On December 2, 2022, the New Zealand Government submitted a bill to Parliament to amend the Climate Change Response (Late Payment Penalty and Industrial Allocation) Bill. The government grants free New Zealand emissions units (NZUs) to companies with high emissions that are exposed to international competition. These are called “industrial allocations.” The government believes the cost of the New Zealand Emissions Trading Scheme (NZETS) could affect the international competitiveness of some companies. The amended bill is an update on the “Industrial Allocation” bill from 10 years ago. Under the current “Industrial Allocation,” some multi-emitting companies are receiving more NZUs than they need, at an estimated cost to the government of $60 million a year.
The amended bill will address NZU over-allocation, reduce government costs, and ensure that businesses receive the appropriate quantities of NZUs. An outline of the Climate Change Response (Late Payment Penalty and Industrial Allocation) Amendment Bill is as follows: