Compliance in the ETS

As a participant in the ETS there are obligations which you must meet. Find out what you need to do to ensure you comply.

Participation in the New Zealand Emissions Trading Scheme (ETS) can either be mandatory or voluntary depending on the type of activity you are carrying out.

If you are a participant in the ETS you must:

  1. Apply to open a holding account in the Register.
  2. ​Register as a participant.
  3. ​File an emissions return.
  4. ​Surrender or receive units.

Mandatory participation

A person who carries out an activity listed in Schedule 3 of the Climate Change Response Act 2002​ (the Act) is known as a mandatory participant. They must notify the Environmental Protection Authority (EPA) that they are a participant in respect of the activity within 20 days of starting to carry out that activity, and must register as a participant in the ETS.

Mandatory participation activities - Climate Change Response Act 2002

Voluntary participation

A person who carries out an activity listed in Schedule 4 of the Act​ may voluntarily register as a participant in the ETS. While voluntary participants have a choice about whether or not to participate in the ETS, once they become a registered participant all of the relevant requirements of the Act and associated Regulations become mandatory for them to follow.

Voluntary participation activities - Climate Change Response Act 2002

 

Compliance and enforcement Plus

The obligation to file an emissions return is similar to the “self-assessment” system provided under tax legislation.

Where an assessment is not provided by a participant, we can make a default assessment. There are both civil and criminal penalties for individuals and body corporates under the Act. These penalties are set out in sections 129-143 of the Act​.

Civil penalties may be incurred for a failure to surrender or repay units. There may be reductions in penalties by up to 100% if:

  • the participant voluntarily discloses the failure to surrender or repay units before receiving a penalty notice, or
  • the participant voluntarily discloses incorrect information in a return, or a failure to file a return before an investigation is started, or
  • the EPA is satisfied that the person formed an incorrect view that was reasonable having regard to the information available to that person at that time.

Read the Emissions Trading Scheme Compliance and Enforcement Programme (pdf 436 KB)

Offences​​​ and penalties Plus

Criminal offences may be committed where there is a breach of obligations imposed by the Act. A summary of civil and criminal penalties is set out below.

Nature of offencePenalty
Failing to surrender or repay units by the due date
  • ​Surrender or repay the outstanding units; and
  • Pay an excess emissions penalty of $30 per outstanding unit; and
  • Interest accrues from the due date until a penalty is paid in full and associated surrender or repayment obligations are met in full

Without reasonable excuse fails to:

  • Register as a participant
  • Submit an emissions return
  • Comply with the requirements in ​relation to an allocation adjustment
  • Retain records (i.e. 20 years (forestry sector), 7 years all other sectors)
  • Notify the EPA of matters when required to do so.​

Fine, on conviction, of up to:

  • $8,000 for first offence
  • $16,000 for second offence
  • $24,000 for every subsequent offence

Without reasonable excuse fails to:

  • Provide information or documents to the EPA or an enforcement officer when required to, or
  • Appear before the EPA or an enforcement officer in relation to enforcement actions.

Fine, on conviction, of up to

  • $12,000 for individuals
  • $24,000 for a body corporate

Knowingly provides altered, false, incomplete or misleading information about any obligations under the scheme, including emissions returns ​

Wilful obstruction or interference with a person exercising a power in relation to enforcement actions.

Fine, on conviction, of up to:

  • $25,000 for individuals
  • $50,000 for a body corporate.
Evasion - lies or deliberately fails to meet obligations under the scheme to gain financial benefit or avoid financial loss

Fine, on conviction, of up to:

  • $50,000; and /or
  • 5 years imprisonment.
Please see sections 129-143 of the Act for further information on offences and penalties or contact us for assistance.