11 April 2023 – Cabinet papers and related documents released
20 December 2022 – Cabinet papers and related documents released
7 November 22 – Summary of submissions released
This consultation closed on 30 August 2022. A summary of submissions is now available.
New legislation is required to implement a new penalty. The Climate Change Response (Late Payment Penalties and Industrial Allocation) Amendment Bill was introduced into the House in December 2022 and is currently before Select Committee.
Background to this consultation
In the New Zealand Emissions Trading Scheme (ETS), a penalty applies if a participant (such as a forester) fails to surrender or repay New Zealand Units (NZUs or "units") to the Crown by the due date.
There is a risk that serious financial hardship could result from these penalties for foresters with small liabilities. We proposed alternatives to reduce this risk while still encouraging people to meet their obligations. We sought your feedback on these options to make sure the penalty would work in practice.
Submissions opened on 2 August and closed at 5pm on 30 August 2022.
We held 2 webinars to discuss these options. A recording of one is available to watch.
What was proposed?
The New Zealand ETS compliance and penalty regime is intended to encourage participants to comply with the rules of the scheme. A surrender/repayment penalty applies when participants fail to surrender or repay units by the due date. This is a cash penalty set at 3 times the price of carbon (set in Regulations) for each overdue unit. This penalty took effect on 1 January 2021 but was deferred for small foresters to avoid a risk of serious financial hardship while new options were developed.
In the short term, we proposed to extend the deferral to allow time to educate participants and develop a new penalty. To reduce the risk of serious financial hardship for small foresters, MPI and the Ministry for the Environment consulted on 2 alternative options for the surrender/repayment penalty:
- A strict liability penalty, which would consist of a cash penalty based on the price of carbon (set in Regulations) and the volume of the overdue units. The penalty would not apply if the participant can prove total absence of fault.
- A discretionary penalty, which would involve a cash penalty set at the price of carbon (set in Regulations). The Environmental Protection Authority (the Regulator) would have discretion to reduce the penalty based on the participant’s culpability.
The discussion document provides information on these 2 options.
Submissions are public information
Note that any submission you make becomes public information. People can ask for copies of submissions under the Official Information Act 1982 (OIA). The OIA says we have to make submissions available unless we have a good reason for withholding it. That is explained in sections 6 and 9 of the OIA.
Tell us if you think there are grounds to withhold specific information in your submission. Reasons might include that it's commercially sensitive or it's personal information. However, any decision MPI makes to withhold information can be reviewed by the Ombudsman, who may tell us to release it.
MPI may post all or parts of any written submission on its website. We will consider that you have consented to its publication, unless clearly stated otherwise in your submission. We cannot reply to individual submitters.