Shipping in emissions trading will hit NZ exporter

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Media Release

9 April 2008

EU move to include shipping in emissions trading will hit NZ exporters

The likely inclusion of shipping in the European Union (EU) emissions trading scheme (ETS) looks set to hit New Zealandexporters in the pocket – and international airline passengers could be next to shell out for their carbon footprint.

The European Parliament’s transport committee was poised yesterday to approve German Socialist Willi Piecyk’s report recommending that shipping be incorporated into the ETS.

Internal aviation is already included, but coverage of shipping has so far been put into the too-hard basket because services are less rigidly scheduled and routes are often altered, the country’s daily carbon market news service, Carbon News, reports today.

The issue has also tended to be over-shadowed by the EU’s ambition to create a union-wide coastguard, a scheme that is already a year behind schedule.

But Piecyk’s report called on the European Commission to be more ambitious about extending the ETS to shipping, criticising an earlier commission blue paper as suffering from “an absence of genuinely practical proposals, measures and policies.”

Assuming the report ends up with shipping being included in the EU’s ETS, New Zealandexporters will feel the brunt, according to the head of PricewaterhouseCooper’s (PWC’s) climate change services, Julia Hoare.

Including marine fuels in the EU ETS “would flow through to the cost of shipping in the New Zealandmarket,” Hoare tells Carbon News at www.carbonnews.co.nz.

The impact would depend on the detail, but it would be analogous to that of petrol coming under the New Zealandscheme on January 1 next year, and raising the pump price by 6.1c/litre if carbon were priced at $25/t.

“With marine fuels we’d be looking at how the emissions factor would be applied to a standard journey, how that would be split amongst the containers on the ship and therefore the flow-through in relation to the cargo,” Hoare said.

“In terms of whether [the impact] would be major or not I can’t comment at this stage, but I can say, yes, it would have an impact in increasing the cost of shipping, and any cost of carbon is likely to flow through to consumers.”

The impact would depend on the detail, but it would be analogous to that of o petrol coming under the New Zealandscheme on January 1 next year, and raising the pump price by 6.1c/litre if carbon were priced at $25/t.

Government says no to carbon taxes on imports

The Government has given an equivocal “No” to the possibility of imposing tariffs on imports from countries that don’t put a price on their greenhouse gas emissions.

“We have no current plans to impose tariffs in New Zealand,” Carbon News reports Climate Change Minister David Parker told as saying.

But he has left the door open to a future policy change by adding, “We are watching overseas developments with interest.”

Agitation for the imposition of carbon tariffs has been mounting in the Northern Hemisphere with French President Nicolas Sarkozy openly supporting them, Germany becoming increasingly concerned about leakage of its heavy-emitting industries as the EU emissions trading scheme (ETS) begins to bite, and sectoral interests in the United States expressing concern about promises by both major parties to introduce a US ETS after this year’s presidential election.

While Parker is not eliminating the possibility of a carbon tariff, his equivocation reflects widely-held views in New Zealandthat such a measure would run counter to the rules of the World Trade Organisation (WTO).

Carbon News provides a daily and web specialist information service for the burgeoning carbon markets: www.carbonnews.co.nz

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