NEWS RELEASE

16 NOVEMBER, 2007

$100 Million For Exporters Great But……..

New government support for exporters in the form of a $100 million contingent liability for exporters needing bonds and/or working capital is to be applauded, according to the Greenhouse Policy Coalition, but the government should be careful not to undermine the viability of exporters with another of its policies, the proposed emissions trading scheme.

The Greenhouse Policy Coalition is an industry association representing the energy intensive sector, and companies in that sector have significant concerns the proposed emissions trading scheme will add significant costs to New Zealand companies that are trying to compete in international markets.

Catherine Beard, executive director of the Greenhouse Policy Coalition says it fantastic that the government, through Export 2007 has “set new levels of export ambition” for the country, but it would be tragic if that was undermined by a headlong rush into an emissions trading scheme that had insufficient protection for trade exposed exporters.

“The current scheme design poses significant risks for business, exposing them to an international carbon trading market that is volatile, lacking in liquidity and where prices are driven by politics rather than the lowest cost abatement in these early days of carbon trading.”

“The current scheme design provides no price safety valve or recognition for being at world’s best practice in energy efficiency and we are urging the government to make some changes to the scheme to ensure we can reach those levels of export ambition we all aspire to.”

Catherine Beard says a relatively small survey of 32 firms, including meat companies, pulp and paper mills, iron, steel, shipping, cement, dairy, mining and supermarkets shows that a carbon price of $30/tonne will cost these firms $241 million in increased direct energy costs, result in deferred investment of $1.5 billion, put at risk over 2000 existing jobs and 425 new jobs had planned investment gone ahead.

Catherine Beard says most of the wealth generated in New Zealand is from agriculture, primary industries and manufacturing and these are the industries that will be hit hardest by the current proposals.

Catherine Beard said the scheme would be improved if recommendations in the recently released Castalia report, such as intensity based targets and price safety valves were adopted.

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