Submission on the Climate Change Response (Late Payment Penalties and Industrial Allocation) Amendment Bill

^{Twizel, Tonia Kraakman, Unsplash}

Of the changes proposed by the Climate Change Response (Late Payment Penalties and Industrial Allocation) Amendment Bill, one issue stands out as being problematic: the proposed change to existing eligibility thresholds for industrial allocation in the New Zealand Emissions Trading Scheme (NZ ETS).

Linking the amount of free allocation to the carbon price would mean that as the carbon price rises (as you would expect if the NZ ETS is doing its job) more free allocation will be given to some NZ ETS participants.

It also potentially increases the number of new sectors (and hence emitters) who would be eligible for free allocation. In effect, all those emitters would be allowed to increase their emissions. This seems contrary to the Government’s statutory responsibility to reduce emissions.

The Commissioner recommends that clause 15 of the bill (which proposes to amend section 161C(1) of the Climate Change Response Act 2002) be deleted.