Climate Change Response (Moderated Emissions Trading) Amendment Bill

  • enacted
22 New subpart 2 of Part 4 substituted
  • Subpart 2 of Part 4 is repealed and the following subpart substituted:

    Subpart 2Issuance and allocation of New Zealand units

    68 Interpretation
    • In this subpart, unless the context otherwise requires,—

      allocate, in relation to New Zealand units,—

      • (a) means the allocation or provisional allocation of New Zealand units free of charge; but

      • (b) does not include the transfer of New Zealand units

      allocative baseline, in relation to an eligible activity, means the prescribed allocative baseline for the eligible activity

      eligible activity means,—

      • (a) an eligible agricultural activity; or

      • (b) an eligible industrial activity

      eligible agricultural activity means an activity or subclass of an activity listed in Part 5 of Schedule 3 in respect of which a person is required to surrender units for emissions under this Act

      eligible industrial activity means an activity specified as an eligible industrial activity in regulations made under section 161A

      eligible land means pre-1990 forest land other than land that has been—

      • (a) declared to be exempt land under section 183 or 184; or

      • (b) deforested where the area deforested is less than 2 hectares and for which no obligation to surrender units for deforesting the land was incurred

      eligible person means a person who meets any requirements specified in this subpart and, if relevant, in an allocation plan for receiving an allocation of New Zealand units free of charge

      existing determination means an existing—

      • (a) determination; or

      • (b) new determination

      fishing allocation plan means the allocation plan that provides for the matters specified in section 75

      pre-1990 forest land allocation plan means the allocation plan that provides for the matters specified in section 73

      provisional allocation means the initial allocation made under section 82

      specified year means,—

      • (a) in relation to an eligible agricultural activity, the year immediately preceding a year in which a person applies to be allocated New Zealand units under section 86A; and

      • (b) in relation to an eligible industrial activity, the year in which a person applies to be allocated New Zealand units under section 86A.

    69 Issuance of New Zealand units
    • (1) The Minister may, at any time, direct the Registrar to issue New Zealand units into a Crown holding account.

      (2) Before giving a direction, the Minister must—

      • (a) consult with the Minister of Finance; and

      • (b) have regard to the following matters:

        • (i) the number of units that New Zealand has received, or that the Minister expects New Zealand to receive, under any international agreement; and

        • (ii) New Zealand's international obligations, including any obligation to retire units equal to the number of tonnes of emissions that are emitted in New Zealand; and

        • (iii) the proper functioning of the greenhouse gas emissions trading scheme established under this Act; and

        • (iv) any other matters that the Minister considers relevant; and

      • (c) if the direction under subsection (1) relates to the issuance of New Zealand units into a Crown holding account after 1 January 2013 and if there is no subsequent commitment period specified or determined under the Protocol or no successor international agreement to the Protocol, have regard to the following matters:

        • (i) New Zealand's annual emissions for the 5 years (on record) prior to the year of the direction under consideration; and

        • (ii) the report of the most recent review completed under section 160(1); and

        • (iii) New Zealand's obligations under the Convention (if any); and

        • (iv) New Zealand's anticipated future international obligations.

      (3) The Registrar must give effect to a direction given by the Minister under subsection (1).

      (4) As soon as practicable after giving a direction under subsection (1), the Minister must—

      • (a) publish a copy of the direction in the Gazette; and

      • (b) ensure that the determination is accessible via the Internet site of the department of the chief executive responsible for the administration of this Act; and

      • (c) present a copy of the direction to the House of Representatives.

      (5) The copies of the direction under subsection (4) must be accompanied by a statement setting out how the Minister has had regard to the matters specified in subsection (2)(b) and (c).

    70 Notification of intention regarding New Zealand units
    • (1) The Minister must recommend that the Governor-General make an Order in Council notifying the Crown's intentions to issue and sell or allocate free of charge New Zealand units at least 9 months before the end of each of the following periods:

      • (a) the first commitment period and each subsequent commitment period (if any); and

      • (b) 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).

      (2) The notification contained in the Order in Council made under subsection (1) must include—

      • (a) the number of New Zealand units that will be issued under section 69; and

      • (b) the time frames for issuance of New Zealand units under section 69; and

      • (c) the intended time frame for any allocation of New Zealand units free of charge, or the sale of New Zealand units and the method of sale.

      (3) The Minister must present a copy of the report under section 160(7) to the House of Representatives before an Order in Council may be made under this section.

      (4) The Minister must make a copy of any Order in Council made under subsection (1) accessible via the Internet site of the department of the chief executive responsible for the administration of this Act.

      (5) The Crown is not bound by the notification contained in any Order in Council made under subsection (1) to make any decisions in relation to the issuance, sale, or allocation free of charge of New Zealand units.

    Allocation of New Zealand units in relation to pre-1990 forest land and fishing

    71 Governor-General may issue allocation plans
    • (1) The Governor-General may, by Order in Council made on the recommendation of the Minister, issue an allocation plan providing for the matters in section 73 or 75.

      (2) The allocation plan must—

      • (a) comply with any relevant requirements specified in this subpart; and

      • (b) be presented to the House of Representatives as soon as practicable after it is issued, along with, in the case of the fishing allocation plan, the report provided to the Minister under section 77(5) and any of the Minister's decisions on the recommendations contained in the report.

      (3) An allocation plan comes into force on the day after the date it is presented to the House of Representatives.

      (4) An allocation plan or amended allocation plan is a regulation for the purposes of the Regulations (Disallowance) Act 1989 and for the purposes of the Acts and Regulations Publication Act 1989.

    72 Correction of allocation plans
    • (1) For the purpose of correcting any minor mistakes or defects in an allocation plan, the Minister may, without complying with section 76 or 77, recommend that the Governor-General revoke that allocation plan and replace it with an amended allocation plan.

      (2) An amended allocation plan comes into force at the time it is issued.

      (3) Section 71(2)(b) and (3) do not apply to an amended allocation plan.

    73 Allocation in respect of pre-1990 forest land
    • (1) The Minister must recommend to the Governor-General that an allocation plan be issued under section 71 in respect of pre-1990 forest land.

      (2) The pre-1990 forest land allocation plan must provide for—

      • (a) an allocation of New Zealand units to—

        • (i) landowners, or former landowners, of eligible land who are eligible persons; or

        • (ii) a person appointed in accordance with section 74 to hold any New Zealand units allocated in respect of the eligible land covered in paragraph (b)(i)(A); and

      • (b) an allocation of New Zealand units free of charge, being—

        • (i) 18 New Zealand units for each hectare of eligible land that was Crown forest licence land on 1 January 2008 and—

          • (A) will not have been transferred to iwi as part of a Treaty of Waitangi settlement by the date on which the allocation plan is issued; or

          • (B) has been, or will have been, transferred to iwi as part of a Treaty of Waitangi settlement either on or after 1 January 2008 but before the date on which the allocation plan is issued:

        • (ii) 39 New Zealand units for each hectare of eligible land, other than land covered by subparagraph (i) that was transferred to the landowner, or former landowner, of the land—

          • (A) after 31 October 2002; or

          • (B) prior to 1 November 2002 if, since that date, ownership of any body corporate owning the land has changed in the manner and to the extent specified in the allocation plan:

        • (iii) 60 New Zealand units for each hectare of eligible land not covered in subparagraph (i) or (ii).

      (3) The pre-1990 forest land allocation plan must provide that the New Zealand units allocated under the plan will be transferred so that—

      • (a) a person allocated 18 units for each hectare of eligible land in accordance with subsection (2)(b)(i) receives—

        • (i) 7 units for each hectare of eligible land on or before 31 December 2012; and

        • (ii) 11 units for each hectare of eligible land after 31 December 2012; and

      • (b) a person allocated 39 units for each hectare of eligible land in accordance with subsection (2)(b)(ii) receives—

        • (i) 15 units for each hectare of eligible land on or before 31 December 2012; and

        • (ii) 24 units for each hectare of eligible land after 31 December 2012; and

      • (c) a person allocated 60 units for each hectare of eligible land in accordance with subsection (2)(b)(iii) receives—

        • (i) 23 units for each hectare of eligible land on or before 31 December 2012; and

        • (ii) 37 units for each hectare of eligible land after 31 December 2012.

      (4) In addition to the matters provided for in subsections (2) and (3), the pre-1990 forest land allocation plan—

      • (a) must also specify the manner in which, and the extent to which, the ownership of any body corporate owning eligible land must have changed for the purposes of subsection (2)(b)(ii)(B); and

      • (b) must specify—

        • (i) the data and information, or the kind of data and information, that each eligible person must supply, and the form in which the person must supply the data and information, in order to—

          • (A) receive an allocation of New Zealand units; and

          • (B) enable the Minister to verify that the person received the correct allocation of New Zealand units under the allocation plan; and

        • (ii) in relation to an eligible person who receives an allocation of New Zealand units,—

          • (A) the records, or the kind of records, that the person must retain; and

          • (B) the form in which the person must retain the records; and

          • (C) the period for which the person must retain the records.

      (5) Despite subsection (2)(b), the pre-1990 forest land allocation plan must treat any Crown forest licence land transferred pursuant to the Te Uri o Hau Claims Settlement Act 2002 as if it were eligible land covered by subsection (2)(b)(iii).

      (6) For the purposes of—

      • (a) this section,—

        • (i) eligible land is to be treated as transferred on the settlement date, unless the allocation plan specifies another date or event upon which any or all eligible land is to be treated as transferred; and

        • (ii) Crown forest licence land means eligible land subject to a Crown forestry licence under section 14 of the Crown Forest Assets Act 1989; and

      • (b) subsection (2)(b)(ii), transfer does not include transmission, unless the allocation plan specifies otherwise, for example, in relation to any land vested under an Act.

    74 Minister to appoint person to hold certain New Zealand units
    • (1) The Minister must, prior to making a determination in respect of eligible land covered by section 73(2)(b)(i)(A), by notice in the Gazette,—

      • (a) appoint a person to—

        • (i) apply for an allocation of New Zealand units in respect of the land; and

        • (ii) hold on trust for the future owners of the land any New Zealand units allocated in respect of the land; and

      • (b) notify—

        • (i) the structure, composition, and functions of the person; and

        • (ii) the terms and conditions upon which the person is to hold the New Zealand units.

      (2) If the Minister has not appointed a person in accordance with subsection (1) prior to issuing a notice under section 78(1) inviting persons to apply for an allocation of New Zealand units under an allocation plan providing for the matters in section 73, then the Minister must, by notice in the Gazette, appoint a person to apply for an allocation of New Zealand units in respect of the land covered by section 73(2)(b)(i)(A) on behalf of the person to be appointed under subsection (1).

    75 Allocation to owners of fishing quota
    • (1) The Minister must recommend to the Governor-General that an allocation plan be issued under section 71 in relation to fishing.

      (2) The fishing allocation plan must provide for—

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

        • (i) were shown on the quota register kept under Part 8 of the Fisheries Act 1996 as owners of fishing quota on 24 September 2009; and

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

      • (b) a total of 700 000 New Zealand units to be available for allocation under the allocation plan; and

      • (c) the persons defined in subsection (2)(a) to receive an allocation calculated in accordance with the following formula:

        P = A × (B + C)/(D + E)

        where—

        P
        is the number of New Zealand units the person is entitled to receive
        A
        is 700 000 New Zealand units
        B
        is the total quota weight equivalent (expressed in kilograms) owned by each quota owner of stocks other than Foveaux Strait dredge oysters on 24 September 2009
        C
        is the total quota weight equivalent (expressed as a number of oysters) owned by each quota owner of the Foveaux Strait dredge oyster stock divided by 9.8 on 24 September 2009
        D
        is the sum of the total allowable commercial catch (expressed in kilograms) of stocks other than Foveaux Strait dredge oysters (excluding any quota shown in the quota register kept under Part 8 of the Fisheries Act 1996 as being owned by the Crown) on 24 September 2009
        E
        is the sum of the total allowable commercial catch (expressed as a number of oysters) of the Foveaux Strait dredge oyster stock divided by 9.8 (excluding any quota shown in the quota register kept under Part 8 of the Fisheries Act 1996 as being owned by the Crown) on 24 September 2009; and
      • (d) the data and information, or the kind of data and information, that each eligible person must supply, and the form in which the person must supply the data and information, in order to—

        • (i) receive an allocation of New Zealand units; and

        • (ii) enable the Minister to verify that the person received the correct allocation of New Zealand units free of charge under the allocation plan; and

      • (e) in relation to an eligible person who receives an allocation of New Zealand units,—

        • (i) the records, or the kind of records, that the person must retain; and

        • (ii) the form in which the person must retain the records; and

        • (iii) the period for which the person must retain the records; and

      • (f) the policies, procedures, and provisions to be applied by the Minister under the allocation plan.

      (3) For the purposes of this section, quota weight equivalent and total allowable commercial catch have the same meaning as in section 2(1) of the Fisheries Act 1996.

    76 Consultation on pre-1990 forest land allocation plan
    • (1) Before making a recommendation under section 73, the Minister must consult, or be satisfied that the chief executive has consulted, representatives of persons that appear to the Minister or the chief executive likely to have an interest in the pre-1990 forest land allocation plan.

      (2) A failure to comply with this section does not affect the validity of any pre-1990 forest land allocation plan issued under section 71.

      (3) Any consultation undertaken before the commencement of this section in respect of the pre-1990 forest land allocation plan is to be treated as the consultation required for the purposes of this section.

    77 Consultation on fishing allocation plan
    • (1) Before making a recommendation under section 75, the Minister must prepare a draft fishing allocation plan.

      (2) The draft fishing allocation plan must provide for the matters set out in section 75(2).

      (3) The Minister must ensure that—

      • (a) public notice is given of the draft fishing allocation plan; and

      • (b) the draft fishing allocation plan is made available in hard copy at the office of, and is accessible via the Internet site of the department of, the chief executive responsible for the administration of this Act and at such other places as the Minister considers appropriate.

      (4) The notice of the draft fishing allocation plan given under subsection (3) must specify—

      • (a) how a hard copy of the draft fishing allocation plan may be obtained; and

      • (b) that any person may make a submission on the draft fishing allocation plan, how submissions may be made, and by what date submissions must be made (which must be no earlier than 20 working days after the date on which notice is given).

      (5) If any submission is made on the draft allocation plan under subsection (4), the chief executive responsible for the administration of this Act must, after the expiry of the time for making submissions, prepare for the Minister a report that contains recommendations in respect of the submissions.

    78 Determinations made in accordance with allocation plan
    • (1) As soon as practicable after an allocation plan is issued, the Minister must give public notice inviting any person who may be eligible for an allocation of New Zealand units under the allocation plan to apply for an allocation.

      (2) The notice under subsection (1) must specify—

      • (a) the date by which applications for an allocation of New Zealand units under the allocation plan must be received by the Minister (which must, in the case of the pre-1990 forest land allocation plan, be no earlier than 40 working days after the date on which the notice is given and, in the case of the fishing allocation plan, be no earlier than 20 working days after the date on which the notice is given); and

      • (b) the data and other information, or the kind of data and other information, that must accompany the application in order for the person’s application to be considered (which data and other information must be that specified in the allocation plan); and

      • (c) how the data and other information are to be supplied.

      (3) To avoid doubt, data and information supplied under subsection (2) is subject to the Official Information Act 1982.

      (4) Despite anything in this subpart or in any allocation plan,—

      • (a) a person is not entitled to receive an allocation of New Zealand units under an allocation plan unless the person applies to the Minister and supplies the required data and other information in the required format; and

      • (b) the Minister is not required to make a determination in favour of any person who fails to apply for an allocation under an allocation plan before the date specified in the notice.

      (5) Following the expiry of the date by which applications must be received, the Minister must, in relation to each application received by that date, make a preliminary determination in accordance with the allocation plan as to—

      • (a) whether the person is eligible to receive an allocation of New Zealand units under the plan; and

      • (b) the total number of New Zealand units the person is entitled to receive under the plan (which may be expressed by reference to a formula); and

      • (c) the year or years in which the New Zealand units will be transferred to the person.

      (6) After making a preliminary determination in relation to an application under subsection (5), the Minister must notify the applicant of the following:

      • (a) whether, in the Minister's view, the person is an eligible person, and—

        • (i) if so, the total number of New Zealand units the Minister has determined the person is entitled to receive under the plan; and

        • (ii) if not, the reasons for that view; and

      • (b) that, if the applicant identifies any errors or miscalculations in the Minister’s preliminary determination of eligibility or entitlement, the person may provide further information to the Minister supporting a different determination; and

      • (c) the date by which any further information must be received by the Minister (which must, in the case of the pre-1990 forest land allocation plan, be no earlier than 20 working days after the date on which the notice is given, and in the case of the fishing allocation plan, be no earlier than 10 working days after the date on which the notice is given).

      (7) Following the expiry of the date referred to in subsection (6)(c), the Minister must, taking into account any information received by the due date in response to the notice, make a final determination of the applicant’s allocation of New Zealand units (if any) under the allocation plan.

      (8) As soon as practicable after making a final determination under subsection (7), the Minister must—

      • (a) publish the determination in the Gazette; and

      • (b) ensure that the determination is accessible via the Internet site of the department of the chief executive responsible for the administration of this Act; and

      • (c) direct the Registrar to transfer the allocated New Zealand units to the holding account of the person in accordance with the determination.

    79 New determination made in accordance with allocation plan
    • (1) Despite anything in this Act, the Minister may (but is not required to) reconsider, revoke, and replace a determination if—

      • (a) the allocation plan under which the determination was made is amended or revoked; or

      • (b) the determination has resulted, or will result, in a person receiving an incorrect allocation owing to—

        • (i) an error in the application of the criteria specified in the applicable allocation plan; or

        • (ii) the person providing altered, false, incomplete, or misleading information in response to a notice given under section 78(1) or (6); or

      • (c) a person who is not specified as an eligible person under a determination has—

        • (i) reasonable grounds to believe that he or she is an eligible person; and

        • (ii) applied to the Minister for an allocation in accordance with the applicable allocation plan.

      (2) In making a new determination, the Minister must,—

      • (a) if the Minister considers that he or she has sufficient information to make the new determination of the matters specified in section 78(5), comply with subsection (4); or

      • (b) if the Minister considers that he or she does not have sufficient information to make the new determination of the matters specified in section 78(5), follow the process in section 78, except that the reference to—

        • (i) 40 working days in the case of the pre-1990 forest land allocation plan and 20 working days in the case of the fishing allocation plan in section 78(2)(a) must be read as 20 working days and 10 working days, respectively; and

        • (ii) 20 working days in the case of the pre-1990 forest land allocation plan and 10 working days in the case of the fishing allocation plan in section 78(6)(c) must be read as 10 working days and 5 working days, respectively.

      (3) If subsection (2)(a) applies, the Minister must—

      • (a) give notice of the matters specified in section 78(5) to the following persons:

        • (i) any eligible person under a final determination who would, once a new determination replaces the final determination, receive greater or fewer New Zealand units than if a new determination did not replace a determination; and

        • (ii) any person not specified as an eligible person under a determination who is specified as an eligible person under a new determination; and

      • (b) comply with section 78(7) and (8) as if the notice given under paragraph (a) had been given under section 78(6).

      (4) If the Minister has provided notice of the matters specified in section 78(5) in accordance with subsection (3), the reference in section 78(6)(c) to 20 working days in the case of the pre-1990 forest land allocation plan and 10 working days in the case of the fishing allocation plan must be read as 10 working days and 5 working days, respectively.

      (5) A new determination made in accordance with subsection (2)

      • (a) may specify 1 or more of the matters specified in section 78(5), and may do 1 or more of the following:

        • (i) specify the correct allocation of a person whose allocation is specified incorrectly in a final determination:

        • (ii) specify as an eligible person a person who was not specified as an eligible person in a final determination:

        • (iii) not specify as an eligible person a person who was specified as an eligible person in a final determination but is no longer an eligible person; and

      • (b) applies subject to section 80.

      (6) Despite anything in this section, the Minister may make a new determination that corrects any minor mistakes or defects in an existing determination without complying with section 78(1) to (6).

    80 Effect of new determination
    • (1) If the Minister makes a new determination in accordance with section 79,—

      • (a) the new determination has the effect of immediately revoking and replacing the final determination; and

      • (b) the Minister may, if practicable, amend or revoke any direction given under section 78(8)(c) in order to give effect to the new determination.

      (2) A new determination made in accordance with section 79 applies from the date it is made, and, subject to subsections (5) and (6), does not change or otherwise affect any transfer of New Zealand units made to a person in accordance with a revoked determination before that date.

      (3) If a revoked determination incorrectly specified a person's allocation, a new determination may increase or decrease the number of New Zealand units the person is to receive by the difference between the number of New Zealand units that the person—

      • (a) received under the revoked determination; and

      • (b) would have received if the revoked determination had specified the person's correct allocation.

      (4) If the circumstances of a person specified as an eligible person under a revoked determination changed while that determination was in force, and the person received a greater or smaller number of New Zealand units than the person's entitlement as a result, then a new determination may increase or decrease the number of New Zealand units the person is to receive by the difference between the number of New Zealand units that the person—

      • (a) received under the revoked determination; and

      • (b) should have received, given the person's change in circumstances.

      (5) If a person specified as an eligible person under a revoked determination is not specified as an eligible person under a new determination, but the person received a greater or smaller number of New Zealand units than they were entitled to under the revoked determination, then,—

      • (a) if the person received too few New Zealand units, the new determination may specify that the person is to receive a further allocation of New Zealand units equal to the difference between the number of New Zealand units the person received under the revoked determination and the number of New Zealand units that the person would have received if the revoked determination had specified the person's correct allocation; or

      • (b) if the person received too many New Zealand units, the chief executive may give a notice to the person, under section 125(1), specifying the number of New Zealand units the person received that the person was not entitled to, and requiring the person to transfer that number of New Zealand units in accordance with section 125(2).

      (6) If a new determination shows that a person received more New Zealand units than the person was entitled to receive under a revoked determination, and the person's incorrect allocation was due to the person providing altered, false, incomplete, or misleading information in response to a notice issued under section 78(1) or (6), then the chief executive may give a notice to the person under section 125(1)—

      • (a) specifying the number of New Zealand units the person received that the person was not entitled to; and

      • (b) requiring the person to repay that number of New Zealand units in accordance with section 125(2).

    Allocation of New Zealand units in relation to industry and agriculture

    81 Criteria for allocation of New Zealand units to industry
    • (1) A person is eligible for an allocation of New Zealand units for an eligible industrial activity in respect of a specified year if the person carries out the activity at any time in the specified year.

      (2) Subsection (1) is subject to section 161B(7).

    82 Provisional allocations for persons carrying out eligible industrial activities
    • (1) A person who carries out an eligible industrial activity in a specified year is entitled to a provisional allocation of New Zealand units calculated in accordance with the following formula:

      PA = LA × AB × OSY

      where—

      PA
      is the person’s provisional allocation of New Zealand units for the specified year
      LA
      is the level of assistance for the activity for the specified year, being,—
      • (a) for a moderately emissions-intensive eligible industrial activity,—

        • (i) 0.6 in 2010, 2011, and 2012; and

        • (ii) in each year after 2012, the level of assistance from the previous year less 1.3% (the phase-out rate for a moderately emissions-intensive eligible industrial activity) (expressed to 2 decimal places):

      • (b) for a highly emissions-intensive eligible industrial activity,—

        • (i) 0.9 in 2010, 2011, and 2012; and

        • (ii) in each year after 2012, the level of assistance from the previous year less 1.3% (the phase-out rate for a highly emissions-intensive eligible industrial activity) (expressed to 2 decimal places)

      AB
      is the prescribed allocative baseline for the eligible industrial activity
      OSY
      is the person’s output from the eligible industrial activity in the year immediately preceding the specified year, as determined in accordance with regulations made under this Act.

      (2) This section is subject to sections 85A and 86B.

    83 Annual reconciliation mechanism
    • (1) A provisional allocation in respect of an eligible industrial activity in a specified year is subject to—

      • (a) an annual allocation adjustment; or

      • (b) if the person ceases to carry out the eligible industrial activity during the specified year, a closing allocation adjustment at the time the person ceases to carry out the activity.

      (2) An annual allocation adjustment must be calculated in accordance with section 84.

      (3) A closing allocation adjustment must be calculated in accordance with section 85.

    84 Annual allocation adjustment
    • (1) A person who has received a provisional allocation of New Zealand units in respect of an eligible industrial activity in a specified year must, subject to section 85, calculate the person’s final allocation entitlement for the specified year in accordance with the following formula:

      FA = LA × AB × OSY

      where—

      FA
      is the person’s final allocation entitlement for the specified year
      LA
      is the figure used for LA (level of assistance) when the person calculated a provisional allocation for the specified year
      AB
      is the figure used for AB (prescribed allocative baseline) when the person calculated a provisional allocation for the specified year
      OSY
      is the person’s output from the eligible industrial activity in the specified year, as determined in accordance with regulations made under this Act.

      (2) The person must then calculate the person’s annual allocation adjustment in accordance with the following formula:

      AA = PA – FA

      where—

      AA
      is the person’s annual allocation adjustment of units
      PA
      is the person's provisional allocation made under section 82
      FA
      is the person's final allocation entitlement calculated under subsection (1).

      (3) If, under subsection (2),—

      • (a) AA is a negative number, the person is entitled to be allocated the difference between PA and FA in the annual allocation adjustment in accordance with subsection (4) and section 86B(2)(b):

      • (b) AA is a positive number, the person must repay the difference between PA and FA in the annual allocation adjustment in accordance with subsection (5).

      (4) In the case of a person who is entitled to be allocated the number of units in the annual allocation adjustment calculated in accordance with subsection (2), the following provisions apply:

      • (a) if the person makes an application for a provisional allocation in the year following the year to which the annual allocation adjustment relates, the person must record the adjustment in the person's application for a provisional allocation for the following year:

      • (b) if the person does not make an application for a provisional allocation in the year following the year to which the annual allocation adjustment relates,—

        • (i) the person must notify the chief executive by 30 April in the year following the year to which the annual allocation adjustment relates that the person is entitled to be allocated the number of units in the annual allocation adjustment; and

        • (ii) by 31 May in the year following the year to which the annual allocation adjustment relates, the chief executive must direct the Registrar to transfer to the holding account notified in the person's application the number of units notified under subparagraph (i).

      (5) If a person is required to repay the number of units in an annual allocation adjustment, the following provisions apply:

      • (a) if the person makes an application for a provisional allocation in the year following the year to which the annual allocation adjustment relates,—

        • (i) the person must record the adjustment for the specified year in the person's application; and

        • (ii) the chief executive must deduct the number of units in the adjustment from the provisional allocation for the following year, unless the number of units in the provisional allocation is less than the adjustment, in which case the person must, by 31 May in the year following the year to which the annual allocation adjustment relates, repay the shortfall by transferring the units to a Crown holding account designated by the chief executive; or

      • (b) if the person does not make an application for a provisional allocation for the year following the year to which the annual allocation adjustment relates, the person must—

        • (i) by 30 April in the year following the year to which the annual allocation adjustment relates, notify the chief executive of the person’s annual allocation adjustment; and

        • (ii) by 31 May in the year following the year to which the annual allocation adjustment relates, repay the number of units in the annual allocation adjustment by transferring the units to a Crown holding account designated by the chief executive.

      (6) Units repaid by a person under subsection (5)(a)(ii) or (b)(ii) or section 85(1)(d)(ii) must be of a type that may be transferred to a surrender account at the time the units are repaid.

    85 Closing allocation adjustment
    • (1) If a person who has received a provisional allocation in a specified year ceases during the specified year to carry out the eligible industrial activity in respect of which the provisional allocation was made, the person must, within 20 working days of ceasing to carry out the activity,—

      • (a) calculate the person’s final allocation entitlement for the year in accordance with the formula in section 84(1); and

      • (b) using the formula in section 84(2), calculate the person’s closing allocation adjustment; and, for this purpose, section 84(2) applies with any necessary modifications as if the closing allocation adjustment was an annual allocation adjustment; and

      • (c) notify the closing allocation adjustment to the chief executive; and

      • (d) either,—

        • (i) if the closing allocation adjustment is a negative number, notify the chief executive that the person is entitled to be allocated the difference between PA and FA in the closing allocation adjustment; or

        • (ii) if the closing allocation adjustment is a positive number, notify the chief executive of the person's closing allocation adjustment and repay the difference between PA and FA in the closing allocation adjustment by transferring the units to a Crown holding account designated by the chief executive.

      (2) The chief executive may, at any time,—

      • (a) require a person who the Minister reasonably believes has ceased to carry out an eligible activity to make the calculations specified in section 84; or

      • (b) waive requirements that a person has under subsection (1) if, in the chief executive's opinion, it is reasonable to do so.

      (3) Subsection (1) is subject to subsection (2)(b).

    85A Allocations to new entrants commencing carrying out an eligible industrial activity
    • (1) This section applies to a person who carries out an eligible industrial activity at any time in a specified year, but did not carry out that activity during the year immediately preceding that year.

      (2) A person to whom this section applies is not entitled to a provisional allocation in respect of the specified year but may instead apply under section 86A for an allocation in respect of the specified year in the year immediately following the specified year, and in that case the person’s allocation for the specified year must be calculated in accordance with the following formula:

      FA = LA × AB × OSY

      where—

      FA
      is the person’s final allocation entitlement for the specified year
      LA
      is the level of assistance for the activity for the specified year, being,—
      • (a) for a moderately emissions-intensive eligible industrial activity,—

        • (i) 0.6 in 2010, 2011, and 2012; and

        • (ii) in each year after 2012, the level of assistance from the previous year less 1.3% (the phase-out rate for a moderately emissions-intensive eligible industrial activity) (expressed to 2 decimal places):

      • (b) for a highly emissions-intensive eligible industrial activity,—

        • (i) 0.9 in 2010, 2011, and 2012; and

        • (ii) in each year after 2012, the level of assistance from the previous year less 1.3% (the phase-out rate for a highly emissions-intensive eligible industrial activity) (expressed to 2 decimal places)

      AB
      is the prescribed allocative baseline for the eligible industrial activity
      OSY
      is the person’s output from the eligible industrial activity for the specified year, as determined in accordance with regulations made under this Act.
    86 Allocation of New Zealand units in relation to agriculture
    • (1) A person is eligible for an allocation of New Zealand units for an eligible agricultural activity in respect of a specified year if the person carries out the activity at any time in the specified year.

      (2) A person who carries out an eligible agricultural activity in a specified year is entitled to an allocation calculated in accordance with the following formula:

      A = LA × AB × OSY

      where—

      A
      is the person's allocation entitlement for the specified year
      LA
      is the level of assistance, being,—
      • (a) 0.9 in 2015; and

      • (b) in each year after 2015, the level of assistance from the previous year less 1.3% (the phase-out rate for an eligible agricultural activity) (expressed to 2 decimal places)

      AB
      is the prescribed allocative baseline for the eligible agricultural activity
      OSY
      is the person’s output from the eligible agricultural activity in the specified year as determined in accordance with regulations made under this Act.

      (3) A person who ceases to carry out the eligible agricultural activity in a year may, within 20 working days of ceasing to carry out the activity, apply under section 86A for an allocation for that year using the formula in subsection (2), and that subsection applies with all the necessary modifications as if OSY were the person's output for that year and not the specified year.

    86A Applications for allocation of New Zealand units for industry and agriculture
    • (1) An eligible person who wishes to be allocated New Zealand units for an eligible industrial activity or eligible agricultural activity in respect of a specified year under this subpart must apply to the chief executive for the allocation.

      (2) An application under subsection (1) must—

      • (a) be in the prescribed form; and

      • (b) be accompanied by—

        • (i) either—

          • (A) in the case of an eligible industrial activity, the person's provisional allocation, final allocation, and annual allocation adjustment, calculated (as applicable) under sections 82, 84, 85, and 85A; or

          • (B) in the case of an eligible agricultural activity, the person's allocation calculated under section 86; and

        • (ii) any other information that the chief executive may require; and

        • (iii) the prescribed fees or charges (if any); and

      • (c) contain the person’s holding account number; and

      • (d) be submitted no later than—

        • (i) 31 December in the year following the specified year, if the application relates to an eligible agricultural activity, unless this subpart otherwise provides; and

        • (ii) 30 April in the specified year, if the application relates to an eligible industrial activity; and

      • (e) if the application relates to an allocation in respect of an eligible industrial activity, be accompanied by a statement as to whether a decision has been made, or whether the applicant is considering making a decision, to cease to carry out the activity in the specified year.

      (3) Subsection (4) applies if and to the extent that any 2 or more persons are jointly carrying out the eligible activity including (but not limited to) in partnership, under an unincorporated joint venture, as trustees of a trust or through joint ownership of land, or an unincorporated association.

      (4) If this subsection applies,—

      • (a) the persons who jointly carry out the eligible activity—

        • (i) are to be treated as persons who comprise a joint person in relation to the allocation of New Zealand units in respect of the eligible activity; and

        • (ii) may not apply individually for an allocation of New Zealand units in respect of the eligible activity; and

      • (b) the joint person may make a single application for an allocation of New Zealand units under subsection (1); and

      • (c) the application submitted by a joint person must comply with the requirements in subsection (2), except that—

        • (i) instead of complying with the requirement in subsection (2)(c), the application must contain the number of a holding account in the name of the joint person; and

        • (ii) the application must also contain—

          • (A) the names and contact details of each of the persons who jointly carry out the eligible activity; and

          • (B) the name and contact details of the person to whom notices are to be given under this Act; and

      • (d) each person who comprises a joint person is, in respect of the period during which the person jointly carries out or carried out the eligible activity,—

        • (i) jointly and severally liable for the obligations of the joint person; and

        • (ii) jointly entitled to the benefits of the joint person; and

      • (e) if this Act requires any thing to be done by or on behalf of the joint person,—

        • (i) it is the joint and several liability of all the persons who comprise the joint person to do the thing; and

        • (ii) any such thing done by 1 person who comprises the joint person is sufficient compliance with the requirement; and

      • (f) a notice that is addressed to a joint person and given in accordance with this Act to the person nominated by the joint person in its application in accordance with paragraph (c)(ii)(B) is to be treated as notice given to that joint person and all the persons who comprise the joint person; and

      • (g) in this subsection—

        joint person includes (but is not limited to) a partnership, an unincorporated joint venture, a trust, joint owners of land, or an unincorporated association (as applicable in the circumstances)

        person means a partner, joint venturer, trustee, joint owner of land, or other person who comprises a joint person (as applicable in the circumstances).

    86B Allocation of New Zealand units
    • (1) On receipt of an application under section 86A, the chief executive must—

      • (a) decide whether the applicant is eligible to receive a provisional allocation or an allocation of New Zealand units for an eligible activity in respect of a specified year; and

      • (b) if the applicant is eligible, decide the number of units the applicant is entitled to be provisionally allocated or allocated; and

      • (c) if the application relates to an eligible industrial activity and in the chief executive’s opinion it is desirable to do so, adjust the amount of any provisional allocation to which the applicant would otherwise be entitled to take account of any statement under section 86A(2)(e) regarding any plans to cease carrying out the activity.

      (2) If the chief executive decides under subsection (1) that an applicant is entitled to a provisional allocation or an allocation of New Zealand units in respect of a specified year, the chief executive must—

      • (a) notify the applicant of the number of units the applicant has been provisionally allocated or allocated in respect of the specified year and of the person's right under section 144 to seek a review of the allocation decision; and

      • (b) direct the Registrar to transfer to the holding account notified in the person’s application the number of units notified under paragraph (a) plus or minus, as the case may be, in relation to an eligible industrial activity the number of units recorded in the application as the applicant’s annual allocation adjustment from the previous specified year.

      (3) If the chief executive decides the applicant is not eligible to be allocated New Zealand units for an eligible activity in respect of a specified year, the chief executive must notify the applicant of—

      • (a) the chief executive's decision; and

      • (b) the reasons for the decision; and

      • (c) the person's right under section 144 to seek a review of the allocation decision.

      (4) Without limiting section 144, the chief executive may also vary or revoke an allocation decision made under this section if in the chief executive’s opinion the decision has resulted, or would otherwise result, in a person receiving an incorrect allocation because—

      • (a) of an error in the calculation of the person’s entitlement to an allocation or provisional allocation under this subpart; or

      • (b) the person has provided altered, false, incomplete, or misleading information in or with an application.

      (5) The chief executive may not vary or revoke a decision under subsection (4) after the expiration of 4 years from the end of the specified year or other period in respect of which the allocation decision was made if the amendment would decrease the number of units allocated to the applicant.

      (6) However, if the chief executive is satisfied that an application for an allocation or provisional allocation, or any other document submitted under this subpart, is fraudulent or wilfully misleading, the chief executive may vary or revoke the allocation decision at any time so as to decrease the number of units allocated to the applicant (including decreasing that number to zero).

      (7) If the chief executive varies or revokes an allocation decision under subsection (4), the chief executive must, as soon as practicable after doing so, notify the applicant of—

      • (a) the particulars of the variation or revocation of the allocation decision; and

      • (b) any grounds or information upon which the variation or revocation was based; and

      • (c) the person's right under section 144 to seek a review of the allocation decision.

      (8) If the result of a review, variation, or revocation of an allocation decision under subsection (4) is that a person allocated units is found to have been allocated and transferred—

      • (a) too many units for an eligible activity in respect of a specified year or any part of a specified year, the person must within 90 working days after the date of the notice under subsection (7) repay the number of units notified to the person by transferring the units to a Crown holding account designated by the chief executive; or

      • (b) too few units for an eligible activity in respect of a specified year or any part of a specified year, the chief executive must as soon as practicable after the date of the notice under subsection (7), direct the Registrar to transfer to the holding account notified in the person’s application (or any other holding account notified by the person) the number of New Zealand units recorded in the notice

      (9) Units repaid by any person under subsection (8) must be of a type that may be transferred to a surrender account at the time the units are repaid.

    86C Chief executive may require further information prior to allocating New Zealand units
    • (1) For the purposes of any of sections 78, 79, and 86B, the chief executive may give to a person who has made an application for an allocation of New Zealand units under any of those sections a notice requiring the person to supply further information to the chief executive (regardless of whether the decision or determination is to be made by the chief executive or the Minister).

      (2) A notice under subsection (1) must be given before the decision or determination is made in respect of the application.

      (3) The notice may require the information to be provided that is necessary to determine whether a person is eligible for a provisional allocation or an allocation of New Zealand units, or eligible for the allocation that the person has applied for.

      (4) A person who has received a notice under this section must supply the information requested within the time frame specified in the notice.

      (5) A person who fails to comply with a notice under this section may not receive a provisional allocation or an allocation of New Zealand units.

    86D Retention of records and materials in relation to allocation
    • (1) A person who has been allocated or provisionally allocated New Zealand units in respect of an eligible activity must keep sufficient records to enable the chief executive to verify, in respect of any specified year in which the person applied for an allocation,—

      • (a) that the person was an eligible person; and

      • (b) the person’s emissions (if applicable); and

      • (c) the person’s calculations of the person’s entitlement to be allocated or provisionally allocated New Zealand units; and

      • (d) the person's output from the eligible activity for the specified year, as determined in accordance with regulations made under this Act; and

      • (e) any other prescribed information.

      (2) The records specified in subsection (1)

      • (a) must include—

        • (i) a copy of any application made to the chief executive under section 86A; and

        • (ii) any information used to prepare the application; and

      • (b) must be retained for a period of at least 7 years after the end of the specified year in respect of which the New Zealand units were allocated.

    86E Balance of units at end of true-up period or other balance date
    • (1) By the end of the true-up period, the Minister must ensure that the Crown holds, in any Crown holding account in the Registry, or in any retirement or surrender account, a number of Kyoto units equal to the number of New Zealand units issued into a Crown holding account during the first commitment period, but not including New Zealand units that are, during the first commitment period,—

      • (a) transferred to a conversion account in accordance with section 30E; or

      • (b) allocated to pre-1990 forest land owners under the pre-1990 forest land allocation plan that will be transferred after 31 December 2012 and that have not been transferred to a cancellation account; or

      • (c) transferred to a cancellation account.

      (2) Subsection (3) applies if New Zealand has received, or if the Minister expects New Zealand to receive, units under—

      • (a) the Protocol during a subsequent commitment period; or

      • (b) a successor international agreement.

      (3) If this subsection applies the Governor-General may, by Order in Council made on the recommendation of the Minister, specify a date by which the Crown must hold, in any Crown holding account in the Registry, or in any retirement or surrender account, a number of Kyoto units or approved overseas units received under any international agreement as calculated under subsection (4).

      (4) The number of Kyoto or approved overseas units held in accordance with subsection (3) must be equal to the number of New Zealand units issued into a Crown holding account up to the date specified in the Order in Council but not including New Zealand units that up to the date specified in the order are—

      • (a) transferred to a conversion account in accordance with section 30E; or

      • (b) allocated to pre-1990 forest land owners under the pre-1990 forest land allocation plan that will be transferred after 31 December 2012 and that have not been transferred to a cancellation account; or

      • (c) transferred to a cancellation account.

      (5) If an Order in Council is made under subsection (3), the Minister must ensure that the Crown holds the required number of units by the date specified in the order.

      (6) For the purposes of subsection (1), true-up period means the 100 days, beginning on a date determined by the Conference of the Parties (serving as the Meeting of the Parties to the Protocol), that provide the Parties with an additional period for fulfilment of their obligation under Article 3.1 of the Protocol through the acquisition and transfer of Kyoto units.