8. Other Regulatory Approaches
A legislative vehicle will be needed to enshrine mechanisms behind any emissions trading scheme, greenhouse gas charge or compulsory aspects of voluntary agreements. Such mechanisms could include establishing emission caps or constraints, a competitiveness-at-risk assessment process (in order to qualify for charge rebate or exemption), non-compliance penalties, quantification tools and reporting regimes. Some short-term regulatory approaches are being considered under sectoral work programmes. This section looks at two other regulatory measures for controlling greenhouse gas emissions in the period after 2012: the Electricity Act 1992 and the Resource Management Act 1991 (RMA).
One option to control greenhouse gas emissions would be to amend the Electricity Act 1992. It could be amended to expand the range of regulation-making powers to include the power to ensure the investment decisions of new thermal generation projects account for a price of greenhouse gas emissions, or to require carbon to be captured and sequestered or offset through planting or other abatement projects. These options are explored further in the draft New Zealand Energy Strategy.
Regulation Example: New South Wales Greenhouse Gas Abatement Scheme
The Greenhouse Gas Abatement Scheme (GGAS) is an abatement-focused emissions trading scheme which places obligations on electricity retailers and some other buyers and sellers of electricity to offset a portion of the greenhouse gas emissions associated with their electricity purchases. GGAS’s objectives are to reduce the emissions associated with the generation and use of electricity and to develop and encourage activities to offset emissions.
The scheme, which has been operating since 2003, sets an annual state-wide greenhouse gas benchmark for the sector. Allocation is determined by the share of the electricity market.
Offsets, or abatement projects, can be applied in supply-side activities, such as low emissions generation or improving the efficiency of existing generation, or in demand-side projects that reduce electricity consumption. Large users of electricity can apply to have their reduction of production emissions count as offsets. Finally, carbon sequestration can be used as abatement.
GGAS was established by New South Wales electricity legislation and regulations which set out rules and eligibility criteria, and create and transfer certificates. The regulatory and administrative body has produced three annual reports which show increasing numbers of abatement projects being assessed and accredited, and progress towards reducing the average emissions intensity of supplied electricity.
More information on GGAS can be found at:
A second option would be to use various mechanisms under the RMA, which at present prevents local authorities from considering the effect on climate change from local emissions of greenhouse gases.
The government could develop three policy instruments as transitional and long-term policy tools. Firstly, the RMA could be amended to restore local government’s ability to consider the impact on climate change from local greenhouse gas emissions through plans and air discharge consents. At the time of this publication, this change is being sought by the Resource Management (Climate Protection) Amendment Bill before the Local Government and Environment Select Committee. Local government did have these powers until 2004, when the government decided to amend the RMA and remove them. At the time, a national economic instrument, the carbon charge, was the government’s preferred option for controlling greenhouse gas emissions [Background on the Cabinet decision can be found in this Cabinet paper]. The RMA could also be used to manage land-use changes that impact on greenhouse gas emissions.
Another possible RMA regulatory instrument to manage greenhouse gas emissions is a National Policy Statement (NPS). An NPS is a mechanism for providing national policy guidance to local authorities on matters of national significance. Once policy statements and plans have been approved, local authorities must ensure they meet the requirements of an NPS. For an NPS to be developed in respect of greenhouse gas emissions, the RMA would have to be amended. An NPS can set out objectives and policies that local authorities must “give effect to” in their local and regional policies and plans, and which they must have regard to when making decisions on individual development projects. The one NPS now in operation is the New Zealand Coastal Policy Statement.
A third possible RMA instrument method is the use of National Environmental Standards (NESs) to control greenhouse gas emissions at the point of source. NESs sets mandatory bottom-line or maximum-setting regulations that apply nationally, although councils may be given discretion to impose additional controls. NESs are regulations that can override local and regional rules, and can specify the performance standards required in relation to specific activities or specify how particular activities are to be regulated at local or regional level. More information on NESs can be found on the Ministry for the Environment’s website: http://www.mfe.govt.nz/laws/standards/index.html.
National Environment Standard Example: Ambient air quality
This 2004 RMA regulation set limits on the concentration of certain air quality contaminants within prescribed time periods in urban areas. It describes monitoring and reporting requirements as well as setting out “paths to compliance” for local air quality that should be referred to when considering air discharge consents. The standard allows for offsets, where either the regional council or the proponent of an activity that would otherwise breach various contaminant concentration limits carries out an “offsetting” emission reduction activity elsewhere in the airshed. Further policies on this mechanism are being developed.
For more information on this standard see:
http://www.mfe.govt.nz/laws/standards/air-quality-standards.html
On a generic basis, it appears possible to draft NES regulations to control point-source greenhouse gas emissions. NESs could require participation in an emissions trading or offset scheme administered by a central agent, although this regulation would have to be carefully worded to avoid the risk of double controls on emitters at the local level and through the national trading system
The above analysis shows there are two viable options under the RMA, as an amendment to the RMA without guidance through an NES or NPS would be unlikely to meet any tests of environmental or economic integrity or administrative simplicity. The problems faced by consent authorities and air discharge resource consent applicants before the 2004 amendment would reoccur and possibly be made worse by the increased attention being given to climate change issues.
The first viable RMA option is to use multiple NESs across a range of sources of greenhouse gas emissions. The second is to use the RMA through amendment and some form of national guidance such as an NPS and accompanying NESs. Both options devolve at least some responsibility for controlling emissions to local authorities, and would be difficult to apply to large numbers of small direct sources of emissions, such as in the transport, agriculture and forestry sectors. The use of short-term RMA controls in the agricultural and forestry sectors will be explored by the relevant sectoral work programmes, which will note that there are co-benefits from requiring particular emission controls or offsets, such as increased afforestation, improved water quality and riparian management. Extending RMA controls to other sectors through an NPS or NES could increase these co-benefits.
Question for discussion
19) Is it desirable to apply RMA controls on greenhouse gas emissions because of their impact on global climate change?
