NZ Emissions Trading Scheme simplified

ETS changes are designed to offer forest owners more certainty. Photo / NZME

The first of two planned tranches of improvements to the New Zealand Emissions Trading Scheme (ETS) were announced last month following public consultation in August and September.

The improvements seek to provide more certainty to scheme participants and create a more effective and fairer ETS.

The key announcements are:

* A new permanent post-1989 forestry activity will be created and will replace the current Permanent Forest Sink Initiative (PFSI).

* A set of technical, operational improvements will make the ETS easier and less costly for forest owners.

* A framework for making unit supply decisions will be established, enabling emissions to be capped, restricting the number of units supplied into the scheme and increasing the incentive to reduce emissions.

* If in future the Government decided to allow international units, they would first ensure the units were of high environmental integrity.

* The $25 per tonne fixed price option for surrenders won't be changed in 2019.

It is likely these improvements, together with the second tranche of decisions expected in early 2019, will be introduced to Parliament in mid-2019 as an amendment to the Climate Change Response Act 2002.

The second tranche will include decisions regarding a new accounting option for post-1989 forests in the ETS called averaging.

Just over 250 submissions were received from businesses and industry groups, iwi and Māori, community groups and individuals, most of which supported the Government's proposals.

Copies of the submissions are on the Ministry for the Environment website (mfe.govt.nz/) and information about the forestry changes planned for the ETS is on the Ministry for Primary Industries' webpage (mpi.govt.nz/).