Fuel and Energy News

Fuel and energy prices are likely to rise as a result of a Government initiative aimed at reducing greenhouse gas emissions.
 
The New Zealand Emissions Trading Scheme (ETS) is the Government’s main policy tool to achieve this, and it puts a price on emissions, which will eventually be passed on to the end consumers.
 
The forestry sector is already part of the scheme, and from 1 July 2010 the stationary energy and industrial process sector along with liquid fossil fuels and transport will also be subject to the scheme’s requirements.
 
Energy participants will be those who import or mine coal and import or mine natural gas, plus petrol refineries and stationary energy producers who use geothermal fluid, used oil, waste oil, used tyres, waste or biofuels for electricity generation or industrial heat.
 
The ETS applies to liquid fossil fuels as far up the supply chain as possible – in other words, when refined oil products leave the refinery or are imported.  This means importers (currently, this includes BP, Caltex, Gull, Mobil, and Shell) will be required to participate in the scheme.  Individual vehicle users are not participants.
 
At this stage fuel companies, such as Mobil, are unable to predict the impact on fuel prices due to the additional cost of purchasing emission units or carbon credits under the scheme.  Mobil believes prices will be influenced by unit market prices and the competitive local market.
 
The Government has made a number of amendments to the ETS passed into law in September 2008. One of the changes is to introduce a transition phase between 1 July 2010 and 31 December 2012 which means participants receive fixed price option and reduced surrendering requirements during this phase.
 
Other sectors due to join the scheme are agriculture (1 January 2015) and waste and all remaining sectors (1 January 2013).
 
More information on the NZ ETS can be found at www.climatechange.govt.nz.