Emissions in New Zealand Measures to Reduce GHG 12 March 2007 Mark - - PDF document

Measures to Reduce GHG Emissions in New Zealand Post-2012

Mark Storey 12 March 2007

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New Zealand’s Choices: Architecture

• Sectoral versus economy-wide approaches
• Costs borne by emitters/consumers versus

taxpayers

• Price-based versus regulatory measures

– If price-based measures, then use of emissions trading versus charges

• Certainty versus flexibility

Climate Change Mitigation Measures

Technology & Reporting Price-Based Measures

Emissions Trading

• Cap and Trade
• Baseline and Credit
• Offsets Trading

Greenhouse Gas Charge Financial Incentives

• Capital Subsidies
• Tax Incentives
• Financing Programmes
• Preferential Pricing

Directive Regulation

Resource Management Act Electricity Act Other Regulatory Vehicle Research & Development Technology Transfer & Dissemination Emissions Reporting

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Key Questions

• Under what circumstances would trading be

preferable to a charge or regulations post-2012?

• What type of trading model(s) would work in NZ?
• If NZ pursued broad price-based measures, which

sectors should participate… – As points of obligation? – As sources of tradable offsets?

• When should the government make decisions?

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Key messages

• New Zealand needs to compete in an emissions-

constrained world in the longer-term.

• Broad price-based measures should be part of the post-

2012 solution – but should fit the New Zealand context.

• Different sectors/entities may require different transitional

paths to emissions pricing.

• We will benefit from both directional certainty and flexibility.
• Significant action to mitigate climate change cannot wait for

the determination of post-2012 measures.

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Consultation

• Further stakeholder meetings in early

February 2007

• Submissions close on 30 March 2007
• Paper and submission template available
• n the website:

– www.climatechange.govt.nz

• For more information, contact:

– climatechange@mfe.govt.nz

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• 1. Future international policy
• Stabilisation requires significant reductions.
• Reducing global emissions will have an

economic cost – but far less than the cost

• f inaction (Stern Review).
• We don’t know the post-2012 international

policy framework; countries are discussing many options.

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• 1. Future international policy
• We can make educated assumptions:

– More countries and deeper efforts – Emissions pricing and emissions trading – Trade consequences for inaction.

• New Zealand needs to prepare to bear this

cost, reduce emissions, and compete.

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• 3. What post-2012 measures suit NZ?
• The paper focuses on two price-based

measures: – Emissions trading – Greenhouse gas charges

• It also considers other approaches:

– Directive regulations (eg, RMA) – Emission reduction agreements

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• 4. Gov’t decisions on post-2012 policy
• Key government decisions:

– Which measures to apply, and to whom – The stringency of measures – When to introduce measures

• Options:

– Define architecture of measures now, but details (stringency, coverage, timing) later – Define principles now, but measures later

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Conclusions

• The government has stated a preference for

applying efficient price-based measures broadly across the economy post-2012.

• Price-based measures can be designed to suit

New Zealand’s national interests.

• Different sectors/entities may require different

transitional paths to emissions pricing.

• No decisions have been made.
• We want to hear your views!

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Consultation

• Further stakeholder meetings in early

February 2007

• Submissions close on 30 March 2007
• Paper and submission template available
• n the website:

– www.climatechange.govt.nz

• For more information, contact:

– climatechange@mfe.govt.nz

Emissions trading offers more flexibility

GHG Charges Emissions Trading

Reduce Emissions Reduce Emissions (Sell/Bank Excess Units) Pay Penalty Pay Charge Surrender Allocated Units Purchase Units at Auction Purchase Units in the Trading Market Pay Penalty

Emissions ”debits” Emissions ”credits”

Emission Level A B C

Actual Emissions Allocated Baseline Business-as-usual

Time

Baseline and Credit Trading

Source: Australian Greenhouse Office