The NZ Emissions Trading Scheme (ETS) allows businesses to trade carbon credits to reduce the overall greenhouse emissions in New Zealand. While households will not have to trade carbon credits, the scheme will have an impact on all New Zealand households. With all the hype in the media about the scheme, there has been some confusion about how the ETS will affect people. The following facts from the New Zealand government‘s website on climate change may help you to figure out just how the ETS will affect you on a personal level.

Households Generally
Households will not participate in the ETS directly. This means you will not have to trade carbon credits on emissions on your household electricity and gas bills. You do not have to plant a tree to run a car. However, businesses throughout New Zealand will participate in the scheme and may pass on the costs of the scheme to you as the consumer. Meanwhile, you can reduce your greenhouse emissions and therefore reduce the costs you have on paying your electricity and fuel bills.

Increase in Electricity Prices
From 1 July 2010, the government estimates that electricity costs will increase by about 1 cent per kWh, which will increase the average household’s electricity bills by $165 per year.

Increase in Fuel Prices
Fuel prices are likely to rise by about 3 cents per litre due to the scheme. The recent price rises due to the increasing global cost of oil have a greater impact on the household budget.

Other Increases in Prices
It is difficult to estimate at this point what the effect of the ETS will be on the prices of other goods and services. As freight charges increase to cover the costs of emission trading on carbon production, many goods could increase in price. It depends on how much companies and businesses pass on these additional costs to the consumer. Goods that do not have to travel will not need to rise in price.

The government has tried to limit the impact of the ETS on the economy by introducing a transitional stage until 31 December 2012 by halving the emissions trading obligation on liquid fuel, gas, and electricity companies.

What You Can Do To Reduce Your Costs
If you do not want to pay more for electricity, gas, and fuel, you can reduce your consumption of these items. Making simple changes in your daily lifestyle could help you to save the difference in costs from the flow down effects of the ETS.

You can receive funding from the Energy Efficiency and Conservation Authority to retrofit homes with insulation and clean, low emissions heating. Under the government’s Warm Up New Zealand: Heat Smart programme, the government will spend $347 million over four years to insulate 188,500 homes.

You can reduce hot water costs by 50 to 70 percent by converting your electricity heater to a solar water heating system and you can get funding for approved solar water heating systems from the Energy Efficiency and Conservation Authority.

To reduce electricity usage in your house, you can turn off electric products at the power point, instead of using a stand by mode. Instead of using warm water (that uses electricity), use cold water for your laundry and save between $50 and $75 per year.

To reduce your fuel consumption, reduce the amount of time you spend in the car. Walk or cycle for short trips instead of using your car. Make sure you inflate your tyres at the right pressure to save up five per cent of your usual fuel usage.

The NZ government’s website on climate change offers links and advice on saving costs by reducing carbon emissions as a household. Even making small changes could reduce your electricity and fuel bills dramatically.

The Emissions Trading Scheme started on July 1 and the full impact on households’ budgets is not clear yet. However, while householders do not have to directly trade carbon credits, there will be some flow on costs in electricity and fuel. Householders can reduce these costs by reducing electricity and fuel consumption.