National will adopt most of the recommendations of the Caygill Review into the Emissions Trading Scheme (ETS), with two key exceptions:
- it will maintain the $25 per tonne price on carbon until "at least" 2015, and
- as already signalled, it has kicked for touch in relation to agriculture's entry to the ETS.
National will extend the transitional supports to the electricity, industrial and transport sectors, in line with the Review's recommendation. This would mean that the 50% surrender obligation, which was to expire on 31 December 2012, would instead be phased out in three equal steps between 1 January 2013 and 1 January 2015.
However, National would maintain the $25 per NZU price cap until at least 2015 rather than increase it by $5 a year each year from 2013 to 2017 – as the Review recommended.
As expected, National has rejected the Review's recommendations that the entry date for agriculture remain at 2015. Rather than commit to a specific date, National says it will review the issue in 2014 and will impose a liability then only if there are practical technologies available to reduce emissions and if our trading partners have made similar commitments.
This represents the key area of difference with the Labour Party ETS policy, which is to bring agriculture in from 2013.
National will introduce off-setting for pre-1990 forest landowners from 1 January 2013 so that land can be converted to the most economic use without deforestation liabilities being incurred if a comparable forest is replanted elsewhere.
National has recommitted to engaging with the Australian government on linking the New Zealand and Australian carbon markets post-2015. The basis for these discussions will now be much clearer following the passage yesterday through the Federal Upper House of the Gillard Government's carbon tax legislation.
The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.