New Zealand Emissions Trading Scheme - ETS

The New Zealand Government is a signatory to the Kyoto Protocol for greenhouse gases and is managing it’s commitments via the introduction of the New Zealand ETS. “ETS” is the acronym for “Emissions Trading Scheme”.

The introduction of the New Zealand ETS imposes a liability on New Zealand industries that release large amounts of CO2 and other greenhouse gases into the atmosphere. The scheme introduces a price on greenhouse gas emissions to provide an incentive for people to reduce those emissions and plant forests to absorb carbon dioxide.

Producers in these industries (and some importers) are required to report emissions and buy carbon permits based on the amount of CO2 (and other greenhouse gases) or equivalent they emit to atmosphere or that is embedded in the products they sell.

“The New Zealand scheme covers emissions of the following six greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hyrdofluorocarbons (HFCs), perflurocarbons (PFCs), and sulphur hexafluoride (SF6). These are the greenhouse gases covered by the Kyoto Protocol.

Timeframes for sectors to enter the trading emissions scheme:

Sector	Voluntary Reporting	Mandatory Reporting	Full obligations
Forestry	-	-	1 January 2008
Transport fuels	-	1 January 2010	1 July 2010
Electricity production	-	1 January 2010	1 July 2010
Industrial processes	-	1 January 2010	1 July 2010
Synthetic gases	1 January 2011	1 January 2012	1 January 2013
Waste	1 January 2011	1 January 2012	1 January 2013
Agriculture	1 January 2011	1 January 2012	1 January 2015

The next phase of Emissions Trading Scheme (ETS) comes into effect in New Zealand on the 1st July 2010.

The reporting obligations started on 1st January 2010 (for some industries refer to the table above) and the obligation to obtain permits starts on the 1st July 2010. For the first 18 months from 1st July 2010 (the transition phase) affected participants will be able to buy permits or emission units from the Government for a fixed price of $NZ25 and will only have to surrender 1 permit for every 2 tonnes of emissions they produce. Thereafter, one emission unit will be equal to one tonne of emissions. After the transition phase, the price of an NZU will be determined in the trading market and will tend to match the international price of emission units.

Elgas’ LPG suppliers in New Zealand are passing the associated ETS costs on to Elgas. Elgas is passing these associated ETS costs to customers.

Initially, the scheme requires the liable producers to purchase the permits.

What makes up the ETS LPG Charge?
The charge covers the:
1) Embedded CO2 equivalent in the LPG Product resulting from combustion use
2) Emissions resulting from the production of the LPG by the producers
3) Emissions resulting from bulk haulage to the customer or filling plant bulk tanks (related to the combustion of diesel fuel in the haulage truck)
4) Emissions resulting from the generation of the electricity consumed in cylinder filling
5) Emissions resulting from the transport of cylinders to/from the customer site(related to the combustion of diesel fuel in the truck)

Where can I find out more about the ETS?
The New Zealand Government climate change website provides extensive literature about the ETS Scheme. Click here for more information www.climatechange.govt.nz/emissions-trading-scheme/