Climate Change Policy Update

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.