Foresters are likely to be pleased with the announcement on 13 November 2012 that the Government will shortly be consulting on the exclusion through regulations of further types of international Kyoto units from the NZ ETS.

The Government is proposing that it exclude the use of:

  • emission reduction units (ERUs) from HFC-23 and N2O destruction projects; and

  • certified emission reduction Units (CERs) and ERUs from large-scale hydroelectricity projects,

from the NZ ETS, with effect from either 1 January or 1 June 2013. As with the restrictions imposed at the end of 2011 on the use of CERs from HFC-23 and N2O destruction projects, it is proposed that exemptions will be available for New Zealand companies with existing forward contracts so that their legitimate investments are not disadvantaged by the ban. Consultation on these proposed regulations will commence on 19 November 2012, with a two week period for stakeholders to respond.

Businesses purchasing international Kyoto units from this date forward should take care to exclude these types of units, to mitigate against the risk that any exemption for forward trade agreements is back-dated to the date of the Minster's initial announcement on 13 November 2012.