Drop the carbon price now to save businesses – Straterra

Drop the carbon price now to save businesses – Straterra

Posted on 11 June 2020

Media Release - 

Businesses and consumers face difficult times with carbon prices spiking to record levels after the Emissions Trading Scheme was strengthened last week according to New Zealand’s minerals sector industry organisation, Straterra.

The revised settings include a cap on emissions and a new upper limit on the price of carbon. The Government’s fixed-price option (FPO) of $35/tonne of CO2 equivalent has driven the carbon price to record levels for the last three days in a row, now, $31.10.

“Strengthening carbon prices could not have come at a worse time as New Zealand businesses try to survive the post-Covid-19 downturn,” Straterra Chief Executive Chris Baker said today.

“Straterra supports the transition to a net zero carbon economy by 2050. However, during this time of exceptional hardship, policies aimed at economic recovery and compassion for New Zealanders should take precedence over a single-minded focus on being a world leader on climate change action.

“Increasing costs to businesses by hiking the carbon price is an unconscionable response to the Covid-19 economic downturn.

“It will increase pressure on consumers and will likely see some businesses cease operating due to costs.

“South Island coal consumers are particularly hard hit because they have little or no alternative to coal. For the small coal users, such as hothouse horticulture, the Government’s climate change policies will cause business closures and job losses.

“Many of the sectors affected by the carbon price will be, or would have been at the forefront of post-Covid recovery including exporters.

“The Government is urged to be kind, and beyond that, to alleviate the impact of the rising carbon price on businesses. It could reduce the FPO to $25 as a minimum immediate measure.

“This cannot be a step too far for the Government – it recognised coal as an essential service during the lockdown, so the Government understands the role of coal in food production and processing.

“More generally, it is essential that the ETS aligns with our trading partners, and to ensure the ongoing competitiveness of affected sectors of the economy.

“In support of this argument, the World Bank has demonstrated, as it has done every year since the Paris Agreement was signed in 2015, that most emissions are not priced, and for those that are priced the average price is USD$2/tonne of CO2e.”

“If production shifts offshore, the higher costs imposed on New Zealand emitters means that jobs and businesses are put at risk for zero environmental benefit,” Mr Baker concluded.