Synthetic greenhouse gases in the ETS

What are synthetic greenhouse gases?

The ‘synthetic’ greenhouse gases included in the NZ ETS are:

  • hydrofluorocarbons (HFCs)
  • perfluorocarbons (PFCs)
  • sulphur hexafluoride (SF6). 

HFCs are used in the refrigeration and air-conditioning, aerosol, fire protection and foam-blowing industries. PFCs are used in refrigeration and air conditioning. SF6 is used in gas-insulated switchgear and circuit breaker equipment and in scientific applications.

How are importers of synthetic greenhouse gases currently affected by the NZ ETS?

Obligations

From 1 January 2013 those who import HFC and PFC in bulk  are required to be registered with the NZ ETS. Those who use SF6 in operating electrical equipment, and who are above the prescribed threshold, are also required to be registered with the NZ ETS.

To register for the NZ ETS go to the New Zealand Emission Unit Register (NZEUR) and follow the steps under 'Join now'.

Importers of HFC and PFC and users of SF6 have obligations to surrender New Zealand Units (NZUs). These NZUs will equal the amount of HFC and PFC they import or the SF6 emitted through use over the 2013 calendar. The NZUs are due with the NZEUR by 31 May 2014. Manufacturers of HFC and PFC also have these obligations for the SGG they will manufacture.

Under current legislation, exporters of HFC and PFC are eligible to receive NZUs from 1 January 2013, as long as they meet prescribed eligibility criteria.

How are importers of HFC and PFC in goods and motor vehicles currently affected?

From 1 July 2013, importers of HFC and PFC in goods and motor vehicles will face a carbon price through a levy. The levy on motor vehicles will apply when a motor vehicle is first registered for on-road use in New Zealand (when a car receives its licence plates). This part of the levy will be administered by the New Zealand Transport Agency (NZTA).

The levy on all other goods that contain HFC and PFC will apply at import and will be administered by the New Zealand Customs Service (Customs).

Key dates

People who import or manufacture HFC or PFC (bulk only) and users of SF6:

  • are required to register with the NZ ETS
  • are required to collect data from January 2013 and calculate and report their emissions by 31 March 2014 as well as surrender New Zealand Units (NZUs) for their emissions by 31 May 2014.

SGG regulations

The Government has developed regulations that set out the:

  • products of goods that are covered under the levy and the corresponding levy rates
  • classes of motor vehicles that are covered under the levy and the corresponding levy rates.

These are set out in the Climate Change (Synthetic Greenhouse Gas Levis) Regulations 2013.

The obligation for people who import HFC or PFC in bulk is set out in the Climate Change (Stationary Energy and Industrial Processes) Amendment Regulations 2010. These regulations are currently being amended to set out the obligation and threshold for users of SF6.

The Climate Change (Other Removal Activities) Amendment Regulations 2010 prescribes the ability for exporters of HFC and PFC to earn NZUs. These regulations are currently being amended to set out the eligibility criteria for export.

Climate Change (General Exemptions) Amendment Order 2010 sets out exemptions from the levy and the NZ ETS. These regulations are currently being amended to remove the exemption for HFC-245fa and HFC-365mfc.

Allocations

Importers of SGG and users of SGG will not receive an allocation of NZUs because they will be able to pass the costs of their NZ ETS obligations on to their customers. Those who re-export or destroy HFC and PFC would be eligible to receive NZUs. This isn't considered part of the NZ ETS allocation process but is classed as a removal activity.

Those who re-export or destroy SGG would be eligible to receive NZUs. This isn't considered part of the ETS allocation process but is classed as a removal activity.

Wilful release

Synthetic greenhouse gases (SGG), such as hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs), are often released slowly into the atmosphere as a result of consumption or leakage, or on disposal at the end of the life of the product in which they are contained (such as when whiteware is dumped). SGG have very high global warming potentials compared to carbon dioxide, and therefore have a significant impact on climate change.

Under the Climate Change Response Act 2002 (CCRA), New Zealand has banned the wilful release of SGG from particular sources and activities. This is restricted to penalising anyone who knowingly, or without lawful justification or excuse, releases SGG into the atmosphere while installing, operating, servicing, modifying or dismantling any electrical switchgear, refrigeration or air-conditioning equipment or other heat-transfer medium.

The wilful release offence will capture everyone who is aware they are releasing SGG while performing specified activities. The reasonableness test will then provide a defence for those people who are using best practice in their industry.

Therefore, the offence would not be triggered if:

  • SGG is leaked into the atmosphere slowly over the natural course of a product’s life
  • SGG is released during servicing where the best industry practice was being exercised.

For a fee, specialist companies will collect and store SGG with purpose-built equipment. Collected gases are transferred to overseas facilities where they are destroyed in an environmentally sound manner. The EPA has enforcement powers under CCRA and offenders can be fined up to $50,000 for willfully releasing SGG into the atmosphere.

For an information sheet please visit the Environmental Protection Authority website.

Guidance

A guidance document for reporting synthetic greenhouse gas emissions and removals under the NZ ETS is available here

Last updated: 22 April 2013