Forestry and the Emissions Trading Scheme
International News
NZ has ratified the Paris Agreement and formally submitted the emission reduction target of 30 percent below 2005 levels by 2030. New Zealand had intended on ratifying later in the year, but fast-tracked the process when it became clear that only countries that had ratified the agreement are likely to be part of the development of the rules. Having access to international carbon markets is crucial to New Zealand meeting our emission reduction targets.
The Paris Agreement requires 55 countries representing 55% of global greenhouse emissions. India and the European Union have this month ratified the agreement meaning the emissions threshold has been met and the Paris Agreement will become binding on the 4th November 2016.
Domestic News
NZ ETS Review
An update on the status of the ETS review was recently released by the Ministry for the Environment. Policy decisions following stage two are expected in mid-2017 and will require further engagement with stakeholders. If legislative changes are required to implement these decisions, these changes are expected to be made in 2018.
The key themes from submissions on stage two of the review were:
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the need for regulatory or policy stability – this was the strongest theme and it was expressed across all sectors
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the need for a long-term plan for how the NZ ETS will help New Zealand meet its emission reduction targets
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forestry submitters said that a stable NZU price that incentivises forestry investment is needed, and emphasised that stability in NZ ETS settings is important for the sector.
Further consultation with stakeholders will be conducted over the coming months.
ETS Facts and Figures 2015
Released this month was the Environmental Protection Authority 2015 ETS Facts and Figures. This report is a snapshot of ETS activity across all sectors for the 2015 calendar year.
The reported emissions for 2015 were 74 million tonnes. However due to the 2 for 1 surrender and the fact that agriculture are required to report but not surrender emissions, the total surrender in 2015 was 20.4 million NZUs and AAUs. The 2015 year is the first year that units of an international origin were not able to be surrendered (compared to 97% surrender using international units in 2014).
Participation of post-1989 forest land in the ETS has increased from 277,212 hectares in 2014 to 301,779 hectares in 2015, likely representing a delay in re-registrations following arbitrage. The highest level of post-1989 registered area was recorded in 2012 at 370,042 hectares.
What about emissions by sectors? Reported emissions from agriculture have increased year on year since reporting requirements began in 2012 and were 33 million tonnes in 2015 (46% of all emissions). The energy and industry sector achieved a small reduction in emissions in 2015 (5%). Liquid forest fuels has increased emissions (3%). Emissions from the waste sector have remained at about the same level as 2014.
The ETS Facts and Figures can be found here
New Zealand Emissions Trading Register
The New Zealand Emissions Units Register (NZEUR) has been replaced with a new platform, the New Zealand Emissions Trading Register (NZETR) which was launched on the 29th August.
If you are the account holder or a primary representative on an existing NZEUR account, you will have received correspondence from the EPA. To gain access to the new site you will need a government RealMe login, and a migration code that will have been sent to you.
Price Update
NZUs are currently trading at around $18.75 per NZU, at similar price levels to last month.
The figure below shows the recent carbon credit prices for EUAs, CERs, NZUs and ERUs. Note that from 1st June 2015 only NZUs or New Zealand AAUs are valid units in the NZ ETS. EUAs are valid units for trading within the European Union.
Figure 1: Recent Carbon Prices - NZ$/t CO2e – Real (CPI adjusted)
