Consultation on Proposed Changes – 2012

The Emissions Trading scheme

1. General Scheme Changes• ‘One for two’ surrender obligation phases

out in three equal steps from 2013 to 2015• $25 fixed price option kept until at least 2015• Ability to auction NZUs within an overall cap• Ability to restrict international units

2. Agriculture and Forestry Changes• Ability to delay agriculture’s entry

• Offset deforestation of pre-1990 forestry• Review pre-1990 forest compensation

Transition phase• Phase out ‘one for two’ more gradually:

o 67% obligation 2013o 83% 2014o full obligation 2015

• $25 fixed price option kept until at least 2015

Supply of New Zealand Units• Manage supply of NZUs through auction to

reduce excessive buying of international units• Supply of NZUs auctioned and allocated would

match target level of emissions• Also propose ability to restrict proportion of

international units that could be surrendered

How Auctioning Could Work

Target level of emissions

NZUs Allocated to Industry and Agriculture

Extra NZUs Auctioned by Govt

Actual emissions

Difference met via post 89 forestry or international units

Ability to delay agriculture’s entry (for three years) Conditions: technologies are available to reduce these

emissions our international competitors are taking

sufficient action on their emissions in general.

Offset deforestation of pre-1990 forest

The Offset Forest (International Guidance)Conditions for new forest: Available from start of 2013 Minimum area and carbon equivalent Not on land that is already forest land Planted - not natural regeneration New class of forest – would not earn credits

Review second tranche of pre-1990 compensationa. Full removal of allocationb. Reduced allocationc. Remove compensation for those who opt to

offset

Under 50 Hectare allocation or exemption ?• Ability to revisit a earlier decision to seek an

allocation – if second tranche reduced or removed.

Consultation

1. What do you think of the overall package of proposed changes?

Consultation

2. Should the second tranche of compensation to pre-1990 forest landowners be adjusted in light of offsetting?

Consultation

3. If compensation is adjusted for the second tranche, which option for the second tranche do you prefer? Why?a. full removalb. reduced compensationc. removal for those who opt to offset

Consultation

4. If you prefer 3b, what is the most desirable way to do this? Why?

Consultation

5pm, 11 May 2012See www.climatechange.govt.nz/ets

Submissions to: etsconsultation@climatechange.govt.nz