How is the stationary energy sector affected by the ETS?
The stationary energy sector has obligations to report their activities and surrender New Zealand Units (NZUs) or equivalent overseas emission units under the New Zealand Emissions Trading Scheme (ETS).
The stationary energy sector includes all fossil fuels (gas and coal) used in electricity generation and in the direct production of industrial heat, as well as geothermal energy. It does not include energy used for transport, emissions from industrial processes, or heating in commercial or residential facilities (emissions from these sources are considered elsewhere under the ETS).
The specific stationary energy activities that are included in the ETS are:
- importing more than 2000 tonnes of coal in a year
- mining more than 2000 tonnes of coal in a year
- importing natural gas
- mining natural gas (excluding natural gas mined for export)
- using geothermal fluid for generating electricity or industrial heat, where the level of carbon dioxide-equivalent (CO2-e) emissions per annum exceeds 4000 tonnes
- combusting more than 1500 tonnes of used or waste oil for generating electricity or industrial heat
- combusting used tyres or waste for generating electricity or industrial heat
- refining petroleum where the refining involves the use of intermediate crude oil products.
Stationary Energy participants in the ETS are mainly organisations carrying out the ‘upstream’ activities described above, such as coal mining.
Some companies further down the supply chain can 'opt-in' to the ETS, and take on a mandatory participant’s obligation if they:
- purchase more than 250,000 tonnes of coal in a year from coal mining participants
- purchase more than 2 petajoules of natural gas in a year from gas mining participants
For example, an electricity generator using coal can choose to take on the surrender obligation of the mining company it buys its coal from. In these circumstances, the supplier of coal or gas is not liable for these emissions.
The stationary energy sector has been required to report its emissions since 1 January 2010. Participants are required to record their activity in the above fields and submit this information as part of their annual emissions return.
Participants may also be required to supply information about the composition of the energy imported, mined or used, so that an emissions factor can be allocated to it. This factor is multiplied by the volume of energy to give a total emissions figure. Once an emissions return has been completed, stationary energy participants are required to surrender emissions units corresponding to the amount of emissions reported to the NZ ETS.
For more information about emissions returns, please see our main Emissions Reporting page.
The energy sector does not receive an allocation of NZUs because it is not trade exposed and is able to pass the costs of its ETS obligations on to its customers.
Climate Change (Stationary Energy and Industrial Processes) Regulations 2009
Stationary Energy and Industrial Processes and Liquid Fossil Fuels Regulations – 2010 guidance update