Starting next Monday, the Government will be undertaking a two week consultation with stakeholders on its proposal to exclude certain types of international Kyoto units from the New Zealand Emissions Trading Scheme (NZ ETS). 

Specifically, the Government is considering whether the following units should remain eligible under the NZ ETS:

  • Emission Reduction Units (ERUs) from HFC-23 and N2O destruction projects;
  • Certified Emission Reduction Units (CERs); and
  • ERUs from large-scale hydroelectricity projects.

The Government is also seeking feedback on whether their exclusion (if confirmed) should be effective from January or June next year.

The European Union is proposing to ban these units from 2013 due to concerns about their environmental integrity, while Australia is also proposing to exclude them from 2015 (when Australia is scheduled to switch from its current carbon pricing scheme to a new emissions trading scheme).

Climate Change Minister announced the proposal and consultation plan this week, and was careful to emphasise that, as with previous restrictions, units bought on forward contracts will be assessed individually and are likely to be exempt from the ban, "to ensure that New Zealand companies with legitimate investments are not disadvantaged by the ban".

Further details about the consultation have not yet been made public, but should be made available here within the next few days.