Restrictions proposed on NZ ETS units

  • Nick Smith
Climate Change Issues

The Government today released a discussion document proposing to exclude specific types of international Kyoto units generated from the destruction of industrial gases from the New Zealand Emissions Trading Scheme.

“The ETS Review Panel recommended the Government should urgently consider whether HFC Certified Emission Reduction Units should be ineligible in the New Zealand Emissions Trading Scheme,” Climate Change Minister Nick Smith said. “It noted the European Union is proposing to ban these units from 2013 and Australia is also proposing a prohibition. The proposal in this discussion paper is that New Zealand not allow these particular types of units either from 1 January 2012 or 1 January 2013.

“The Government wants to maintain the integrity of the New Zealand Emissions Trading Scheme. There are legitimate questions about these types of international units. While very few were used in the first surrender period this year, we need to be conscious of changes in the international market and risks into the future.

“The concern about these Kyoto units is that they are generated by the destruction of powerful greenhouse gases like HFC-23 and N2O. The high value for destroying these gases creates perverse incentives in developing countries to manufacture more of them bringing into question the environmental gains.

“The Government is also very conscious of New Zealand being a small market and, if we are alone in accepting these units, our market may be flooded or it may limit our capacity to link with other schemes.

“A decision on whether these units will be excluded from the NZ ETS will be made after consultation closes on 31 October 2011. We want to give scheme participants the opportunity to comment on the proposal but also want to give the market certainty as quickly as possible on the eligibility of these units.”

The discussion document is available at: