Don’t Subsidise Pollution campaign spokesperson Alex Johnston, of Common Grace Aotearoa, comments on the Government’s Second Emissions Reduction Plan finalised today:

"It's disappointing that the plan doesn't address the massive subsidy we give to multinationals through free carbon credits so they can continue carbon-intensive business as usual.

Policies in the Emissions Budget 2 period are expected to only achieve 3.2 million tonnes of emissions reduction, while the government in that time plans to give away 28 million emissions units for free via industrial allocation.

"The Climate Change Commission and other experts agree that changes to industrial allocation in the ETS are urgently needed. Such a huge subsidy props up multinationals’ production processes whose emissions account for nearly 10% of the country's emissions. While the rest of NZ must reduce emissions to meet our reduction goals, these companies are largely exempt at a huge cost to ordinary households."

“The Plan also ignores the fact that over half of submitters called on the government to deal with the problem of free carbon credits to industrial polluters.”

Policies in the Emissions Budget 2 period are expected to only achieve 3.2 million tonnes of emissions reduction, while the government in that time plans to give away 28 million emissions units for free via industrial allocation.

In an email to submitters, the Ministry reported that there were 1800 submissions, and the Don’t Subsidise Pollution campaign was responsible for 962 submissions from individuals.

Said Johnston:

“Removing free credits and replacing them with targeted investments to support trade-exposed industries to decarbonise could achieve much greater and more certain emissions reductions than relying on speculative carbon capture technology.

“The ERP stresses the need to create investment certainty. But because these free allocations are so costly to NZ and do not align with our climate targets, it is inevitable that significant changes will need to be made down the road. The ERP creates the illusion that it is possible to continue business as usual, when it will in fact expose investors and businesses to shock adjustments later.”

“The better approach would be for the government to show leadership and commit to phase out the free credits by 2030 and introduce a Carbon Border Adjustment Mechanism. It should develop a range of policies to support these businesses to decarbonise rather than subsidising business as usual at the expense of taxpayers and the planet.”

About the Don’t Subsidise Pollution campaign

The Don’t Subsidise Pollution campaign is a coalition of climate advocacy organisations, communities of faith and construction industry groups who want an industrial future for Aotearoa that is green, creates good jobs, and ensures a fair distribution of effort in cutting climate pollution. Visit https://www.endfreecredits.nz/ to learn more. The campaign is coordinated and led by Common Grace Aotearoa.

The coalition is calling for Minister of Climate Change and Cabinet to:

End free carbon credits: accelerate the phase out of free industrial allocation in the Emissions Trading Scheme to end free credits by 2030.

Cut pollution: use funds generated from ending free credits to contribute to the upfront costs of decarbonising emissions intensive industries (in the form of loans or in return for equity stakes).

Unlock green jobs: protect jobs with a Carbon Border Mechanism (like the EU is introducing), green infrastructure investment via a Ministry of Green Works or public procurement, and fund a just transition for any affected workers.

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