Error sends cost of ETS changes skyrocketing

Still secret new Treasury advice says the cost of changes to the emissions trading scheme might be up to three times as high as the Government has said, Carbon News reports this morning.

The country’s only specialist information service on the carbon markets, Carbon News (www.carbonnews.co.nz) says it understands that Treasury has told the Government this week that it made a mistake in calculating the cost of changes in the way in which free carbon credits will be allocated to trade-exposed, heavy-emitting industries.

The new advice has not been made public.

Carbon News says it has learnt that it might put the cost of the changes as high as 15 per cent of GDP, instead of the six to eight per cent Treasury initially predicted. This means the fiscal cost of phasing out assistance more slowly could jump from $3.5 billion to $7 billion in today’s dollars.

Meanwhile, a former Labour Government adviser on climate change, Dr Christina Hood, says that the true cost of changes to the way in which free credits will be allocated to industry could be as high as $105 billion by 2050.

Hood now works for the Kapiti District Council but has also worked for the Ministry for the Environment and the Victoria University Institute of Policy Studies.

Carbon News reports a spokesman for Climate Change Minister Nick Smith as saying Hood’s figures are wrong.

ENDS

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