ETS And Waste Disposal
Participation in the ETS is compulsory if you operate a waste disposal facility, and for most Councils waste will be their only direct involvement in the ETS scheme [1]. The Ministry for the Environment has recently released for consultation the draft Climate Change (Waste) Regulations 2010 (Regs) [2] that allow Councils to estimate what their annual emission liability may be and should enable decision making to commence around how the liabilities will be met.
What qualifies as a disposal facility?
The ETS scheme is established in the Climate Change Response Act 2002 (Act). The Act defines disposal facilities [3] as follows:
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"disposal facility means any facility, including a landfill,— |
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(a) |
at which waste is disposed; and |
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(b) |
at which the waste disposed includes waste from a household that is not entirely from construction, renovation, or demolition of a house; and |
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(c) |
that operates, at least in part, as a business to dispose of waste; but |
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(d) |
does not include a facility, or any part of a facility, at which waste is combusted for the purpose of generating electricity or industrial heat |
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dispose, in relation to waste,— |
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(a) |
means— |
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(i) |
the final or more than short-term deposit of waste into or onto land set apart for that purpose; or |
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(ii) |
the incineration of waste by deliberately burning the waste to destroy it; but |
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(b) |
does not include any deposit of biosolids for rehabilitation or other beneficial purposes |
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waste means any thing that has been disposed of or discarded— |
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(a) |
including (but not limited to) any disposed of or discarded thing that is defined by its composition or source (for example, organic waste, electronic waste, or construction and demolition waste); but |
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(b) |
excluding any solid biofuel combusted for the purposes of generating electricity or industrial heat" |
What does participation mean and when will it commence?
Under the ETS, emitting participants are required to surrender 1 carbon credit per tonne of carbon emitted [4]. Emissions are reported on an annual basis 1 January – 31 December with returns (which may be required to be subject to verification) due to be filed, after the close of that period, between 1 January and 31 March each year. Where a participant has emission liabilities they must pay the amount calculated in the return by 31 May in the same year. In addition to filing returns and extinguishing liabilities participants must register as a participant, open carbon credit trading accounts, collect any prescribed information and retain records for seven years.
For operators of waste disposal facilities there is a phase in period whereby operators can voluntarily report emissions for the period 1 January 2011 to 31 December 2011 and do not have to make any payment for the emissions reported. Reporting of emissions becomes mandatory for the period 1 January 2012 to 31 December 2012 but, again, no payment is required for the emissions reported. Full obligation, that is, reporting and payment for emissions generated commences from 1 January 2013. This means that operators must calculate their emissions for the period 1 January 2013 to 31 December 2013, file an emission return for that period between 1 January and 31 March 2014 and extinguish the emission liability stated in the return by 31 May 2014.
Unlike other types of participant in the ETS no allocations of free carbon credits to help offset emission liabilities are provided to operators of disposal facilities.
How is the emission liability to be calculated?
The Regs propose emission liability from waste disposal facilities be determined by:
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Operators recording the 'gross tonnage' and 'diverted tonnage' by class of waste deposited. 'Gross tonnage' and 'diverted tonnage' are measured in accordance with regulations 11-14 or 15 [5] of the Waste Minimisation (Calculation and Payment of Waste Disposal Levy) Regulations 2009. |
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Emissions are then calculated by deducting the 'diverted tonnage' from the 'gross tonnage' and then multiplying that amount by the default emission factor of 1.1454:
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(i) |
The default emission factor must be used unless a 'unique emission factor' (UEF) has been authorised and is in force under the Climate Change (Unique Emissions Factors) Regulations 2009 [6] for a particular class of waste, such as: municipal solid waste; commercial and industrial waste; building and demolition waste and other waste. Approved UEFs are, generally speaking, lower factors which reduce overall emission liability [7] and are approved based on further specific assessment of the composition of material disposed or where a landfill gas collection and disposal system which complies with the requirements of those regulations is in operation.
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(ii) |
If a UEF is in place for one or more particular class of waste, an operator must make separate calculations for each class and combine the totals for the purpose of its emission return. |
Going forward
The Regs were released for public consultation on 21 June 2010 with consultation closing 23 July 2010. This suggests that the Regs are not expected to change a great deal, however until promulgated the Regs are not law. While the ultimate fiscal liability does not occur until May 2014 we suggest Councils may wish to review their emission liabilities from disposal facilities much earlier so that any amendment to fees charged, which will require use of the special consultative procedure, can take place from the date Councils start incurring liability, 1 January 2013. We note that the Act allows parties to report their emission liabilities together, which may allow for emission liabilities to be reported on a regional basis and/or incentive for Public Private Partnerships with entities engaged in emission extraction and sequestration.
[1] Councils will, like other New Zealanders, be indirectly involved through having to accommodate the rise in the cost of goods and services which are emission intensive.
[2] Amendment regulations the Climate Change (Unique Emissions Factors) Amendment Regulations 2010 were also released to enable the Regs to integrate with existing regulations.
[3] See sections 2A(1) & (7), 4, 54-57 and Part 6 of Schedule 3.
[4] The transitional measure which allows for payment in cash rather than surrender of credits will have expired before waste enters the ETS.
[5] If regulation 15 is applicable.
[6] As amendment by the Climate Change (Unique Emission Factors) Amendment Regulations 2010.
[7] If the default factor is utilised then a nett tonne of waste deposited at the landfill will equate to 1.1454 tonnes of emissions requiring 1.1454 carbon credits per nett tonne to satisfy the liability.
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Last updated: 6 July 2010
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