NEWS RELEASE
11 June 2008

Maori Party Wrong On Emissions Trading Bill

Catherine Beard, executive director of the Greenhouse Policy Coalition, says the Maori Party’s call on 10 June to have a cross party approach to reduce government, personal and business dependence on oil is laudable, but their call to bring forward the emissions trading scheme is at odds with their concerns about the increased costs for consumers from emissions trading.

“There is no escaping the fact that by leading the world with the toughest and most comprehensive emissions trading scheme, increased costs are going to flow through to businesses and consumers – over and above the high cost of oil we are facing at present.”

Catherine Beard says a quick read through the submissions to the Finance and Expenditure Select Committee on the emissions trading Bill shows that those multinational companies that are already covered by the European emissions trading scheme have calculated that the cost of the proposed New Zealand scheme will be much greater than the costs they face in Europe.

“The Maori Party seems to be concerned that a free allocation of 90% of 2005 allowances is a ‘free ride’ for industry and agriculture at the expense of households. The reality is that no company or agricultural entity is likely to get 90% free allocation as this is an amount that is to be shared amongst all those deemed eligible and once thresholds are applied the free allocation might be spread quite thinly.”

“The other reality is that if New Zealand businesses have to take on increased costs due to an emissions trading scheme that their international competitors do not face, they lose their competitiveness and ultimately either go out of business or move their business to a country where they do not have to face those costs and can remain competitive.”

“It will be no ‘win’ for householders if businesses are forced to relocate to Asia and jobs are lost and wages contract. The impact on householders is unavoidable in an emissions trading scheme as they will pay through higher prices for fuel and electricity, higher prices for food and transport as businesses pass on higher energy costs. If businesses can not stay profitable and are forced to close or relocate, householders pay even more dearly through fewer job opportunities and lower wages”.

Catherine Beard said the Maori Party are right to be concerned about sending the right signals to industry and agriculture to reduce emissions, because the current Bill does not achieve that aim. “The current Bill sends the signal to business to exit the country – not invest in new cleaner technology. With every new tonne of carbon priced at the full international price of carbon (between $30-50/tonne) it will be cheaper to run old plant for longer and exit the country when the plant is at the end of its life.”

“A better approach would be to make industry face a price of carbon if they are above worlds best practice in emissions intensity (emissions per unit of output) and to reward them with units to sell if they are better than ‘worlds best practice’. That way industry is incentivised to keep investing in new technology to reduce emissions and it is investment in new technology that will put us on a path to a lower carbon future.”

ENDS

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