In May this year it was announced that New Zealand would aim for an emissions trading scheme (ETS) as a priced-based measure to address climate change. The ETS for New Zealand will, over time, apply to all sectors and all greenhouse gases. Sectors covered under the scheme include forestry, liquid fossil fuels, stationary energy, industrial processes, agriculture and waste.
The ETS is a cap and trade scheme, with the overall cap for the period 2008-2012 being the cap on New Zealand emissions under the Kyoto Protocol. New Zealand emission units (NZUs) are the primary domestic unit of trade under the scheme, and are equal to one metric tonne of CO2. Participants in the scheme will have an obligation to hold NZUs to match the emissions levels for which they are responsible.
On 4 December 2007, the draft Bill relating to the ETS was introduced in the House, accompanied by a change to the Electricity Act 1992 which places a moratorium on new fossil-fuelled electricity generation. The ETS appears relatively unchanged from the main points outlined in the draft documents released in September 2007. Over the coming months the Bill will go through the select committee and public consultation process.
The Bill has now had its first reading (12 December) and has been referred to the Finance & Expenditure Select Committee. A date for the submission period has yet to be set but is expected to be mid March 2008.
Even though only 200 companies will be directly affected by the ETS the indirect effects will be felt by everyone. All businesses need to evaluate the effect of the scheme on their operations, and make a decision whether to participate in the select committee process.
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