Government announces emissions trading scheme freezes

Government announces emissions trading scheme freezes
Business and the primary industry are applauding a softening-up of the emissions trading scheme.

Business and the primary industry are applauding a softening-up of the emissions trading scheme.

The government yesterday pushed back both the dates and levels at which New Zealand will face higher carbon costs under the emissions trading scheme.

The key changes are:

  • Keeping the ‘one-for-two’ obligation in place until after this year. This means participants in the scheme will continue to surrender units for half the carbon they emit;
  • Maintaining the $25 ‘fixed-price option’ until at least 2015, which caps the price firms will face if carbon prices begin to rise internationally;
  • Introducing off-setting for pre-1990 forest land owners, and allocating the full second tranche of compensation where off-setting is not taken; and
  • Leaving agricultural emissions out of the ETS until at least 2015.

A bill putting these changes into effect will be introduced later this year.

Climate change issues minister Tim Groser said the changes took into account the recommendations of the ETS Review Panel and feedback through community consultation, including written submissions, a series of regional meetings, and hui.

"It is worth noting that we are the only country outside Europe with a comprehensive ETS.  In these times of uncertainty, the government has opted not to pile further costs on to households and the productive sector."

BusinessNZ chief executive Phil O’Reilly said New Zealand was ahead of most of the world in accepting a price on carbon, and the changes would maintain incentives for emissions reduction while shoring up New Zealand companies’ ability to compete against companies in other countries.

“The move recognises the financial constraints not only on businesses but also on consumers. It guards against increases in the price of electricity and fuel that would otherwise occur because of an unequal international playing field.

“This is not a softening of the ETS. The changes announced today will not reduce the costs currently faced by New Zealand business and consumers," he said.

“It would be preferable if the settings announced were today kept in place for a reasonable amount of time – at least until 2020 - to allow New Zealand businesses to make a success of our bold national stance on emissions reduction.”

Catherine Beard, ExportNZ executive director, called the changes "sensible moves" to remain competitive "in a world where putting a price on carbon has been patchy at best".

Agriculture's free passcontinues

One of the hairiest points of the ETS is the further delay in bringing agriculture into the fold.

Dr William Rolleston, Federated Farmers vice-president and climate change spokesperson, said the ETS still remained the harshest on any agricultural production system, anywhere in the world.

“Unlike other countries where agriculture is given special treatment, farmers here, just like every other business and family, pay the ETS on the fuel and energy we use. This not only impacts a farm’s bottom line, but the cost of turning what we produce into finished goods for export.

“In a world of increasing food deficit, our hope is for opposition parties to realise being a carbon efficient food exporter is global leadership."

But Labour's climate change spokesperson Moana Mackey accused National of having no intention of ever starting to transition the agriculture sector into the ETS.

“National is giving farming a free pass to pollute and is expecting the taxpayer and other sectors of the economy to cross-subsidise agriculture, the sector which contributes half of our emissions.

“The Government says that agriculture won’t have to come in until the science exists to mitigate their emissions, or until our international trading competitors put a price of carbon on their agricultural sectors. No other major emitting sectors got these concessions.

“How many of our trade competitors have to move before the government decides that it's time for agriculture to enter the ETS? And what level of mitigation does science have to provide?"

And Tariana Turia, co-leader of the Māori Party, said: "While we accept the advice of the Iwi leadership group that there needs to be a delay until such time as affordable technologies are available to Iwi/Māori farmers, the Māori Party would hope to see a rapid focus on development so that agriculture can enter the ETS as soon as possible."

She said agriculture can reduce its emissions and has already begun to do so.

“Introducing agriculture into the ETS would give a financial reward to farmers who continue to drive their emissions down.

“Keeping agriculture out of the ETS means that New Zealand families subsidise pollution."

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