Govt throws bone to ETS critics, looks to ban dodgy foreign credits
BUSINESSDESK: Climate Change Minister Tim Groser has thrown a small bone to critics of the government's weakening of the emissions trading scheme, promising a review of low-quality foreign-sourced carbon credits that slipped through the cracks of an earlier ban.
However, carbon market watchers says to ban so-called "grey" Emissions Reduction Units is a token move that will do nothing to restore the value of New Zealand Units, the locally issued carbon units whose value has sunk below $3 a tonne of carbon this week as cheaper foreign-sourced credits have fallen even lower.
Lizzie Chambers from the carbon trading service Carbon Match described it as "a move to prop up interest from the crowd as NZU's walk towards the gallows".
The announcements came hours after the finance and expenditure select committee reported back to parliament on amendments to the ETS which will indefinitely extend transitional measures in light of the lack of global progress on carbon emissions reduction commitments beyond the end of this year.
Mr Groser says officials are looking into the "environmental integrity of some units following concerns raised that the restrictions we placed on some Certified Emission Reduction units (CERs) last year were not encompassing enough".
"We need to make sure New Zealand continues to do its fair share, alongside other countries, to combat the effects of climate change while ensuring that the ETS doesn't have an unreasonable impact on businesses and households in this time of economic recovery".
Any changes to the eligibility of Kyoto units in the ETS would be subject to Cabinet approval and public consultation.
Apparently in Mr Groser's sights are low-quality ERUs similar in character to "grey" CERs, which were banned from the New Zealand ETS last year because the carbon emissions reduction schemes that underpinned them were too often being manipulated by developing economies to manufacture carbon credits.
Mr Groser has also asked for clarification on the rules about carrying over international units after 2014 under the ETS.
In 2015, New Zealand will be required to surrender emissions units equal to its emissions over the first Kyoto commitment period, which runs from 2008-12.
Under international Kyoto carry-over rules, any units in the New Zealand Emission Unit Register (EUR) that have not been approved for carry-over after this time will be cancelled and will not be eligible in future periods. Exactly how these international rules will be applied domestically has yet to be finalised.
"Any rules will only apply to international units generated during CP1 and New Zealand Units (NZUs) will not be affected," Mr Groser says. "Any proposals will be subject to Cabinet approval and public consultation."