Recent updates on the Emissions Trading Scheme (ETS)

The government has recently announced details of the first tranche of ETS changes for forestry, following public consultation and submissions earlier in 2018.

Key takeaways from the announcement:

  • The government has decided to introduce a new permanent post-1989 forest activity into the ETS. This will replace the current PFSI, but existing PFSI participants will not be adversely affected and MPI will contact those landowners in due course to advise of options going forward. The design of this new activity aims to reduce barriers to establishing permanent forests.

  • The government will proceed with proposed changes to pre-1990 offsetting rules, to provide more flexibility around land use change.

  • Tree weed exemptions will be simplified in order to support the management and removal of tree weeds in compliance with regional pest management plans.

  • Decisions on proposed changes to accounting approach (ie. averaging) have not been made in this first tranche. It is expected that the second tranche of decisions will be announced around March 2019.

  • All changes from tranche 1 and 2 announcements will be submitted as a single bill in parliament. This bill is expected to be introduced to parliament in the second half of 2019.

  • Details on the first tranche of forestry-related changes can be found here

Several decisions on changes to the overall ETS structure have also been announced by the government. Decisions announced include changes to:

  • Align legislation with the Paris Agreement.

  • Enable a cap to be placed on emissions (primarily through the introduction of an auctioning system).

  • Replace the current price ceiling with an alternate system integrated with auctioning.

  • Improve the operation and administration of the ETS.

  • Details on these decisions can be found here.