Doubts about Emissions Trading Scheme reinforced

Thursday, 11th October 2007 For Immediate release

Media release by the Major Electricity Users’ Group (MEUG)

Doubts about robustness of Emissions Trading Scheme reinforced with Energy Strategy announcements

“Just 2½ weeks ago the New Zealand Emissions Trading Scheme (NZ ETS) was announced. This was the key plank of proposed climate change policies. The New Zealand Energy Strategy (NZES) released today is a supporting strategy to that overarching climate change policy.

“The Energy Strategy announcements have reinforced growing doubts about the robustness of the NZ ETS announcements. For example will there be a liquid international market for carbon in the next 1 to 2 years? Will linkages with those yet to develop liquid markets be possible? And what carbon price can be expected in those markets?” said Ralph Matthes, Executive Director of Major Electricity Users’ Group (MEUG).

“When the NZ ETS was announced Ministers quoted a carbon price of NZ$15/t CO2-e.

“In launching the NZES today the most quoted price was NZ$25/t CO2-e.

“In workshops in Wellington and Christchurch last week and Auckland this week to discuss the NZ ETS, officials conceded the expected price is probably more like NZ$30/t CO2-e.

“At NZ$15/t CO2-e consumers would be paying approximately $600 million per annum more for their petrol, other liquid fuels, electricity, gas and coal. The costs start 1 January 2009 and by 1 January 2010 the regime is planned to be fully operational. Since the announcements 2½ weeks ago the expected additional cost to consumers has doubled to $1.2 billion per annum. If some of the high carbon price sensitivity analysis undertaken as part of the NZES come true, those costs would be many times higher than that. These costs exclude the as yet to be fully decided carbon emission obligations on the agriculture sector commencing 2013.

“By comparison consumers in Australia won’t have higher energy costs from their proposed ETS until 2012. The NZ ETS is widening the gap between the cost of living and doing business in Australia compared to that of New Zealand. New Zealand needs to do its fair share for climate change, but not at any cost” concluded Mr Matthes.

ENDS

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