Care needed with ETS review report

Care needed with ETS review report

Posted on 15 September 2011

The New Zealand Emissions Trading Scheme review report is unjustifiably optimistic on the global climate change response, and the Government is urged to get its own facts before reaching any decisions, Straterra says.

The NZETS Review Panel reported today to the Government. Climate Change Minister Hon Dr Nick Smith said he welcomed recommendations to slow down implementation of the scheme to ease price impacts on New Zealanders, and that in general the scheme is working as intended.

Straterra CEO Chris Baker said today he appreciated the Minister’s announcement that the Government will carry out “detailed work” before making decisions.

“Like the review panel, industry has also been able to assess first hand other countries’ actions, and there is very little to report. Other than Europe, and leaving Australia to resolve its own policy challenges, New Zealand is the only country in the world with a price on carbon, and that situation is not likely to change anytime soon.”

“The report is therefore unrealistic on the required pace of change in New Zealand. Slowing down the entry of some sectors in the ETS, and the two-for-one surrendering obligation for units, by a few years offer little comfort for sectors that cannot pass on the price of carbon, especially when coupled with a steeply climbing carbon price cap.”

“If New Zealand businesses cannot compete with overseas businesses where there is no price on carbon, those businesses will simply reduce output, or even move offshore, with no benefits for the world’s climate, and with adverse effects on the New Zealand economy.”

“That said, the report is sensible in many respects, and the hard work of the review panel is appreciated,” Mr Baker said. “It is appropriate to retain the phase-out rate for sectors that receive free allocation of emissions units by 1.3 percent a year.”

“While mining has wrongly been excluded from being eligible for free allocation of units because of anomalies in ETS design, the reviewers have recommended this be reconsidered. We appreciate the panel’s efforts to understand mining, and in particular the treatment of fugitive emissions and diesel.”

“We would be happy to be involved in further work the Government is doing to ensure New Zealand does our fair share towards the global climate change response, and to make sure the ETS promotes our ability to continue to deliver economic prosperity in an environmentally responsible way.”