The recently introduced the Emissions Trading Scheme (ETS) aims to reduce the environmental damage caused by greenhouse gases by charging those who emit gases.
The New Zealand ETS is based on the trading of ‘New Zealand Units’ (NZUs), which are effectively the right to emit one tonne of carbon dioxide, or the equivalent amount of other greenhouse gases.
While most New Zealanders won’t participate directly in the scheme, they may notice a small increase in energy prices as gas emitting organisations pass on their increased costs.
Similarly, it is unlikely that the ETS will directly impact on the majority of New Zealand’s small and medium-sized businesses (SMEs), and there is no requirement for most SMEs to report on their emissions or to trade NZUs.
Even if your business is not trading Units, there are benefits for becoming smarter in this area. Businesses can save money and make a difference in reducing greenhouse gas emissions by using energy more efficiently, reducing waste and, where economic, using renewable energy alternatives, such as solar power and wood energy.
SMEs do, however, contribute to climate change through their use of electricity, gas and transport fuels, and waste generation, so it is likely that they may see higher fuel and electricity prices and waste disposal costs as a result of the Emissions Trading Scheme.
Emissions-intensive, trade-exposed smaller businesses may be eligible to receive an allocation of New Zealand Units (NZUs). Check the information on the industrial allocation page to find out if your business may qualify.
Those organisations that do participate directly in the ETS will do so in a number of ways:
- Surrender NZUs to the Government – eg: companies that mine natural gas as this will emit greenhouse gases when it is used.
- Earn NZUs from the Government – eg: owners of forests that absorb greenhouse gases.
- Be given NZUs by the Government – eg: companies that might face significant increases in energy costs and be unable to pass these costs on to their customers.
These groups and others can then trade NZUs, as those with spare NZUs sell them to those who have to surrender NZUs.
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