Surrendering emission units

Participants with obligations under the ETS are required to give up to the Government one emission unit for each tonne of carbon dioxide or carbon dioxide equivalent greenhouse gas emissions their activities produce in a year. See the sector-specific questions below about when participants in each sector need to start surrendering units.

The primary unit of trade for the emissions trading scheme is the New Zealand unit (NZU), which is the unit created and distributed by the Government. One NZU is equivalent to one tonne of carbon dioxide equivalent emissions.

Several types of international Kyoto unit can also be purchased by participants in the ETS and cancelled or surrendered to meet their obligations.

• Emission reduction units (ERUs) – generated by Joint Implementation projects that reduce emissions or create forest sinks in Annex B countries
• Removal units (RMUs) – awarded to Annex B countries on the basis of net removals by carbon sinks in the land use, land-use change and forestry sector
• Certified emission reductions (CERs) – generated by Clean Development Mechanism projects that support sustainable development and reduce emissions or create forest carbon sinks in developing countries

The legislation also retains the option for the Government to allow through regulations imported assigned amount units to be surrendered (assigned amount units issued out of the initial assigned amount of a country other than New Zealand). This would require government regulation and no decision has been made about which assigned amount units will be permitted.

New Zealand AAUs allocated under the Kyoto Protocol (for example, those issued to participants in Projects to Reduce Emissions, the Permanent Forest Sink Initiative and Negotiated Greenhouse Agreements) can be surrendered under the ETS.

If you need to buy New Zealand units to comply with your obligations , you can buy them directly from other scheme participants who may have a surplus of them or through a carbon market broker. See below for more information on carbon markets.

You can buy Kyoto units from several sources such as participants in other emissions trading schemes around the world, certified overseas projects to reduce emissions, New Zealand projects to reduce emissions, and international carbon traders.

Most New Zealand units can only be traded domestically.  Forestry units can be converted into Kyoto units for trading offshore.

Units are converted through the New Zealand Emission Unit Registry.

If you’re required to surrender emission units under the ETS, you’ll have to surrender the number of emission units you’ve calculated in your emission return by 31 May each year.

If you own post-1989 forest, you’re required to report their emissions or removals, and surrender units if relevant, once every five years.

Surrendering emission units is managed through the New Zealand Emission Unit Registry. See the sector-specific questions below about when participants in each sector need to start surrendering units.

No, the emissions trading scheme is separate from the tax system and is administered through the New Zealand Emission Unit Registry.

Borrowing emission units is not allowed under the ETS.

Carrying over emission units means storing them during one compliance period and using them to meet ETS obligations in the next compliance period.

Banking means the same as carrying over. See above.