Change to ETS rules

May 28, 2014 at 11:40 am

The Government has recently passed a Bill to amend the Climate Change Response Act 2002 (CCRA) to prevent reregistration arbitrage. Reregistration arbitrage is where post-1989 forest participants profit by registering and deregistering the same piece of land in the ETS multiple times, each time receiving New Zealand Units (NZUs) while registered but surrendering cheaper international Kyoto units when they deregister. While there has been little arbitrage activity to date, the potential impact is significant, in terms of fiscal cost and reputational risk.

This change remedies an unintended consequence in the operation of the ETS that, if unchecked, may create a fiscal risk to the government and could undermine the integrity of the ETS.

The change only applies to post-1989 foresters seeking to deregister or remove land from the ETS.  Participants can still use Kyoto units for emissions as a result of deforestation or harvesting up until 30 May 2015.

The amended legislation took effect from 16 May 2014. However, it will not affect deregistration applications received by the Ministry for Primary Industries on or before 15 May 2014.

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Entry filed under: Forestry.

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