Industrial gas units banned from New Zealand’s ETS

Climate Change Minister Nick Smith today announced the Government is banning some international emissions units from New Zealand’s Emissions Trading Scheme (ETS).

"We are banning international units generated from industrial gas destruction projects involving HFC-23 and N2O because we are concerned that they create perverse incentives that may not benefit the environment. This change is about ensuring the environmental integrity of the New Zealand Emissions Trading Scheme," said Dr Smith.

This decision arises from the 2011 Review of the ETS that recommends that urgent consideration be given to banning the units and a subsequent discussion paper on the issue released in October.

“Australia and the European Union have already announced their intention to ban these industrial gas CERs from their emission trading schemes. It's important that New Zealand does the same or we risk becoming a dumping ground for units of questionable environmental benefits," said Dr Smith.

"The Government is also cognisant of the importance of market certainty. Units already in the New Zealand ETS register will be able to be used for meeting surrender obligations. Emitters who have already committed to purchase these types of units in forward contracts will be able to use them for surrender obligations until June 2013, providing contracts were entered into prior to today.

“The ETS is the most important tool New Zealand has to reduce emissions and meet our international obligations on climate change but it is complex and will require ongoing refinement.

“We will be monitoring future developments in the Clean Development Mechanism certification process to ensure any units entering the New Zealand scheme are consistent with its purpose.

"These changes have been made by regulation on Monday and take effect today. We are also planning an ETS Amendment Bill in 2012 in response to the Review Panel's report to ensure the scheme meets the Government's overall goal of New Zealand doing its fair share internationally on climate change while minimising costs on households and businesses," said Dr Smith.

A copy of Q&A can be found at:http://www.climatechange.govt.nz/emissions-trading-scheme/building/regulatory-updates/