Industrial allocation reform legislation introduced to Parliament
A significant milestone has been reached with new industrial allocation legislation introduced to Parliament on 2 December 2022.
The Climate Change Response (Late Payment Penalty and Industrial Allocation) Amendment Bill updates decade-old industrial allocation settings that have resulted in some emitting firms receiving more New Zealand emission units (NZUs) than needed, at an estimated cost to Government of $60 million a year.
Industrial allocation is the granting of free NZUs to businesses for activities that are both emissions-intensive and trade-exposed. It helps companies to stay cost-competitive against counterparts in countries with more lenient climate policy.
The updated legislation will ensure businesses receive an appropriate amount of NZUs. The Bill will address over-allocation of NZUs, reduce costs to government, and align with Aotearoa New Zealand’s climate response targets. Changes will also make it easier for emissions budgets to be met and make the NZ ETS more accurate.
See more detail on the reforms
The public will have an opportunity to comment on policy decisions during the Select Committee stage of the Bill. Subject to changes to the legislation, the earliest these changes could take effect is from 2024, following an extensive data collection and regulatory change.
The legislation will also introduce a revised penalty for small forestry participants who fail to surrender or repay NZUs on time. The new Bill updates the penalty to be more proportionate and fit for purpose for small foresters, while effectively deterring non-compliance.
See more detailed information [Ministry for Primary Industries website]