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New Zealand Passes Climate Change Emissions Trading Bill; Coverage of Liquid Fossil Fuels for Transportation Begins in 2011

New Zealand’s Parliament passed the Climate Change (Emissions Trading and Renewable Preference) Bill, thereby establishing the framework for the New Zealand Emissions Trading Scheme (NZ ETS).

The emissions trading scheme will include liquid fossil fuels used in New Zealand transportation beginning in 2011, and cover gasoline, diesel, aviation gasoline, jet kerosene, light fuel oil, and heavy fuel oil. The transportation sector accounts for 19.2% of New Zealand’s CO2emissions.

Emissions from fuel used for international aviation and marine transport are exempted from the scheme, consistent with the Kyoto Protocol.

The ETS had originally targeted inclusion of transportation fuels in 2009; given the spike in fuel costs, the government delayed that for two years. The phase-in for the other covered sectors is as follows:

  • Forestry, 2008
  • Stationary energy and Industrial processes, 2010
  • Agriculture, waste and all remaining sectors, 2013

All six Kyoto Protocol greenhouse gases—CO2, CH4, N2O, PFCs, HFCs, SF6 are included.

The ETS will apply to liquid fossil fuels as far upstream the supply chain as possible&madsh;i.e., the point of obligation is the suppliers who take fuel from the refinery, or who import it, if the total amount exceeds 50,000 liters in a calendar year.

In a set if sample emission price scenarios (NZ$15, NZ$25 and NZ$50 per tonne of CO2e), the government calculated that the increase in retail price for gasoline could range from 3.6 to 12.0 NZ cents per liter (US$0.09-$0.30 per gallon US), and for diesel from 4.0 to 13.5 NZ cents per liter (US$0.10-$0.33 per gallon).

The government expects fuel suppliers will pass on the costs of the scheme to their customers; therefore, the government does not intend to give fuel suppliers free emission units.

For the first time we will start factoring in the true cost of greenhouse gas emissions into our economy. This is in line with developments in the rest of the world. The sooner we get on top of this challenge, the sooner we can reap the benefits of providing low carbon goods and services that are attractive to affluent overseas markets. There is much to be gained by grasping this opportunity.

—Climate Change Minister David Parker

(A hat-tip to Niklas!)

Resources

Comments

Joseph


Yay for higher taxes, go New Zealand.

limiting supply usually has unintended consequences.

HarveyD

A move in the right direction. Will the fuel carbon tax rates be high enough to convince buyers to switch to more fuel efficient vehicles such as HEVs, PHEVs and BEVs? It may have to be adjusted progressively higher to accomplish the desired effects.

Joseph


HarveyD, I'm confused. What PHEV's and BEV's might they be able to buy. I need a sedan with room for two small children that will go 150+ miles on a charge. Preferably in a light color, it's very hot where I live, so a top notch A/C is a must. I have 20K to spend, could you point me to a good dealership?

Rikiki

I like the choice of words "New Zealand Emissions Trading Scheme". SCHEME, ja, put over on them by Kyoto wonks. Why not just tax carbon based fuels in country. The price of fuels with the added tax will automatically induce users of carbon based fuels to become more efficient and use less fuels, and, of course, switch to eco-sane alternative propulsion systems. It would be a lot simpler programme to administer.

And another thing ! Urine contributes 15% (See chart on "New Zealands Emmissions Profile" as link in main artcle). Hey, you guys, quit drinking so much beer! :>)

And another thing! Methane contributes 31%!. Start feeding those millions of sheep Beano. :>))

Rikiki

Andrew

@Joseph,

I see your point. Just like to say a lot of folks posting here are actually looking forward a few years, anticipating widespread adoption of EV's.

I really don't see any big technical challenges to make affordable mass EV's. It will just take 3-5 years to develop the products, manufacturing base and supply chain.

I guess some of us are so convinced EV's will be a big part of the future, we are already talking about it as if it has already happened.

cms

One uses ever more funny synonyms for the word tax nowadays: "trading scheme", "rights", "true cost".

gr

Interesting they have pushed this through. The NZ brethren in the UK are not so happy to pay for green ideas:

"More than seven in 10 voters insist that they would not be willing to pay higher taxes in order to fund projects to combat climate change, according to a new poll."

http://www.independent.co.uk/environment/climate-change/the-green-tax-revolt-britons-will-not-foot-bill-to-save-planet-poll-shows-819703.html

hansb

"The government expects fuel suppliers will pass on the costs of the scheme to their customers;..."

And whose absolutely brilliant analysis is that?

After all it was never meant to be paid by anybody BUT the end user of the product. If somebody were to tell people that this is a TAX and nothing else, would those people really allow this garbage?
If you knew that at least half the money will end up with the criminals at the United Nations, would anybody actually WANT to pay the tax? (One answer is: There are probably some idiots who do!)
And as far as the calculations go: You kiwis get away relatively 'cheap'. Our US nimrods have so far come up with calculations of US$ 0.54 per gallon. Either your nimrods are better liars than ours or just more stupid for not going higher!
Regardless, either way considering 'government calculations' being what they are, these are 'starting' numbers only - the final costs will be three to five times HIGHER!!
Have fun, guys.

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