Ag could have milked extra millions under Labour

Agriculture could have milked extra millions early under Labour deal

A draft ETS deal sent to the National party by Labour yesterday morning reveals the Opposition proposed a special deal for agriculture which could have paid farmers millions before 2013.

It appears to have been passed over by National in favour of its interim proposal with the Maori Party, the country’s specialist carbon market news service, Carbon news, reports.

Carbon News (www.carbonnews.co.nz ) cites a draft Memorandum of Understanding under which Labour proposes giving free units for emissions reductions made by farmers before the sector entered the scheme on January 1, 2013. The offer would be worth hundreds of millions and encourage early emissions cuts by farmers who would then have free units to trade on the international market, Carbon News says.

The draft MOU, which was to have been discussed at a 5pm meeting between the parties today, reveals Labour would also support a temporary price cap on emissions at $45, would allow forestry to keep trading internationally, but opposed emissions intensity without a cap. The Government has decided on a $25 cap, below the current $28 market price.

The MOU proposes transitional assistance for agriculture will be provided to compensate farmers for loss of value.

It reveals the cost of this could run to more than $4 billion.

“For the period 2013 to 2017, 165 million NZUs (approximately five times 90% of 2005 agricultural sector emissions) will be allocated to the sector, with the allocation per farm to be based on land area, location and type of farming. For 2018 to 2022, the allocation will be based on the final level of New Zealand’s target determined after Copenhagen. For example, if the target is 90% of 1990 levels, the allocation will be 146 million units. A target of 80% yields an allocation of 130 million units.

Other key policy details proposed included:

• Transitional assistance for the industrial processes sector will be based on industry average intensity, within a fixed cap based on New Zealand’s national emissions target. For the period the 2010 to 2017, the cap will be 90% of 2005 emissions (plus an allowance for emissions from electricity). For the period 2018 to 2022, the precise cap will depend on the national target agreed at Copenhagen, which is expected to be between 90% and 80% of 1990 emissions;

• an allocation of 90% of 2005 emissions levels from fuel used by fishing vessels will be provided for the period 1st July 2010 to 1st January 2013;

• detail provisions regarding allocation plans will be contained in primary legislation, not regulations;

• a climate change committee will be established as an independent Crown Entity. The role of the Committee will be to provide independent advice to Ministers and to promote informed public debate on the public policy response to climate change;

• for all sectors, the Committee will undertake regular reviews to determine whether transitional assistance is still required, based on the spread of effective carbon pricing policies through the world.

A full copy of the draft MOU, which Labour put forward for discussion and an agreement which it hoped would be signed by Prime Minister Key and Labour leader Phil Goff, is available from Carbon News here.

If the Maori Party fails to support the ETS changes beyond referring them to a select committee, the current announced arrangement, then the select committee and Labour might try to further change the scheme in line with policies suggested in the MOU, Carbon News says.

ENDS

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