Billion Dollar Bungle

NEWS RELEASE
6 March 2008

Billion Dollar Bungle

BP New Zealand has warned the Local Government and Environment Select Committee today that the current biofuel obligation could result in a price increase on petrol and diesel of at least seven cents per litre at the pump.

The Greenhouse Policy Coalition, which represents many industrial companies, says the climate change (Emissions Trading and Renewable Preference) Bill has similar price shocks in store for the motorist, with the potential to add another $1 billion per annum in cost to the price of petrol and diesel if the Bill goes ahead in its current form.

Catherine Beard, executive director of the Greenhouse Policy Coalition said a carbon price of $50/tonne would increase the price of petrol and diesel by 12-13c a litre, which added to the extra cost imposed by the biofuel obligation, would result in a nearly 20c per litre increase in the price for fuel.

Forward prices for the EU emissions trading system are already close to NZ$50/tonne.

Catherine Beard said it must be starting to dawn on the government that they are pursing high cost strategies with their climate change policies, which will be hard for consumers and industry to be able to absorb.

"There are good reasons why no other government in the world has moved to put a price on every tonne of carbon emitted from the transport sector, and that is largely due to the costs it would impose on consumers and on such an important part of the economy."

Catherine Beard says while every-one wants to reduce emissions, there is much to be said for putting in place policies that will make the transition to a low carbon future more manageable by avoiding large sudden price shocks. She said the Greenhouse Policy Coalition is advocating a safety valve be included in the emissions trading scheme to avoid exposing the economy to high and volatile prices of carbon.

ENDS

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