Hodgson Responds To GPC/PEANZ Report On Climate Change Policies
Energy Minister Pete Hodgson says the report The Economic Effects of Greenhouse Gas Emission Policies: A quantitative
evaluation is a contribution to the climate change debate that must be taken “with a large pinch of salt”.
Mr Hodgson said the analytical limitations of the report, released by business groups the Greenhouse Policy Coalition
and the Petroleum Exploration Association, meant its conclusions about the possible economic impacts of climate change
policies should be read with caution.
“The impacts analysis commissioned by the Government from the Australian Bureau of Agricultural and Resource Economics
(ABARE) suggested the econonomic impact of climate change policies would be slightly positive overall,” Mr Hodgson said.
“This report says the impact could range between slightly negative and very negative, depending on how extreme a policy
scenario is applied.”
“This report is interesting but not illuminating, given the uncertainty surrounding its conclusions. An independent
review commissioned by the Department of Prime Minister and Cabinet from Infometrics economist Adolf Stroombergen notes
that ‘it is not at all clear that the scenarios present a plausible picture of the economic effects of policies to
reduce emissions’.
Mr Stroombergen says the uncertainty surrounding the report’s conclusions on economic impacts is primarily due to a
shortage of information on its base assumptions, insufficient explanation of the economic model it uses and a lack of
testing of the model’s sensitivity to variation in critical parameters.
“I would add that the GPC/PEANZ report makes misguided assumptions about New Zealand’s energy needs, fails to take
account of the incentives created by early certainty of climate change policy and shows no comprehension of
international political reality in its policy analysis,” Mr Hodgson said.
“The report assumes that New Zealand’s present level of inefficiency in energy use must continue and completely
overlooks the greenhouse gas emission reductions that even partial success for the National Energy Efficiency and
Conservation Strategy would achieve. It assumes businesses would be hit by climate change policies as if by lightning,
when in fact they will have years to adjust behaviour and position themselves to minimise the impacts.
“Most incredibly, the report’s conclusion that New Zealand should meet its Kyoto Protocol obligations entirely with
carbon sink credits, while doing nothing to reduce emissions, completely ignores the political reality of our position
in international climate change negotiations. Far from enabling the government ‘to position the New Zealand economy for
the second commitment period in the least damaging fashion’, this approach would demolish New Zealand’s credibility in
negotiations and make it extremely difficult to get targets for the second commitment period that were remotely
achievable.
“Notwithstanding its shortcomings, the report is a worthwhile contribution to the debate on climate change policy now
under way in New Zealand. By modelling a series of extreme scenarios, NZIER have shown that poor policy would lead to
serious economic effects. That is why the government is consulting widely on climate change policy now, and will consult
widely again next year when we have developed a preferred policy package.”
Ends