Changes to the Emissions Trading Scheme
The Emissions Trading Scheme (ETS) is changing. Find out how these changes will affect you.
The Government has made changes to New Zealand’s Emissions Trading Scheme (ETS) through the Climate Change Response (Emissions Trading Reform) Amendment Act 2020, which became law on 22 June 2020.
The Environmental Protection Authority administers the ETS, including management of the New Zealand Emissions Trading Register (the Register), which is the key tool we use to run the ETS and allow the trading of units.
The changes to the ETS provide us with a wider range of compliance tools to help manage and maintain the integrity of the scheme and ensure it achieves its purpose.
If you are a participant, or have obligations under the Climate Change Response Act 2002, some of these changes will affect you.
Some of the key changes you should be aware of are:
- The amount of the fixed price option has increased from $25 a unit to $35 a unit for emissions and removals occurring in or attributed to 2020.
- Changes to the penalties scheme, including an automatic, non-reducible surrender/repayment cash penalty for each overdue unit, and a behaviour based reporting penalty where an assessment or amendment to an emissions return, by an enforcement agency, has been required.
- Strengthening the compliance regime by introducing infringement offences for low-level offending.
- The phasing out of industrial allocations from 2021.
- Increased transparency through publishing emissions and removal information. Information about penalties incurred by participants where they fail to meet their obligations under the scheme will be made publically available.
- Introducing auctioning into the ETS.
Kyoto units in your account
On 30 November 2020 we will be cancelling legacy units held in private accounts from the first commitment period of the Kyoto Protocol (starting on 1 January 2008 and ending on 31 December 2012).
The units being cancelled are AAUs, ERUs, CERs, and RMUs. If you hold New Zealand issued assigned amount units (NZ AAUs) from this commitment period (NZ AAUs issued for PFSI, NGA, or PRE initiatives), these will be replaced with NZUs as part of this process. Other unit types (ERUs, CERs, RMUs and non-New Zealand issued AAUs) will not be replaced.
In order to carry out this cancellation, we will be restricting Kyoto units for transactions from Thursday 26 November 2020 for the following transaction types:
- Domestic transfer
- Surrender
- Repayment
- Kyoto voluntary cancellation.
If you intend to transfer any Kyoto units before this date, please ensure that transactions are approved by Wednesday 25 November. Transactions containing only NZUs are unaffected and all other Register functions will be available as normal. If you have any questions please contact us.
Terms used in the Emissions Trading Scheme
Timing of changes
On 23 June 2020 a number of changes were made to the ETS. These included operational and technical changes to the ETS, as well as changes to the availability of the fixed price option (that is, the ability to pay money rather than surrendering units).
On 1 January 2021 further changes come into effect. These include the changes to the penalties, including for reporting errors and failures to surrender units by the due date. The Ministry for the Environment are developing regulations to create the infringement offences.
We will continue to communicate about the changes to the ETS.
Reforming the New Zealand Emissions Trading Scheme - Ministry for the Environment website
Find out more about ETS improvements for forestry - Ministry for Primary Industries