New Zealand: Climate Change (Emissions Trading and Renewable Preference) Bill

Last Updated: 4 February 2008
Article by Neil Russ

The Climate Change (Emissions Trading and Renewable Preference) Bill was tabled in Parliament yesterday (Tuesday 4 December 2007)10:25 04/02/2008.

The Bill unexpectedly legislates for a 10-year moratorium on new thermal electricity generation, while its provisions to implement a greenhouse gas emissions trading scheme have been widely signalled and depart in only small ways from previously announced policy.


The Climate Change (Emissions Trading and Renewable Preference) Bill ("the Bill") has 2 parts:

  • Part 1 contains provisions to implement a greenhouse gas emissions trading scheme in New Zealand
  • Part 2 legislates the government's preference for renewable electricity generation by implementing a 10-year moratorium on new base-load thermal electricity generation, except to the extent required to ensure security of supply.

In summary, Part 1:

  • Provides for the entry of all sectors into the ETS, setting default points of obligation upstream but allowing major downstream emitters to become participants as follows:

Scheme entry date


Default participants

Possible participants

1 January 2008 Forestry Landowners (pre-1990 forests) Landowners or forestry right/registered lease holders (post-1989 forests)
1 January 2009 Liquid fossil fuels Fuel suppliers Major jet fuel users
1 January 2010 Stationary energy Coal, gas and geothermal suppliers; oil, tyre and waste burners for electricity or heat generation; petroleum refiners. Major users of coal and gas
Industrial processes End emitters Producers who embed carbon in their products
1 January 2013 (presumably this will need formatting??) Agriculture:


Default option:

Nitrogen fertiliser suppliers
(i) synthetic fertiliser

Possible option:

(ii) enteric fermentation and manure management

Default option:

Meat/dairy processors


Possible option:



Waste Landfill operators


  • Specifies the obligations of "participants" in the scheme and the consequences of non-compliance
  • Creates a "New Zealand Unit" and determines how emission units will be traded in New Zealand and overseas
  • Provides for the free allocation of New Zealand Units
  • Contains a number of forestry sector-specific provisions.

Part 2 makes it an offence to connect new thermal generation plant to the national grid or distribution network unless the Minister of Energy has issued an exemption.


In September 2007, the government announced details of a proposed New Zealand ETS. The Bill implements the policy as announced, with 2 key differences:

  • A relaxation of the penalty regime so that participants will not face full monetary penalties the first time they surrender units for any accidental shortfall (see clause 43, new section 175); and
  • A process for the issuing of allocation plans for the free allocation of New Zealand Units (see clause 43, new sections 73-74).

Participants In The Scheme

Clause 43 of the Bill amends the Climate Change Response Act 2002 ("the CCRA") by inserting new Parts 4 and 5, which implement the core provisions of the ETS. These provisions define who is covered by the ETS and from what date.

"Participants" are the firms and individuals with obligations under the scheme. Participants are defined with reference to certain activities, which are listed in new Schedules 3 and 4 of the CCRA (inserted by clause 44).

  • Schedule 3: any individual or firm who does an activity listed in Schedule 3 must register as a participant (see clause 43, new sections 54 and 56), but only from the date the relevant part of Schedule 3 applies (see table above).
  • Schedule 4: any individual or firm who does an activity listed in Schedule 4 may elect to register as a participant (see clause 43, new sections 54 and 57), but only from the date the relevant part of Schedule 4 applies. This allows the people to become participants from the dates as follows:
  • post-1989 forest owners or forestry right/registered lease holders - from 1 January 2008 (and therefore to earn units from that date)
  • firms that embed carbon in their products - from 1 January 2010 (and therefore earn units from that date)
  • firms that purchase more than 10m litres of jet fuel for domestic flights in a year – from 1 January 2009
  • firms that purchase more than 250,000 tonnes of coal, or 2 petajoules of gas, in a year – from 1 January 2010.

Participant obligations

New sections 61-66 state participants' obligations and entitlements to:

  • Have an account in the emission unit Registry to hold emission units
  • Monitor emissions and removals in accordance with methodologies to be prescribed in regulations
  • Report annually by 31 March on any emissions or removals that result from activities in the previous year (except for post-1989 forest participants, who may report at the times defined in new section 167)
  • Surrender 1 emissions unit for each tonne of emissions (or earn 1 emissions unit for each tonne of removals)
  • Retain records showing their emissions and removals for 7 years (20 years in the case of forestry participants).

Compliance And Enforcement

Subparts 3-5 of new Part 4 contain the administrative provisions of the ETS and give the administering chief executive compliance and enforcement powers, including:

  • Requiring or obtaining information from participants (new sections 82-95)
  • Issuing "emissions rulings", which are similar to binding rulings issued under tax legislation (new sections 96-105)
  • Correcting participant errors (new sections 106-115)
  • Taking enforcement proceedings and imposing penalties in the case of non-compliance (new sections 116-130).

Subpart 5 gives the right of review and appeal to people who wish to challenge the chief executive's decisions.

Unit Of Trade And International Linkages

Clauses 4-42 of the Bill amend the existing provisions of the CCRA. These amendments extend the scope of Part 2 of the CCRA to:

  • Create New Zealand Units ("NZUs") and define how NZUs (and Kyoto Protocol units) are held, traded, and surrendered for compliance purposes under the ETS
  • Enable linking of the ETS to the international market for Kyoto units through the conversion of NZUs into defined Kyoto units for transfer overseas
  • Enable linking of the ETS to other countries' domestic trading schemes by regulation when appropriate.

The Bill also contains regulation-making powers giving government the ability to restrict the type of emissions units that may enter the New Zealand emission unit register (see clause 28, new section 30G). If the government decides to prevent "hot air" Assigned Amount Units from being used for compliance under the ETS, for example, it would do so in regulations made under this provision. Importantly, any regulations will only apply to units already in the Register on the date the regulations come into force.

Allocation of NZUs

With respect to the free allocation of NZUs, the Bill:

  • Specifies the broad parameters of free allocation of NZUs to the owners of pre-1990 forests, and to certain individuals and firms in the industrial and agriculture sectors (see clause 43, new sections 69-71)
  • Establishes a consultative process culminating in the issuing of an "allocation plan" to determine precisely who gets how many NZUs (see clause 43, new sections 73-74)
  • Specifies that no person other than the people provided for in the Act are able to receive a free allocation of NZUs.

The Bill provides for all free allocation to cease by 2025, although Hon David Parker, Minister Responsible for Climate Change Issues, has made it clear that the government is willing to engage further on the phase-out date for free allocation. The Bill also contains a review clause (new section 147), which requires aspects of allocation policy to be reviewed by March 2012, including the impact on allocation policy of the emissions pricing policies of New Zealand's major trading partners.

New section 75 empowers the Minister to sell NZUs by public auction.

Forestry: Sector-Specific Provisions

Although new Part 5 contains provisions that are specific to the forestry, transport, and stationary energy sectors, most apply to the forestry sector. They govern matters such as:

  • Who is, or may be, a participant in respect of pre-1990 forests and post-1989 forests
  • Exemptions for the owners of certain pre-1990 forest land
  • Provisions deeming when forestry activities have occurred and when participants must report any emissions (or removals) from those activities.

Consequential Amendments To Tax Legislation And The Ppsa

Clauses 45-65 consequentially amend other legislation in respect of the ETS, including:

  • The Income Tax Acts 2004 and 2007 to provide for the tax treatment of units transferred in respect of forestry activities
  • The Personal Property Securities Act 1999 to allow the registration of security interests over emissions units on the Personal Property Securities Register.


Part 2 of the Bill inserts a new Part 6A into the Electricity Act 1992 placing a 10-year moratorium on new thermal electricity generation, except where required for security of supply purposes. It achieves this by making it an offence to connect new thermal generation plant to the national grid or distribution network unless the Minister of Energy has issued an exemption enabling the connection to occur.

The Minister of Energy will only issue exemptions when certain criteria are met (see clause 7, new section 62G). The Electricity Commission will receive and analyse exemption applications, and advise the Minister.


A copy of the Bill can be obtained here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.