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New Zealand: Amendments to Emissions Trading Scheme Passed

(Dec. 1, 2009) On November 25, 2009, the New Zealand Parliament passed the Climate Change Response (Moderated Emissions Trading) Amendment Bill. This legislation amends the scheme that was enacted by the previous government in September 2008, which was due to come into effect on January 1, 2010. (See Lisa White, New Zealand: Greenhouse Gas Emissions Trading Scheme, GLOBAL LEGAL MONITOR, Oct. 25, 2008, available at// That scheme was put on hold by the new government because it considered that revisions were needed to take the recession into account and to ensure that the scheme was more closely aligned with Australia's proposed Carbon Pollution Reduction Scheme, which is currently being debated in the Senate there. (Press Release, Hon. Dr. Nick Smith, Balanced New Law Important Step on Climate Change (Nov. 25, 2009), available at

The industrial, energy, and transport sectors will now be required to enter into the emissions trading scheme from July 1, 2010. The agricultural sector will not enter the scheme until 2015. (Hon. Dr Nick Smith, Third Reading, Climate Change Response (Moderated Emissions Trading) Amendment Bill (2009), New Zealand House of Representatives, Nov. 25, 2009, available at

Other changes in the amending legislation include:

· The allocation of emission units will be based on industry averages, rather than on 2005 levels as required by the original scheme, and will also be production-based.

· There will now be a transition phase of three years, involving a half-obligation and a fixed-price option of NZ$25 (about US$18) per ton of carbon.

· The phase-out of support to industry will be slower than under the original legislation. (Id.)

The revised scheme has been criticized by some as being too weak, and the bill was vigorously debated in the Parliament. The Opposition argued that taxpayers will be required to subsidize major emitters as a result of the changes. The Parliamentary Commissioner for the Environment also expressed the view that the legislation would not achieve its goal of reducing greenhouse gas emissions. (Tracy Watkins, Controversial Emissions Trading Scheme Passed in Urgency, Dominion Post, Nov. 25, 2009, available at

The legislation provides for regular review, with the first to take place in 2011. Minister for Climate Change Issues, Hon. Dr. Nick Smith, said that New Zealand needs to “keep nimble footed in response to developments in international negotiations; advances in the climate change science and as new technologies become available. The ongoing principle for the Government will be ensuring New Zealand does its fair share.” (Press Release, supra.)