Proposed regulations for synthetic greenhouse gases in the NZETS

9 October 2012, Auckland

Meeting objective

For you to understand:1.The proposed regulations.2.The difference between the regulations and the Bill3.How the changes will effect you.4.What the process going forward will be.

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Workshop agenda

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Time Item

10.30 – 10.50 Part 1: HFC/PFC Levy

10.50 - 11 Part 2: Exporting HFC and PFC

11 – 11.15 Part 4: Updating Global Warming Potentials

11:40 – 12 Questions?

Background

• The Government has announced a number of changes to the New Zealand Emissions Trading Scheme (NZ ETS), which will be implemented through the Bill. The Bill has been tabled in the House and referred to the Finance and Expenditure Select Committee.

• Most of the changes flow out of the Bill

Assessment Criteria

• Balance the need for reducing emissions with administration and compliance costs

Proposed Regulations

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Part 1: The Goods Levy Formula

Average refrigerant charge x GWP x carbon price = Levy

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Proposed categories

Assumed HFC or

mixture

Average charge (grams)

Global warming potential

CO2

equivalent (tonnes)

Unit of measuremen

t

Levy per unit of measurement

for effective CO2

price ($9.69)

Final levy rate

(including transitional

phase measures)

Air conditioning machines; comprising a motor-driven fan and elements for changing the temperature and humidity, window or wall types, self-contained or split-system, containing hydrofluorocarbons, single phase, of cooling capacity less than or equal to 4kW

R410A 1000 2090 2.09Per number of items in

class$20.25 $10.13

Air-conditioning

Proposed categories

Assumed HFC or

mixture

Average charge (grams)

Global warming potential

CO2

equivalent (tonnes)

Unit of measurement

Levy per unit of

measurement for effective

CO2 price

($9.69)

Final levy rate

(including transitional

phase measures)

Refrigerators and freezers; combined refrigerator freezers, fitted with separate external doors, containing hydrofluorocarbons, compression type, 200 litres and over but less than 300 litres gross internal capacity

HFC-134a 110 1430 0.1573Per number of items in class

$1.52 $0.76

Refrigeration

Other categories

The approach under the ETS was to include everything unless it was exempt. Under the levy it is the opposite, unless the product is mentioned then there is no cost. The current exemptions i.e. asthma inhalers and those importing products for household use will still apply. Other goods not covered are aerosols (Customs has advised that it is not practical) and fire extinguishers (as this is safety equipment).

Impact of levy• Reduce administration costs, as each importer will not need to identify exact

amounts of HFC/PFC in their products. • Diminishes the costs for the collection (Customs) and enforcement

(Environmental Protection Authority) agencies, as collection and verification of exact refrigerant charges would be highly administratively intensive.

• Raises approximation issues• Assumed relationship between refrigerant charges and cooling capacity (for

the air-conditioning importers) or internal volume (for household refrigerators and freezers importers). It is assumed that the larger the cooling capacity or internal volume, the more SGG contained in the equipment. This may not always be the case.

The HFC/PFC levy – Consultation questions • Do you agree with the proposed motor vehicle and goods classes?

– If not, what alternative classes would you propose instead?

• Do you agree with the Government’s estimated impacts of its proposed classes?– What other impacts and costs have not been identified/considered?– How would these impacts and costs differ under an alternative approach?

• Do you agree with the proposed average refrigerant charges?– If not, what alternative average refrigerant charges would you propose instead?

• What do you think the impacts and costs of the proposed average refrigerant charges would be?

• Do you agree with replicating the existing exemptions in the NZ ETS with the levy?• Do you agree with the proposed reporting requirements?

For all your answers please explain why and provide evidence of the impacts and costs.

Part 2: Exporting HFC/PFC • Export criteria:

– all the components of the bulk HFC/PFC exported (or if the HFC/PFC was imported in goods, the goods themselves) were imported after 31 December 2012; or

– if the person exporting bulk HFC/PFC or HFC/PFC contained in goods is a manager of a product stewardship scheme accredited under the Waste Minimisation Act 2008,

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Options for enforcement

• Self-assessment model

• Verification of information

Exporting HFC/PFC • Add the levy categories as default charges for

exporting goods

Exporting HFC and PFC – Consultation questions

• Do you agree with the proposed criteria?– If not, what alternative criteria would you propose instead?

• What option for enforcement do you prefer? (Self-assessment model or verification of information)

• Do you agree with the Government’s estimated impacts? • What other impacts and costs have not been

identified/considered?

For all your answers please explain why and provide evidence of the impacts and costs.

Part 4: Global Warming Potentials• New Zealand is moving to the IPCC’s Fourth

Assessment Report.

• Global warming potentials will increase for most refrigerants:

– HFC-134a: 1300 1430

– R404A: 3260 3920

– R410A: 1730 2090

New refrigerant gases

Removing exemption for HFC-365mfc and HFC-245fa

• Do you agree with the proposal to include these new HFC/PFCs?

• Do you agree with the Government’s estimated impacts?

• What other impacts and costs have not been identified/considered?

For all your answers please explain why and provide evidence of the impacts and costs.

Updating global warming potentials – Consultation questions

What does this mean for you?

So what does this all look like?

ANY WILFUL RELEASE IS ILLEGAL

What’s next?

Introducing the levy will happen through an Act change

Making a submissionThe Ministry for the Environment welcomes written submissions on the proposed regulations for synthetic greenhouse gases to be implemented as a result of the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill.

Submissions are due by 5.00pm on 15 October 2012.

Please send your submission by email to: climatechange@mfe.govt.nz with the subject field ‘SSG submission’.

ETS Operational Policy TeamMinistry for the Environment

PO Box 10362Wellington 6143

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Next stepsSubmissions will be analysed by the Ministry for the Environment and reported to the Minister for Climate Change Issues for final decisions. Changes to the regulations are expected to be made before 31 December 2012 and come into force from 1 January 2013. Updates about the process will be provided on the climate change website: www.climatechange.govt.nz.

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Questions?

0800 CLIMATE

climatechange@mfe.govt.nz