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Projects to reduce emissions (PRE)

What is PRE?

The New Zealand Government launched the Projects to Reduce Emissions (PRE) programme in 2003 to support initiatives that will reduce greenhouse gas emissions.

There are a number of different kinds of projects under the PRE scheme. Some produce renewable energy by using natural resources such as water, wind, or steam from geothermal activity. Others turn waste into energy.

There have been two trial projects and two contestable tender rounds – the first tender round in 2003 and the second in 2004. There are now 40 projects in the PRE programme. Investors are private or publicly-listed companies, state-owned enterprises, and local authorities. The government does not intend to undertake a third tender round at this stage. However, It is possible that the proposed emissions trading scheme (ETS) could be augmented by including an offset mechanisms similar to the PRE programme. The government will discuss this possibility with stakeholders and Maori.

The incentive for tendering for PRE was the provision of emissions units, or "carbon credits", which are internationally tradable and add to the financial value of the project.

PRE participants may sell the emission units that they receive on the international or domestic market either to governments or to private buyers. The price depends on international or domestic rules and the market at the time of selling.

A number of participants have already secured buyers for their emissions units. Some have secured sales with an overall value in excess of a million New Zealand dollars.

Criterion of PRE projects

The main criterion of PRE is that projects must reduce emissions beyond business-as-usual reduction goals. This helps to bring forward projects that would not otherwise be economic. The greenhouse gas emissions reductions must occur over the first commitment period of the Kyoto Protocol (2008-2012).

Projects must also take place in New Zealand and result in a reduction in the total greenhouse gas emissions that will be reported by New Zealand it's greenhouse gas inventory. This means that they can be counted towards New Zealand’s commitment under the Kyoto Protocol.

PRE and the Kyoto Protocol

PRE projects are eligible to become Joint Implementation (JI) initiatives. This means that PRE project owners can sell the emission units they ‘earn’ through the JI mechanism.

JI is a flexibility mechanism under the Kyoto Protocol. JI allows industrialised countries to meet part of their required cuts in greenhouse gas emissions by paying for projects that reduce emissions in other industrialised countries. This means that countries, or companies within those countries, can find the least-cost method for meeting their emission targets.

JI also helps countries to work together by jointly implementing initiatives that will reduce overall greenhouse gas emissions.

Cross-sector initiatives

The PRE programme is known as a cross-sector scheme because it works with a number of different sectors to deliver initiatives with climate change benefits.

The government is currently investigating options for further ‘cross-sector’ incentive schemes like PRE. The cross-sector incentives work will be undertaken in addition to the sector-specific work already under way, such as through forestry, transport, industry and agriculture work programmes.

The following links can provide you with more information on the PRE programme:

For more information on the Projects to Reduce Emissions programme, email projects@climatechange.govt.nz.

Last updated: 9 May 2008