Energy’s obligations: Reporting emissions and surrendering NZUs

Who is involved?

'The energy sector' includes all fuels used in electricity generation and in the direct production of industrial heat. It does not include energy used for transport, emissions from industrial processes, or heating in commercial or residential facilities.

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 over 2000 tonnes of coal in a year
  • importing more than 10,000 litres of natural gas in a year
  • 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 4,000 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 on our regulations page and in hard copy from Government bookshops.

When did it happen?

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

For 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 period 1 July 2010 – 31 December 2012

During the transition period from 1 July 2010 to 31 December 2012 participants will only be required to surrender one NZUfor every two tonnes of emissions and can buy NZUs from the Government to meet their obligations at a fixed price of $25 per NZU if they wish.

After the transition period participants will need to surrender one NZU for each tonne of emissions and the Government’s fixed price option will cease.

What has happened so far?

There are 78 Energy participants in the ETS. As with the transport sector, other companies lower 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 face the same reporting and surrender obligations as the 78 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: 16 December 2011