This page has questions and answers on synthetic greenhouse gases including the synthetic greenhouse gas levy and NZ ETS 2012 amendments.
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The Synthetic Greenhouse Gas levy
This proposed extension would mean the levy would be charged on hydrofluorocarbons (HFCs) imported as a component in formulated polyol used in the manufacture of polyurethane foam.
To find out more read the consultation document
Submissions closed at 5.00pm on Friday 20 January 2017.
The amendments to the Climate Change Response Act 2012 removed the ETS obligation from the importation of SGG in goods and motor vehicles and replaced it with a SGG levy linked to the ETS emission price.
From 1 July 2013, importers of goods and motor vehicles containing HFC or PFC are required to pay a levy.
The levy applies to goods containing HFC or PFC. Common goods include: fridges, freezers, heat pumps, air-conditioners and refrigerated trailers. The levy also applies to motor vehicles that contain HFC in their air-conditioning unit.
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) and the registration cost will increase slightly. This levy will be collected by the New Zealand Transport Agency (NZTA).
The levy on all other goods that contain HFC and PFC will apply at the point of import and will be collected by the New Zealand Customs Service (Customs).
The levy is linked to the price of carbon in the NZ ETS and will vary. The charge will vary between items to reflect the amount of particular gas, and its global warming potential. The rates of the levy are updated annually by the Ministry for the Environment to reflect prevailing ETS prices. The scope of the levy may also be reviewed if new gases or products need to be added to the schedule.
For motor vehicles containing HFC, the levy rates will be based on the type of motor vehicle and the amount of gas in the vehicle’s air conditioning unit.
For goods containing HFC or PFC, the levy rates will be based on tariff descriptions and statistical key codes and will mostly be charged on a $ per item basis. Some goods will be charged based on the amount of gas contained in the good.
The current rates are listed in the Schedule of the Climate Change (Synthetic Greenhouse Gas Levies) Regulations 2013.
Motor vehicles that are entry-certified, but not registered until on or after 1 July 2013 are exempt from paying the levy as the necessary information about the motor vehicle’s air conditioning unit, will not be available.
There are also exemptions for household goods and effects of passengers under the Customs and Excise Act 1996. For more information, please visit the New Zealand Customs website.
NZ ETS 2012 Amendments
Yes. The Climate Change Response (Emissions Trading and Other Matters) Amendment Act 2012 has made a series of changes to the NZ ETS. The changes are reflected throughout the climate change website.
The changes affected:
- people importing SGG both in bulk and in goods and motor vehicles
- people exporting or destroying SGG both in bulk and in goods and motor vehicles
- people installing, operating, servicing, modifying, or dismantling equipment that contains SGG
- heavy users of SF6 in electrical switchgear.
The changes are reflected in the SGG webpage. For historical pages of the changes made under the Climate Change Response (Emissions Trading and Other Matters) Amendment Act 2012 visit the ETS Amendment 2012 page.
The EPA will be in touch with those participants who need to deregister from the NZ ETS, or you can contact the EPA on 0800 CLIMATE (0800 254 628).
The synthetic greenhouse gases covered by the NZ ETS are:
- hydrofluorocarbons (HFCs),
- perfluorocarbons (PFCs)
- sulphur hexafluoride (SF6).
They are imported and exported in bulk and also contained in goods. They have specialist uses in:
- air conditioning and refrigeration systems
- electricity transmission.
They are substitutes for ozone depleting substances, whose bulk import is being phased out under the Ozone Layer Protection Act 1996.
Synthetic greenhouse gases (SGG) 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 motor vehicles are dumped).
They have very high global warming potentials compared to carbon dioxide. A kilogram of sulphur hexafluoride, for example, has the effect of almost 23 tonnes of carbon dioxide. Consequently, we expect the NZ ETS to noticeably increase the price of SGG in the bulk gas market.
The Minister has the ability under the Climate Change Response Act 2002 to recommend exemptions where the environmental integrity of the scheme is not materially undermined and where the costs of such exemptions do not outweigh the benefits. Exemptions and thresholds are in place for other NZ ETS sectors through the Climate Change (General Exemptions) Order 2009.
Exemptions for certain SGG activities within that Order include:
- importing SGG contained in goods that are for personal and non-business use
- importing SGG contained in the refrigeration or air conditioning systems of containers, ships or aircraft that are passing through New Zealand (and various other criteria).
These exemptions are mirrored in the eligibility criteria for NZUs when SGG are being exported. There is one additional constraint: the export of sulphur hexafluoride is only eligible for NZUs if the gas exported was imported after 1 January 2013.
No, because they are not included in New Zealand's international climate change obligations. While some ozone depleting substances are also greenhouse gases, they are not included in the Kyoto Protocol and the NZ ETS as they are controlled by the Montreal Protocol and the Ozone Layer Protection Act 1996.
Importers of synthetic gases do not receive an allocation of NZUs because they are able to pass the costs of their NZ ETS obligations onto customers.
Exporting SGG is an activity for which you can receive NZUs; however, this isn’t considered part of the NZ ETS allocation process but is classed as a ‘removal activity’. See the question above for more detail on removal activities.
In many applications, alternatives exist to synthetic gases. The NZ ETS will provide incentives for these alternatives. It encourages better handling, recycling and destruction of SGG.
The NZ ETS also favours people who can find ways to reduce greenhouse gas emissions through developing or applying new technology or more efficient production methods.
SGG importers with NZ ETS obligations will almost always be different from those who have some control over eventual emissions. However, it is expected that those emitters will face an increased price for the gases they use, or for the products that contain those gases.