Liquid fossil fuel suppliers’ obligations: Reporting emissions and surrendering NZUs

Who is involved?

The Emissions Trading Scheme (ETS) applies to liquid fossil fuels as far up the supply chain as possible – in other words, when refined oil products leave the refinery or are imported. This means that fuel suppliers who take fuel from the refinery or who import it are required to participate in the scheme by surrendering New Zealand Units (NZUs) to cover the emissions that result from the fuel they buy – this currently includes BP, Caltex, Gull, Mobil and Shell. Private citizens, such as motorists, will not be directly involved in emissions trading.

What does the ETS cover?

The ETS covers liquid fossil fuels used in New Zealand. It covers petrol, diesel, aviation gasoline, jet kerosene, light fuel oil and heavy fuel oil. Emissions from fuel used for international aviation and marine transport are exempt from the scheme. This is consistent with the Kyoto Protocol.

What has happened so far?

The transport sector has been required to report its emissions from 1 January 2010.  For 2010, the five mandatory participants surrendered NZUs for emissions occurring between 1 July and 31 December. Four users of jet fuel choose to become voluntary participants in the scheme. They faced the same reporting and surrender obligations as the five mandatory participants.

From 2011 on, surrender obligations will apply to emissions for the full year. 

Businesses in this sector are required to monitor and report on their emissions for every calendar year. They submit their emission report in March of the following year, and surrender units in May. For the first surrender period, these companies were only required to surrender units for the six months between 1 July and 31 December 2010. Because of the transition phase (1 July 2010 to 31 December 2012), they were only required to surrender one unit for every two tonnes of carbon dioxide equivalent emitted. After the transition period (post-2012) participants will be required to surrender one NZU for each tonne of emissions.

Transition period 1 July 2010 – 31 December 2012

For the transition period from 1 July 2010 to 31 December 2012 participants will only be required to surrender one NZU for 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 be required to surrender one NZU for each tonne of emissions and the Government fixed price option will cease.

What do I have to do?

Liquid fossil fuel participants must record information about fuel imported or removed for home consumption during the year using methods in the Climate Change (Liquid Fossil Fuels) Regulations. They will need this information to complete and file an annual emissions return.  The methods set out how a liquid fossil fuel participant must calculate their emissions in this annual return.

More information is available on administrative and reporting requirements:

Reporting Guidance for the Stationary Energy and Industrial Processes and Liquid Fossil Fuels Sectors under the NZ ETS (Ministry for the Environment website)

Last updated: 16 December 2011