Govt to cap purchase of offshore carbon credits under ETS

BUSINESSDESK: The government is signalling a move against the widespread purchase by major carbon emitters of cheap international carbon credits rather than using New Zealand-based units derived from activity that either offsets or reduces total carbon emissions.

The announcement came from Tim Groser at an Iwi Leaders’ Forum meeting in his first speech as Climate Change Minister since taking over from Nick Smith, who resigned his portfolios in a scandal late last month.

“The government proposes to enable in legislation the introduction of a mechanism that would place a restriction on the proportion of international units a participant can surrender to meet their ETS obligations,” he said.

“Under current settings, there is a serious danger of NZ essentially exporting capital for no good reason resulting in a loss of economic welfare."

The issue has become acute since a collapse in the value of international carbon credits brought on by a combination of reduced industrial activity in Europe and a flooding of the global market with Carbon Emissions Reduction units under the European ETS.

Mr Groser issued a consultation on proposed ETS changes, including the introduction of more explicit powers to auction NZUs within an overall cap and provide for restrictions on the use of international units, both subject to consultation on the detail.

As anticipated, it also proposes a more gradual phasing out of transition measures between 2013 and 2015 for those industries covered by the ETS – transport fuels, electricity generation and industrial energy plant – in three equal steps.

The discussion document proposes maintaining the $25 fixed price per tonne of carbon under the ETS until at least 2015 rather than accepting the recommendation from last year’s ETS review panel report that it should increase by $5 a year.

Also included are proposals to allow greater flexibility for land conversion to its highest value uses by allowing offsetting of deforestation on pre-1990 forests, while also reviewing the number of compensatory NZUs available to pre-1990 forest owners.

It also would provide for delaying the entry of emissions from animal livestock and fertiliser use for up to three years if certain criteria are not met, following a review in 2014.

The consultation document also proposes providing for an extension of the fixed price option beyond 2015 to align with any price ceiling set under the Australian ETS, assuming the two schemes are capable of being linked.

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Communal idiocy, throwing money at fairy tales. Just abolish the mad, useless, costly ETS.


Good point. It was Jkey who said it was all a hoax in 2006. He was right.


Unbelievable - this whole carbon trade scam has just proven if it was ever needed to be a load of crock. If Groser thinks any of this has an ounce of credibility the man frankly is as bad as the idiot Smith.


When are the morons running this country going to wake up!!

49 former NASA scientists and astronauts sent a letter to NASA Administrator Charles Bolden last week admonishing the agency for it’s role in advocating a high degree of certainty that man-made CO2 is a major cause of climate change while neglecting empirical evidence that calls the theory into question.

The group, which includes seven Apollo astronauts and two former directors of NASA’s Johnson Space Center in Houston, are dismayed over the failure of NASA, and specifically the Goddard Institute For Space Studies (GISS), to make an objective assessment of all available scientific data on climate change. They charge that NASA is relying too heavily on complex climate models that have proven scientifically inadequate in predicting climate only one or two decades in advance.

H. Leighton Steward, chairman of the non-profit Plants Need CO2, noted that many of the former NASA scientists harbored doubts about the significance of the C02-climate change theory and have concerns over NASA’s advocacy on the issue. While making presentations in late 2011 to many of the signatories of the letter, Steward realized that the NASA scientists should make their concerns known to NASA and the GISS.


Great move Tim!
Obviously you are going hard out to outdo Nick Smith in the idiocy stakes.
I recommend that you immediately bring forward legislation making it illegal to state "the Emperor has no clothes".
Because that is essentially what someone who buys worthless overseas carbon credits ( to satisfy internal obligations under the ETS) is saying.
Why buy expensive carbon credits , when the whole thing is bull***t?


First, Nick Smith has repeatedly denied the existing scheme is a tax, because it didn't raise revenue for the Government. The Government has just been the regulator, facilitating the flow of credits from the energy sector to the forestry sector.

But the consultation document just issued by MfE tells us that , in future, the Government will issue and sell the credits for cash.

A "market" requires buyers and sellers to bring different future price expectations. The Amending Bill will allow the Minister to exclude all competition from overseas, so that the Government is the monopoly supplier of credits – a closed system. That is the opposite of a market.

The international price per credit is languishing at $6 per tone but that won't help us if imports are banned. The $25 cap is likely to become the de facto price – a fourfold increase. Then the obligation doubles over three years, to become an eight-fold increase.

Nick Smith has frequently stated: "We will not proceed with … removal of the half-obligation … unless other countries – particularly our major trading partners – make progress." Since then, the USA has abandoned its cap & trade scheme, Japan, China, and S Korea have deferred their proposed ETS schemes
,the Kyoto Protocol has lapsed, and the Durban Platform says there will be no international scheme until 2020. Australia's new tax will be repealed before it is due to become an ETS. This is a flat-out broken promise.

Many people feared that the ETS was a straight tax-grab, but came to believe it was a genuine attempt to grapple with climate change. If auctioning credits was the plan all along, they have been duped. It also explains why every government-funded science institution has been encouraged to stir up fears.


The capping of international credits is solely to maximise government revenues, as it moves to become the monopoly supplier.

The existing ETS says that every NZU must be "backed" by an international credit. The new Bill proposes to repeal that provision, so the auction proceeds flow directly to The Treasury.


Its a crazy redtape construct that will only result in more expensive food , energy etc for average Kiwis, all done to supply revenue to Iwi, sorry the Forestry Sector


MFE ignores CERN
Thank you for your email of 8 March 2012 regarding climate change. I forwarded your enquiry to my colleagues in the Ministry’s Science team for their consideration.

The Ministry for the Environment believes that the sources of evidence pointing towards anthropogenic climate change are both established and credible. We base our climate change advice on multiple sources of peer reviewed science, including information produced by the Intergovernmental Panel on Climate Change, NASA, universities and research institutes from around the globe and research from within New Zealand. These multiple lines of scientific evidence show that climate change is happening, and humankind’s emissions of greenhouse gases are very likely the cause. Research also shows that, unless action is taken to reduce the concentrations of greenhouse gases in the atmosphere, the impacts on climate and civilisation could be severe. New Zealand’s climate change policy has been developed accordingly.

You question why there is no mention of a CERN study on the website. The team advised the following:

Over the years a lot of research has been undertaken to try and find a clear link between solar output changes, such as those from sunspots and changes in our climate. The research generally shows that the effect of the changes in the sun’s output is small compared to the effects that greenhouse gasses have in trapping heat inside our atmosphere. In contrast, changes in the orbit of the Earth around the sun can make significant impacts on our climate, as experienced with ice ages. These changes to the energy arriving at the Earth are well known and accounted for in the modelling of the Earth’s climate. However, it is only when the effect of the recent increases in greenhouse gases is taken into account that the recent increases in temperature observed around the globe can be explained.’ End email quote

Reply Comment: Your final paragraph totally avoids addressing the CERN findings. CERN is one, if not the most respected scientific organisation in the world. Your response ignores it completely. That is staggering in its indifference. How can mfe simply omit information from CERN and suggest that you knew it already and the data is in the modelling. Their interim report was only published a couple of months ago. It will be five years before it is final. There is no possible way in which the reports upon which you rely or that modelling can include the CERN data.

You say: the effect of the changes in the sun’s output is small..

You say: humankind’s emissions of greenhouse gases are very likely the cause
As mentioned, CERN say it is the sun’s effect on cosmic rays which is between 50% and 100% of the cause of changes in climate.

The sun’s effect on cosmic rays is quite a different thing from changes in the sun’s output.

You say it is man-made and opt to exclude CERN. You directly contradict CERN.


I for one don't rely on astronauts and nuclear physicists for my climate change information. And it's heartening to see the MFE is full of sanity as well.

If the Govt is worried about money being spent on carbon credits going offshore, then there is a simple replacement - a carbon tax.


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