Trust prices to look after the environment

Trust prices to look after the environment

Businesses should reinforce their belief in the power of markets to put a price on carbon and take care of the environment.

This year the country will see a price put on carbon, and on solid waste going to landfills. In the next decade we will see prices put on pollutants going into the air and waterways.

These are some of the comments made by Peter Neilson, Chief Executive of the New Zealand Business Council for Sustainable Development, attending the launch of the new carbon offset trading firm Green Carbon at Auckland this evening with Opposition leader John Key.

Mr Neilson's remarks follow:

The Leader of the Opposition, John Key

Seeby Woodhouse, CEO of Green Carbon, Craig Greenlees, distinguished guests, ladies and gentlemen

I have to start with a health warning.

There is an item on the Television New Zealand web site which warns: "Reef fish get lost as climate changes".

Apparently as the temperature changes, the shape of the ear bone of reef fish changes and they have more difficulty in finding their way round.

So beware of climate change.

Things have come a long way.

Today we are having less difficulty finding our way round.

Both of our major political parties are committed to aspirational targets on emissions:

- National to reducing them to 50% of 1990 levels by 2050

- Labour for carbon neutrality by an unspecified date

Three years ago the most common comment on climate change from business people was – we should do what Australia does.

The Australian Government announced yesterday it would have an emissions trading scheme in operation by 2010, and its emissions reduction target is 60% by 2050.

Some are telling us we should put a price on carbon without that affecting any other prices.

Unfortunately, that's not how it works.

We believe in the power of the market - and the power of a price to affect a market and lead to better decisions.

For example, I think as businesses we should reinforce our belief in allowing the market to put a price on carbon - which will then determine whether or not new baseload thermal power generation, using gas or coal, is more economic than renewables.

If we have confidence in a market, why have a ban?

Some tell us there are no low-cost opportunities to reduce emissions in New Zealand.

Yet Rio Tinto has reduced its emissions 40% in the past 10 years, while increasing production 23% - and become one of the top five most efficient smelters in the world.

Lincoln University scientists tell us that by using just the one of the new nitrogen inhibitors, we can increase pasture growth 15% (at negative net cost – accountants' jargon for saying you increase profits) - and eliminate enough nitrous oxide emissions to get them back to 1990 levels.

Some tell us we should impose a safety valve on emissions prices: when they reach a certain level, the Government should step in and issue more emissions credits to control the price and its effect on large emitters.

The Reserve Bank tried that with the currency last year when it was at 75c against the US dollar. After spending hundreds of millions, is it now above 80 cents.

If you want to interfere in the currency or coming emissions markets, it is not likely to be effective.

Some say the business community is up in arms over emissions trading, yet our extensive polling consistently tells us that business people nationwide are

- more aware of climate change,

- more supportive of emissions trading, and

- more optimistic about the economic opportunities it presents, than the general public- who are also in favour of emissions trading.

This is one of the reasons we are here this evening:

A young entrepreneur can see an issue facing the world, facing New Zealand, facing each of us and our children and their children.

He knows, like many of us, that when you measure emissions you find opportunities to reduce them

- you often find opportunities to lower costs

- you find opportunities to become more competitive

- while doing the right thing by this and the next generations.

Tonight he launches a business based on that.

First you measure your carbon footprint and reduce your emissions on a cost-effective basis. If you can't do that, you buy offsets or emission credits.

We must hope it is one of many thousands of new businesses, here and around the world, based on new responses, new technology, new solutions - to solve what Nicholas Stern called one of "the greatest market failures in human history": the failure to put a price on carbon going into the atmosphere, until it is nearly too late to avoid the economic, environmental and social costs.

This year we are introducing a price on carbon and a price on solid waste going to landfills. In the next decade we will have trading schemes for pollutants going into the air and our waterways.

While the Business Council does not endorse any particular business, either members or non members, we salute all of those who provide leadership for the long term.

Tonight we see another example of that.

We wish you all and Carbon Green well in your new venture.

ENDS

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