Draft Terms of Reference Strategic Environmental Assessment of the New Zealand Emissions Trading Scheme
Introduction
The New Zealand Emissions Trading Scheme (ETS) will result in changes to land and natural resource use, patterns of economic activity and operational practices. These changes will, in turn, affect the environment["Environment" here has the same meaning as it does in the Resource Management Act 1991 and the Environment Act 1986. This is a broad definition and the focus of the SEA will be refined and developed as part of the initial scoping stage of the exercise.] in positive or negative ways.
Strategic Environmental Assessment (SEA) is a tool that is well accepted internationally for evaluating the environmental effects of government policy. The SEA will cover the potential environmental effects of the ETS and closely related aspects of sectoral policies and measures (such as the New Zealand Energy Strategy (NZES) and New Zealand Energy Efficiency and Conservation Strategy (NZEECS)).
An SEA can assist in minimising negative impacts, maximising positive impacts, and harnessing potential synergies with desirable outcomes in other policy areas. In simple terms, it can help ensure that the ETS:
(i) has broad environmental integrity designed into the scheme from the start;
(ii) is broadly consistent with the Government's overall sustainability goals.
There are challenging aspects to conducting an SEA for a globally linked ETS. The type and distribution of environmental impacts (whether positive or negative) resulting from the ETS are difficult to assess with precision.
The SEA will be undertaken in parallel with Select Committee hearings on the draft ETS legislation. It will be completed in time to inform Select Committee consideration of the Bill.
Purpose
The purpose of the SEA is to:
(i) identify any environmental sustainability concerns and opportunities in respect of the ETS and closely related aspects of sectoral policies and measures, and
(ii) propose mechanisms by which these can be addressed, taking into account existing regulatory and policy mechanisms.
Scope
The primary focus of the SEA will be on identifying the domestic environmental impacts of the ETS itself. The assessment will also need to take into account the effects of closely related government policy including aspects of the NZES and the NZEECS.
The SEA will scope the potential environmental impacts of the ETS over its first 12 years of operation (until 2020, which is emerging as a milestone year for climate policy internationally). These impacts include the likely reductions in greenhouse gas emissions resulting from the ETS and closely related aspects of sectoral policies and measures[Substantial work has already been undertaken to assess the effects of the ETS and closely related aspects of sectoral policies and measures on domestic greenhouse gas emissions. The SEA will focus on consolidating this information rather than undertaking further analytical work on this issue.]. The SEA will include recommendations for ongoing environmental monitoring and review of the environmental impacts of the ETS and closely related aspects of sectoral policies and measures. This information could feed into the review of the ETS prior to the end of the first commitment period.
Methodology
The SEA will include the components listed below. The team undertaking the SEA will develop a more detailed methodology and programme of work.
Preliminary scoping and prioritisation report
The preliminary scoping report will identify and prioritise the issues to be considered in more detail as part of the assessment phase of the SEA. The scoping report will:
- include a preliminary assessment of the potential domestic environmental impacts arising from likely changes in activities due to the ETS and associated policies;
- provide clear prioritisation of areas for more detailed assessment of effects, and the reasons for these priorities;
- identify the methodology proposed to be applied to the assessment of environmental effects, outlining the key assumptions to be used and any anticipated constraints including uncertainty of effects and lack of information.
Assessment of environmental effects
The assessment of environmental effects will outline the magnitude of likely environmental changes, the time period over which they may occur, the spatial location of the changes where applicable and the extent to which effects may be cumulative. As well as identifying likely adverse environmental effects of the ETS, the assessment should also identify opportunities for achieving greater positive environmental benefits through improved design of the scheme or related policy.
Examples of potential adverse effects include afforestation pressures on regenerating natural ecosystems and landscapes, and pressures on natural rivers from expanded use of hydroelectricity. Examples of potential positive effects include public health cobenefits, air quality improvements in urban areas, enhancements to erosion control in unstable regions, and improved biodiversity through permanent native forest sinks.
Where there is considerable uncertainty as to the effects of the ETS on activities and their resultant environmental impacts (eg the availability and rate of take up of new technologies) different scenarios may need to be assessed.
Recommendations for policy design
The SEA will include recommendations for improved policy design for the ETS and closely related aspects of sectoral policies and measures, if relevant. These will take into account the extent to which the identified environmental effects are already adequately addressed by existing policy and legislation such as the RMA.
Recommendations will focus on reducing any significant negative environmental effects that are identified and maximising potential positive environmental effects of the ETS including co-benefits across sectors.
The recommendations may include both changes to the detailed design of the ETS and changes to other aspects of the national policy and legal framework.
Recommendations for environmental monitoring and review
The SEA will include recommendations for ongoing monitoring and review of the environmental performance of the ETS. These will include a framework to enable the review of the ETS prior to the end of the first Kyoto commitment period to properly assess the environmental effects of the ETS and closely related aspects of sectoral policies and measures.
Timeframe
The SEA will need to be completed by early to mid-March 2008 in order to inform Select Committee consideration of the Bill, and for recommendations to be considered alongside the introduction of the ETS. To achieve this, the scoping study would be completed by late January 2008.
Oversight
The SEA will be overseen by a Steering Group of 3-4 people drawn from the Climate Leadership Forum.
