty regime and set up a process to develop allocation plans. We have also worked closely with business, industry and community groups, and Maori on some key issues, particularly around pre-1990 forestry, assistance, and aspects of the carbon market,” Climate Change Minister David Parker said.

“Further engagement will occur over the next year before these issues are settled. The select committee process will be important for further refinement and improvement. The legislation also provides for a review of the ETS, which must consider the allocation model in the context of the emissions pricing policies of major trading partners.”

The government’s preference for new renewable energy generation will be achieved through a 10 year restriction on new baseload fossil-fuelled thermal electricity generation, except to the extent required to ensure the security of New Zealand’s electricity supply.

This takes effect through a new part 6A added to the Electricity Act 1992. The Bill’s provisions will apply to any proposed thermal generation above 10 megawatts that uses more than 20 percent of fossil fuels as its fuel source.

“We have already said that we expect State-owned generators to heed the government’s message that all new baseload electricity generation should be renewable. That expectation remains.

“This measure gives legislative backing to the policy outlined in the New Zealand Energy Strategy, and ensures privately-owned and publicly-owned generators operate on a level playing field,” David Parker said.

Exemptions to the prohibition will be possible in some circumstances, including when thermal generation is appropriately mixed with renewables or based on waste products, where it is needed in an emergency or to ensure security of supply, or where the needs of isolated communities are most logically met by thermal generation.

The Electricity Commission will recommend whether exemptions are warranted.

Addressing climate change is an important aspect of New Zealand’s economic transformation agenda, and is essential to our biologically-based economy, Dr Cullen said.

“There are real opportunities in adopting a more sustainable approach. Important sectors of the economy – notably tourism, viticulture, and agriculture - are already doing so.

“Our green credentials must be rock solid to compete in a global market place where proven sustainability can be a point of competitive advantage. The Labour-led government is showing leadership by making sure New Zealand is at the forefront of this new way of thinking,” Dr Cullen concluded.


More Information


  • See attached factsheet and Q&A on the Bill.
  • A copy of the Bill is available at the Parliament website — please click here.

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