Synthetic greenhouse gases
If you're involved in the import, manufacture or removal of synthetic greenhouse gases you may have ETS obligations.
The synthetic greenhouse gases (SGGs) included in the ETS are:
- hydrofluorocarbons (HFCs) – these gases are most commonly found in refrigeration and air-conditioning systems, aerosols, fire protection and foam-blowing equipment
- perfluorocarbons (PFCs) – these gases are most commonly found in refrigeration and air-conditioning systems
- sulphur hexafluoride (SF6) – used in gas-insulated switchgear and circuit breaker equipment and in scientific applications.
The New Zealand Emissions Trading Scheme is designed to place the point of obligation as far upstream in the supply chain as possible. This means if you manufacture or import HFC or PFC in bulk you’re required to be registered with the ETS. For example, if you import canisters of these gases (rather than importing goods which contain these gases) you are required to be a participant.
If you use SF6 in operating electrical equipment (above the 1 tonne threshold) you’re also required to be registered with the ETS.
Importers of HFC and PFC in goods and motor vehicles will face a carbon price through the Synthetic Greenhouse Gas Levy and are not required to be participants in the ETS.
If you are an importer or exporter of hydrofluorocarbons (HFCs) under the ETS you will now have additional responsibilities under the Kigali Amendment.
It is an offence for users of SGGs to knowingly release them into the atmosphere without reason.
Importers of HFCs and PFCs and users of SF6 have reporting and surrender obligations under the ETS. Each gas has a Global Warming Potential (GWP) value which is set by how much it affects the atmosphere when released. SGG participants are required to record information about gas imported, manufactured or used during each year and submit this as part of their annual emissions return. This figure is then multiplied by the GWP value of the specific substance imported, manufactured or used to give a total emissions figure.
Once an emissions return has been completed, SGG participants will be required to surrender emissions units corresponding to the amount of emissions reported to the ETS.
Importers of HFC and PFC in goods and motor vehicles do not report in this way, as these are covered by the SGG Levy.
Importers and users of SGGs do not receive an allocation of NZUs because they are able to pass the costs of their ETS obligations on to their customers.
However, those who re-export or destroy SGGs are eligible to receive NZUs. This isn't considered part of the ETS allocation process but is classed as a removal activity.
Exporters and removal activities
If you export or destroy HFCs or PFCs you may be eligible to receive NZUs, provided you meet the prescribed eligibility criteria.
To receive any NZUs for which you may be eligible, you must register as a participant in the ETS.
You can find out more about receiving NZUs, as well as your record keeping and reporting obligations, in our Removal activities section.
The Synthetic Greenhouse Gas Levy
Since 2013, importers of HFC and PFC contained in goods and motor vehicles have faced a carbon price through a levy.
The levy is linked to the price of carbon and is updated annually by the Ministry for the Environment to reflect prevailing ETS costs. Levy rates vary between items and depend on the specific gas, the amount of gas and its global warming potential (GWP). Current rates are listed in the Schedule of the Climate Change (Synthetic Greenhouse Gas Levies) Regulations 2013.
The levy on motor vehicles applies when a motor vehicle is first registered for on-road use in New Zealand (when a car receives its licence plates). This part of the levy is administered by the New Zealand Transport Agency (NZTA). Different levy rates apply depending on the type of motor vehicle and the amount of gas in the vehicle's air conditioning unit.
The levy on all other goods that contain HFC and PFC applies at the point of import and is administered by the New Zealand Customs Service (Customs). Common goods in this category include fridges, freezers, heat-pumps, air-conditioners and refrigerated trailers. Levy rates are based on tariff descriptions and statistical key codes. The levy is mostly charged on a dollar per item basis and some goods are charged based on the amount of gas they contain.
Knowing release of Synthetic Greenhouse Gases
Synthetic greenhouse gases (SGGs), such as hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs), are often released slowly into the atmosphere as a result of consumption or leakage, or on disposal at the end of the life of the product in which they are contained (such as when whiteware is dumped). SGGs have very high global warming potentials compared to carbon dioxide, and therefore have a significant impact on climate change.
Under the Climate Change Response Act 2002 (CCRA), New Zealand has banned the knowing release of SGGs from particular sources and activities. This is restricted to penalising anyone who knowingly, and without lawful justification or excuse, releases SGGs into the atmosphere while installing, operating, servicing, modifying or dismantling any electrical switchgear, refrigeration or air-conditioning equipment or other heat-transfer medium.
We have enforcement powers under CCRA and offenders can be fined up to $50,000 for wilfully releasing SGG into the atmosphere.
The wilful release offence captures everyone who is aware they are releasing SGGs while performing specified activities. The reasonableness test will then provide a defence for those people who are using best practice in their industry.
Therefore, the offence would not be triggered where:
- SGG is leaked into the atmosphere slowly over the natural course of a product’s life
- SGG is released during servicing where the best industry practice was being exercised.
Safe disposal of Synthetic Greenhouse Gases
For a fee, specialist companies will collect and store SGG with purpose-built equipment. Collected gases are transferred to overseas facilities where they are destroyed in an environmentally sound manner.
Ozone depleting substances
Ozone depleting substances are not included in New Zealand's international climate change obligations. While some ozone depleting substances are also greenhouse gases, they are not included in the Kyoto Protocol and the ETS as they are controlled by the Montreal Protocol and the Ozone Layer Protection Act 1996. You can find more information about these substances on the main Ozone Depleting Substances page.