Climate Change Response Act 2002

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73 Allocation to industry
  • (1) The Minister must exercise his or her powers under this subpart to ensure that an allocation plan that provides for the matters in this section and section 78(2) is in force for each of the following periods—

    • (a) the first commitment period:

    • (b) each subsequent commitment period, but expiring no later than 31 December 2029:

    • (c) if there is no subsequent commitment period,—

      • (i) the 5-year period commencing on 1 January 2013; or

      • (ii) each subsequent 5-year period after the period specified in subparagraph (i), but expiring no later than 31 December 2029.

    (2) The matters that an allocation plan must provide for are—

    • (a) an allocation of New Zealand units free of charge to persons who—

      • (i) the Minister considers are likely to be trade-exposed; and

      • (ii) meet any tests or thresholds that are specified in the allocation plan; and

      • (iii) in any year or years specified in the allocation plan—

        • (A) are participants in respect of an activity listed in Part 4 of Schedule 3 or Part 4 of Schedule 4, unless the person does not face any obligations under section 63 in respect of the emissions from the activity in any year for which the allocation plan is in force; or

        • (B) as a result of the obligations imposed by this Act on participants who carry out an activity listed in Part 3 of Schedule 3, face increased costs in respect of the person's direct use of coal, natural gas, or geothermal steam, direct combustion of any used oil or waste oil for the purpose of generating electricity or industrial heat, or direct consumption of electricity; and

    • (b) if the allocation plan is in force in any year from 1 January 2010 to 31 December 2018, a total number of New Zealand units available for allocation free of charge under the allocation plan, in each year that the allocation plan is in force, consisting of—

      • (i) 90 New Zealand units for each 100 tonnes of emissions that the Minister is satisfied resulted from the persons specified in paragraph (a)—

        • (A) carrying out any activity listed in Part 4 of Schedule 3 in 2005:

        • (B) directly using any coal, natural gas, or geothermal steam in 2005:

        • (C) directly combusting any used oil or waste oil for the purpose of generating electricity or industrial heat in 2005; and

      • (ii) a number of New Zealand units that the Minister is satisfied is sufficient to compensate the persons specified in paragraph (a) for 90% of the electricity cost increase that the Minister estimates those persons would face, due to the obligation imposed by this Act on participants to surrender units, in the period for which the allocation plan is in force, as if those persons purchased and consumed the same amount of electricity per year in that period as those persons did in 2005; and

    • (c) if the allocation plan is in force in any year from 1 January 2019 to 31 December 2029, a total number of New Zealand units available for allocation free of charge under the allocation plan that is equal to eleven-twelfths of N in 2019, and then declining in each subsequent year at a linear rate to reach a number equal to one-twelfth of N in 2029, where N equals the total number of New Zealand units available for allocation under paragraph (b) in 2018; and

    • (d) the matters that the Minister must have regard to when considering if a person is likely to be trade-exposed, including (but not limited to)—

      • (i) whether the person competes with a firm or firms that operate from outside New Zealand in respect of—

        • (A) products the person sells into the New Zealand market; or

        • (B) products the person exports into overseas markets; and

      • (ii) if the person does compete with firms that operate from outside New Zealand, whether the person—

        • (A) faces higher costs in respect of the person’s emissions than the firm or firms with which the person competes face in respect of their emissions; and

        • (B) is unable to pass-on some or all of the person’s costs due to the competition the person faces.

    (3) If, after 31 December 2018, a person becomes eligible for an allocation of New Zealand units in accordance with an allocation plan providing for the matters in this section, the allocation plan may provide for the matters in subsection (2)(c) as if the person had been eligible for an allocation of New Zealand units in accordance with an allocation plan providing for the matters in this section that was in force in 2018.

    (4) Nothing in subsection (3) entitles a person who becomes an eligible person after 31 December 2018 to an allocation of New Zealand units free of charge in any year before the year in which the person becomes an eligible person.

    Section 73: added, on 26 September 2008, by section 50 of the Climate Change Response (Emissions Trading) Amendment Act 2008 (2008 No 85).