New opportunities in climate change Projects

The Government has confirmed details of its climate change Projects mechanism and will call for proposals in an exploratory tender round in the middle of this year, Pete Hodgson said today.

The Projects mechanism will offer incentives for initiatives that will deliver defined reductions in greenhouse gas emissions in any sector of the economy.

The incentives for the exploratory round will be promissory notes for Kyoto Protocol emission units. These units, often referred to as 'carbon credits' will be internationally tradeable when the Kyoto Protocol comes into force. The promissory notes and units will have a financial value for the firms or industries with successful Projects. Direct financial incentives for Projects are a possibility in future rounds.

“The Projects mechanism will offer significant incentives for business to adopt technologies and processes that will reduce or slow growth in greenhouse gas emissions," Mr Hodgson said. "This mechanism creates business opportunities in the pursuit of better emissions management and will be a key source of early progress towards a low-emissions economy."

To qualify for consideration, Projects must be additional to business-as-usual. The objective is to secure improvements in emissions management that would not be economic unless an incentive was available.

"Projects can be proposed by individual firms, groups of firms, or industry organisations," Mr Hodgson said. "The minimum reduction in emissions is 10,000 tonnes of carbon dioxide equivalent over the Kyoto Protocol's first commitment period, 2008-2012, but there is no upper limit. I am hopeful that some ambitious proposals for Projects that will achieve substantial emissions reductions will be received."

Mr Hodgson said tenders would be assessed and successful proposals selected by the third quarter of this year, with detailed agreements to be settled progressively after that.

"Projects that would improve New Zealand's electricity supply security will be given priority in processing for this round," Mr Hodgson said. "Already this year, the Government has agreed to help the development of two proposed wind farms by giving them credit for the emissions benefit they would provide. There is plenty of scope for further such developments."

Information on the key elements of the Projects mechanism is available on the New Zealand Climate Change Office’s website http:// http://www.climatechange.govt.nz.

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