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Industrial allocation provides assistance to the parts of the economy most heavily affected by the New Zealand Emissions Trading Scheme (ETS). Allocation is given to businesses whose activities are considered emissions intensive and trade exposed.
It does this by allocating New Zealand Units (NZUs) to persons carrying out eligible industrial activities.
Industrial allocation is provided on the basis of ‘activities’, not on the basis of sites, businesses or facilities. An ‘activity’ consists of the physical, biological or chemical transformation of inputs into a given set of outputs (eg, the chemical transformation of hydrocarbons into methanol, or the physical and chemical transformation of silicon dioxide to produce glass containers).
Businesses carrying out Eligible industrial activities can apply for an allocation of NZUs. New activities will be added to the list as they are made eligible.
If you think your activity might be eligible for industrial allocation, please see the information on the New activities for industrial allocation page.
The information below explains how to calculate your entitlement. If you prefer, you can use a calculation worksheet.
The number of NZUs you can get for an eligible activity depends on three things:
See Eligible industrial activities for levels of assistance, prescribed products and allocative baselines for each eligible activity.
Your allocation of NZUs is then calculated using formulae from the Climate Change Response Act 2002. These are detailed below. Separate calculations must be made for each eligible activity.
Note: NZUs can’t be divided. Less than half an NZU is rounded to 0, half or more is rounded to 1.
At present, persons with obligations under the ETS are only required to surrender one NZU for each two tonnes of CO2-equivalent of their actual emissions. While this transition measure is in place, the number of NZUs allocated is also halved to reflect the lower costs that businesses experience.
Allocation = (LA × ∑ (PDCT × AB)) ÷ 2
That is, to find the number of NZUs you are entitled to you:
The number you are left with is the number of NZUs you are entitled to.
The NZUs you get can be:
At present, the NZUs received through industrial allocation cannot be sold overseas.
Disclaimer: These web pages are intended to provide general information in summary form. The contents are not a substitute for getting your own advice on the provisions in the Climate Change Response Act 2002 or the Climate Change (Eligible Industrial Activities) Regulations 2010.
Last updated: 3 December 2012