Energy’s obligations: Reporting emissions and surrendering NZUs

Who is involved?

'The stationary energy sector' includes all fossil fuels (gas and coal) used in electricity generation and in the direct production of industrial heat, as well as geothermal energy. It does not include energy used for transport, emissions from industrial processes, or heating in commercial or residential facilities (emissions from these sources are considered elsewhere under the ETS).

What activities does the ETS cover?

The specific stationary energy activities that are included in the Emissions Trading Scheme (ETS) are:

  • importing more than 2000 tonnes of coal in a year
  • mining more than 2000 tonnes of coal in a year
  • importing natural gas  
  • mining natural gas (excluding natural gas mined for export)
  • using geothermal fluid for generating electricity or industrial heat, where the level of  carbon dioxide-equivalent (CO2-e) emissions per annum exceeds 4000 tonnes
  • combusting more than 1500 tonnes of used or waste oil for generating electricity or industrial heat
  • combusting used tyres or waste for generating electricity or industrial heat
  • refining petroleum where the refining involves the use of intermediate crude oil products.

Businesses can 'opt-in' to the ETS for stationary energy activities if they:

  • purchase more than 250,000 tonnes of coal in a year from coal mining participants
  • purchase more than 2 petajoules of natural gas in a year from gas mining participants.

Regulations setting out data collection and emissions calculation methods for the energy sector came into force on 1 January 2010.

Full text of the regulations and explanatory material is available:

What are the obligations for the stationary energy sector?

The stationary energy sector has been required to report its emissions since 1 January 2010. It is required to surrender New Zealand Units (NZUs) or equivalent imported emission units for emissions that occur from 1 July 2010.

During 2010, the sector was only required to surrender NZUs for emissions occurring between 1 July and 31 December. From 2011 on, surrender obligations apply to emissions for the full year. 

Participants are required to submit an emissions return for each calendar year by 31 March of the following calendar year. NZUs for each year must be surrendered by 30 May of the following year. 

Transition measures

Stationary energy participants are only required to surrender one NZU for every two tonnes of emissions, and they can buy NZUs from the Government to meet their obligations at a fixed price of $25 per NZU if they wish.

Changes taking effect from 2013
Under the previous legislation, the one-for-two obligation and price cap were intended to end after the transition period from 1 July 2010 to 31 December 2012.  The Government has now extended these transition measures indefinitely.

Who are the participants?

There are about 80 stationary energy participants in the ETS. They are mainly people carrying out the ‘upstream’ activities described above, such as coal mining.  Also, other companies further down the supply chain can opt in to the ETS, and take on a mandatory participant’s obligation. For example, an electricity generator using coal can choose to take on the surrender obligation of the mining company it buys its coal from. In these circumstances, the supplier of coal or gas is not liable for these emissions. Currently, there are five companies who have opted in to the ETS. They have the same reporting and surrender obligations as the mandatory participants whose obligations they have taken on.

I’m a participant. What do I have to do?

Anyone carrying out a stationary energy activity must complete a participant notification form from the Emissions Unit Registry.

Stationary energy participants must record information about fuel use during the year using the methods in the Climate Change (Stationary Energy and Industrial Processes) Regulations. They will need this information to complete and file an annual emissions return.  The methods clearly set out how a stationary energy participant must calculate their emissions in their annual return.

Emissions trading bulletin 13 provides an explanation of the regulations.

Last updated: 3 December 2012