ETS legislation changes proceedingAs reported by Carbon Match earlier in the week, Legislation was tabled on Monday to amend the Emissions Trading Scheme (ETS) with changes announced by Government in early July. The bill passed its first reading yesterday and was sent to select committee.
As per the announcement, the key changes are:
• To extend transitional measures designed to reduce the initial cost impacts of the scheme beyond 2012. In particular, these will extend the ability of many of those with ETS obligations to surrender one emissions unit for every two tonnes of emissions (the 'one for two'). In addition, participants will also have the choice to meet their obligations by paying the Government $25 per tonne of emissions (the fixed price option)
• To defer the start date for surrender obligations for biological emissions from agriculture, pending a review in 2015
• To introduce 'offsetting' as an option for pre-1990 forests, giving forest landowners the flexibility to convert their land to a better use, but avoid ETS deforestation costs by planting a carbon equivalent area of forest elsewhere
• Pre-1990 landowners will continue to receive their allocation of emissions units in full, unless they take up offsetting. In recognition of the benefits offered by offsetting, pre-1990 forest landowners who take up offsetting will need to return the second tranche of this allocation
• To introduce a power to allow the Government to increase the supply of New Zealand Units (NZUs, the primary emissions unit used within the ETS) through an auction, within an overall cap on the number of NZUs auctioned and allocated. This will help to ensure that ETS participants do not need to fund more emissions reductions in other countries than New Zealand needs to in order to meet its international obligations or domestic targets
• Not to introduce a new power that specifically allows for quantitative restrictions on the number of international emissions units that can be surrendered by those with ETS obligations. This will ensure that the carbon prices faced by ETS participants continue to reflect international prices.
Source: Carbon Match, www.carbonmatch.co.nz
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