How are liquid fossil fuel suppliers affected by the NZ ETS?
Since 2010, liquid fossil fuel suppliers have had an obligation to report their activities and surrender New Zealand Units (NZUs) or equivalent overseas emission units under the New Zealand Emissions Trading Scheme (ETS).
Fuels covered under this category are; petrol, diesel, aviation gasoline, jet kerosene, light fuel oil and heavy fuel oil. Emissions from fuel used for international aviation and marine transport are exempt, consistent with the Kyoto Protocol.
Like many other parts of the Scheme, the ETS obligation for liquid fossil fuels applies as far up the supply chain as possible; at the point that a fuel supplier takes fuel from the refinery or imports it. Private citizens, such as motorists, are not directly involved.
The only exception to this, is an option for large purchasers of liquid fossil fuels to participate voluntarily or "opt-in" to the ETS. More information about opt-in participants of this type can be found in the Climate Change (Liquid Fossil Fuels) Regulations 2008.
Liquid fossil fuel participants are required to record information about fuel imported or removed for home consumption during each year using methods in the Climate Change (Liquid Fossil Fuels) Regulations 2008.
The Regulations provide emissions factors for each type of liquid fossil fuel, and set out how a participant must use this information to calculate their emissions for their annual emissions return.
Once an emissions return has been completed, a liquid fossil fuel participant will be required to surrender emissions units corresponding to the amount of emissions reported to the Emissions Trading Scheme.
Suppliers of liquid fossil fuels do not receive an allocation of NZUs because they are not trade exposed and are able to pass the costs of their ETS obligations on to their customers.
Climate Change (Liquid Fossil Fuel) Regulations 2008
Stationary Energy and Industrial Processes and Liquid Fossil Fuels Regulations – 2010 guidance update