Report Might Slow Down The New Zealand Emissions Trading System
The NZ ETS was first legislated in 2008, and is planned to include all economic sectors and will restrict emissions of all greenhouse gases by 2015.
Carbon credits explained in terms of NZ ETS are the primary domestic emission units under the NZ ETS, allocated by the New Zealand government to eligible individuals or companies in specific sectors; they are called New Zealand Units (NZUs).
NZ ETS is continuously expanding its coverage, as forestry was the first sector to enter the NZ ETS and fuels and industry were added in 2010.
As forestry was the first sector to enter the NZ ETS, it is the biggest source of NZUs.
To have carbon credits explained in the context of the NZ ETS, it is also important to mention, that the New Zealand government also allows the import of CERs (Certified Emission Reductions) or carbon offsets, generated by clean projects in developing countries.
Even though the NZ ETS seems to be moving at a moderate pace and moreover, there are fears that full implementation might need to be delayed, the New Zealand government seems to be promoting itself as a carbon trading centre in the region.
Despite the relatively small size of the NZ ETS, New Zealand is ahead of its neighbour Australia, where the highly controversial carbon tax was recently adopted in order to pave the way to a future cap-and-trade system.
The Review Panel Report, however, might affect the ambitions of the ETS and the New Zealand government.
As required by the New Zealand Climate Change Responses Act of 2002, a review of the NZ ETS by an independent panel of experts started early in 2011, in order to evaluate the system 12 month prior to the expiration of the first commitment period under the Kyoto Protocol.
In absence of a future international commitment, the review of the NZ ETS is supposed to be conducted every five years.
The final report of the ETS Review Panel, "Doing New Zealand's Fair Share", recommends that the inclusion of further sectors into the ETS happens at a slower pace.
As per the current legislation, energy, transport and industrial sectors are expected to join the NZ ETS in 2013, whereas the Report proposes that it takes place in three steps - in 2013, 2014 and 2015, in order to decrease the impact on households and businesses.
So far, the government has been following some of the report recommendations, for instance greater scrutiny of hydrofluorocarbon (HFC) CERs.
At the end of September 2011, the Ministry for the Environment released a consultation document proposing regulations to restrict the use of HFC-23 and N20 CERs in the NZ ETS.
Carbon credits explained as a consequence of HFC-23 and N20 gas destruction projects raise some concerns about environmental integrity, namely, that there might be an incentive to increase production of these gases in developing countries.
(I don't understand this paragraph, it needs rewritten and the keyword needs to be used in a different way, here it is not very logical) It still remain unclear, however, whether the New Zealand government will follow all the Report's recommendations, as the Climate Change Minister Nick Smith said in a statement, that there were both upside and downside fiscal implications to different recommendations that would need to be considered.
As for the New Zealand carbon market, according to the World Bank's report "State and Trends of the Carbon Market 2011", published in June 2011, demand in ETS mainly stems from local utilities, industry and fuel companies, while supply in the form of NZUs is not coming to the market as quickly as envisioned.
Therefore, it will be interesting to observe how the carbon market in New Zealand will react, should the government decide to slow down the inclusion of the industrial and transport sectors.
The Panel Review Report also suggests that New Zealand should take Australian developments into account.
Both countries have discussed the linking of their respective carbon trading systems.
However, there have been similar discussions between Australia and the EU, and the linking of a future Australian cap-and-trade system to the EU Emissions Trading System (EU ETS) is also a possibility.
In addition, as the opposition in Australia has declared its resolution to repeal the carbon tax, the future Australian emissions trading system may be put on hold.
Carbon credits explained in terms of NZ ETS are the primary domestic emission units under the NZ ETS, allocated by the New Zealand government to eligible individuals or companies in specific sectors; they are called New Zealand Units (NZUs).
NZ ETS is continuously expanding its coverage, as forestry was the first sector to enter the NZ ETS and fuels and industry were added in 2010.
As forestry was the first sector to enter the NZ ETS, it is the biggest source of NZUs.
To have carbon credits explained in the context of the NZ ETS, it is also important to mention, that the New Zealand government also allows the import of CERs (Certified Emission Reductions) or carbon offsets, generated by clean projects in developing countries.
Even though the NZ ETS seems to be moving at a moderate pace and moreover, there are fears that full implementation might need to be delayed, the New Zealand government seems to be promoting itself as a carbon trading centre in the region.
Despite the relatively small size of the NZ ETS, New Zealand is ahead of its neighbour Australia, where the highly controversial carbon tax was recently adopted in order to pave the way to a future cap-and-trade system.
The Review Panel Report, however, might affect the ambitions of the ETS and the New Zealand government.
As required by the New Zealand Climate Change Responses Act of 2002, a review of the NZ ETS by an independent panel of experts started early in 2011, in order to evaluate the system 12 month prior to the expiration of the first commitment period under the Kyoto Protocol.
In absence of a future international commitment, the review of the NZ ETS is supposed to be conducted every five years.
The final report of the ETS Review Panel, "Doing New Zealand's Fair Share", recommends that the inclusion of further sectors into the ETS happens at a slower pace.
As per the current legislation, energy, transport and industrial sectors are expected to join the NZ ETS in 2013, whereas the Report proposes that it takes place in three steps - in 2013, 2014 and 2015, in order to decrease the impact on households and businesses.
So far, the government has been following some of the report recommendations, for instance greater scrutiny of hydrofluorocarbon (HFC) CERs.
At the end of September 2011, the Ministry for the Environment released a consultation document proposing regulations to restrict the use of HFC-23 and N20 CERs in the NZ ETS.
Carbon credits explained as a consequence of HFC-23 and N20 gas destruction projects raise some concerns about environmental integrity, namely, that there might be an incentive to increase production of these gases in developing countries.
(I don't understand this paragraph, it needs rewritten and the keyword needs to be used in a different way, here it is not very logical) It still remain unclear, however, whether the New Zealand government will follow all the Report's recommendations, as the Climate Change Minister Nick Smith said in a statement, that there were both upside and downside fiscal implications to different recommendations that would need to be considered.
As for the New Zealand carbon market, according to the World Bank's report "State and Trends of the Carbon Market 2011", published in June 2011, demand in ETS mainly stems from local utilities, industry and fuel companies, while supply in the form of NZUs is not coming to the market as quickly as envisioned.
Therefore, it will be interesting to observe how the carbon market in New Zealand will react, should the government decide to slow down the inclusion of the industrial and transport sectors.
The Panel Review Report also suggests that New Zealand should take Australian developments into account.
Both countries have discussed the linking of their respective carbon trading systems.
However, there have been similar discussions between Australia and the EU, and the linking of a future Australian cap-and-trade system to the EU Emissions Trading System (EU ETS) is also a possibility.
In addition, as the opposition in Australia has declared its resolution to repeal the carbon tax, the future Australian emissions trading system may be put on hold.
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