Click to edit Master title style. New Zealand s proposed Emissions Trading System

Transcription

1 Click to edit Master title style New Zealand s proposed Emissions Trading System Tim Denne 30 th November 2007 Covec Ltd Covec Ltd 1

2 Introduction Click to edit Master title style NZ will introduce an ETS. The objectives are: Some emission reductions at home ( below business as usual ) Kyoto compliance and thereafter Least cost in the long term Will be introduced over the next 5 years, starting 1 st Jan 2008 Covec Ltd 2

3 Key Click features to edit Master title style All sectors All gases As upstream as possible All emissions to face the full cost of emitting Unit of trade = NZ Unit (NZU) As flexible and as open as possible (NZU fully backed by Kyoto units) Industry protection in the transition through free allocation Covec Ltd 3

4 Timetable Click to edit for Master Introduction title style Covec Ltd 4

5 '000 tonnes CO2 NZ Click Emissions to edit Master (no LULUCF) title style 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 Other (incl Waste) Agricultural N2O Agricultural methane Industrial Process Other Energy Transport CO2 Energy CO2 20,000 10, Covec Ltd 5

6 '000 ha Expected Fellings/ Click to edit Master title style Potential Emissions Size of potential liabilities is a big part of Reason for early entry of forestry to ETS million tonnes CO Covec Ltd 6

7 Million tonnes carbon dioxide equivalent Net Click emissions to edit Master title style Net projected emissions* Hypothetical illustration of post-2012 scenarios * Includes removals from post-1989 afforestation Covec Ltd 7

8 Forestry Click to edit Kyoto Master treatment title style Pre-1990 forests Felling is treated as an immediate emission Full liability applies (c800 t CO 2 /ha) unless land replanted Cannot transfer between sites, eg fell one and plant another Post-1989 forests Net change in carbon stocks measured to estimate absorption/emissions NZ government does not receive Removal Units (RMUs) until some time after 2012 Covec Ltd 8

9 Forestry Click to edit under Master ETS title style Entry 1 st Jan 2008 Obligated participants = landowners Liability for pre-1990 forests Can opt out if small Voluntary entry for post-1989 forests Covec Ltd 9

10 Wood Volume/Carbon sequestered Post-1989 Click to edit forests Master title style Post-1989 forests can join voluntarily (18 months to decide). They can claim credits from absorption but take on a liability for emissions Will be awarded NZUs Potential absorption credits & liabilities Covec Ltd 10

11 Forestry Click to edit (Pre-1990) Master title style Liability for emissions most hold NZUs if deforesting/changing land use Can opt out if landholdings <50ha 21 million NZUs freely allocated to existing landowners for (roughly equal to historical deforestation rates c.5,000ha pa) No way of knowing who will deforest, so free allocations given in proportion to landholding Covec Ltd 11

12 Liquid Click to fuels edit Master title style Enter 1 st Jan 2009 Obligated parties are oil companies importers of product plus removals from refinery Some potential for opt-in for large users (Air New Zealand) No free allocation Covec Ltd 12

13 Stationary Energy & Industrial Click to edit Master title style Processes Entry 1 st Jan 2010 Obligated parties = introducers of carbon (fuel importers, coal mines, gas producers, geothermal users) Some potential for opt-in (eg electricity) Some free allocation: Industrial processes to obligated parties Energy downstream energy users Covec Ltd 13

14 Agriculture Click to edit Master title style Entry delayed until 2013 Point of obligation: Sale of nitrogenous fertilisers and EITHER Processing of meat & dairy products; OR Farming activity Some free allocation, as for industry Waste also included in 2013 Covec Ltd 14

15 Free Click Allocation to edit Master title style Free allocation separate from points of obligation No free allocation to firms that could pass the costs on, so no free allocation to Liquid fuels (transport) Electricity Eligible firms Stationary energy and industrial process emissions Agriculture Forestry - deforestation Covec Ltd 15

16 Free Click allocation to edit Master - reasons title style Long-term intent to move towards zero free allocation on efficiency grounds In transition, reasons for free allocation are: Regrets the rules may change or others take on price such that NZ would regret firm closure Adjustment costs, particularly those from concentrated job losses Reputational issues around stranded assets Equity stranded assets also Less so emissions leakage Covec Ltd 16

17 Free Click allocation to edit Master - proposal title style Generous free allocation for those most affected when sectors enter the scheme All sectors expected to make a contribution Relatively simple approach to establish size of package 90% of 2005 for ag and industry Industry support for electricity price rises, stationary energy use & process emissions Assistance for deforestation based on historical deforestation rates Assistance phased out by 2025 (reduce linearly from 2013) Covec Ltd 17

18 Free Click Allocation to edit Master - more title style No assistance (industrials) past firm exit - important in avoiding regrets No assistance on firm entry means new entrants & incumbents on similar footing re growth in emissions Initial concept (but not firm on this approach) is: maximum emissions of threshold of 50,000 tonnes trade-exposure test. Covec Ltd 18

19 Overall Click to position edit Master for NZ title style Covec Ltd 19

20 Process Click to edit Master title style Legislation introduced to Parliament this year (2007) Select Committee considers the Bill and invites submissions Legislation in place by mid-2008 Covec Ltd 20

21 Click to edit Master title style Tim Denne Covec Ltd Covec Ltd 21