05 October 2004

Hodgson clears National's climate change confusion

National MP Brian Connell's latest sadly confused statement on the Kyoto Protocol is another example of his bizarre anti-business rhetoric. His formula is to talk up problems that don't exist and then say they'll scare off business.

To set the record straight, the government's climate change policies include:

Foundation policies such as the National Energy Efficiency and Conservation strategy; now in its third year, the New Zealand Transport Strategy, and the New Zealand Waste Strategy. These polices will help reduce emissions and reduce our dependence on fossil fuels.

Projects to Reduce Emissions – Through this programme, projects such as windfarms are rewarded for the reductions of greenhouse gas emissions they deliver. Allocation of internationally tradeable emissions units enables these projects to proceed when they would not otherwise be economic.

Emissions Charge – International action to limit greenhouse gases means that the environmental cost of greenhouse gas pollution will increasingly be factored into the cost of fossil fuels, through emissions trading requirements or emissions charges. If we are to remain competitive, New Zealand’s economy needs to adapt and move with this global shift. The government will introduce an emissions charge after 2007, set at the expected international price but capped at $25/tonne. All emissions charge revenue will be recycled back into the economy, so there will be no net increase in tax take for the government, and no net cost to the economy.

Major businesses whose competitiveness would be at risk from an emissions charge are being offered Negotiated Greenhouse Agreements (NGA). Through NGAs, companies move to international best practice in emissions management in return for being exempted from the emissions charge. This removes any incentive to move operations offshore because of climate change policy, and is expected to deliver enhanced environmental benefits over an emissions charge alone.

The international competitiveness of our farmers is being protected, by the government meeting the cost of all agricultural methane and nitrous oxide emissions. A research programme to find ways to reduce these emissions is now fully underway, jointly funded by the industry and government.

The government is managing both the credits and liabilities arising from Kyoto forest sinks, meaning foresters will face no harvest or change of land use costs for post-1990 forests. The government is also providing capped cover for the deforestation of pre-1990 forests, which do not attract credits, at a level far in excess of historical deforestation rates. This approach means there is no climate change related disincentive to invest in new forestry, and no climate change related costs for expected deforestation of pre-1990 forests.

Recent moves in Russia point towards the Protocol coming into force within the next few months. It is anticipated that the world price of emissions will become apparent soon after. This means the government will be able to finalise details of the emissions charge and the recycling of revenue within a year.

Unusually for a developed nation, New Zealand will be a net seller of some hundreds of millions of dollars worth of emissions units for the period 2008 – 2012. This stands to be a significant benefit to the economy that would not be available outside Kyoto. Negotiations for periods beyond 2012 are to start in 2005. No accurate forecast of the benefits or liabilities of meeting future targets beyond 2012 can be made in advance of those targets being set.

“The world is moving inevitably to a future where limits are set on greenhouse gas emissions. Rather than helping New Zealand’s businesses, farmers, and householders prepare for this future, the National Party’s do nothing attitude seems to be to pretend it’s not happening. National is also sending a clear signal to the international community that there is doubt about its commitment to stand by international agreements. New Zealanders deserve better", says Convenor, Ministerial Group on Climate Change, Pete Hodgson.

ENDS

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