Trans Tasman's Political Pulse - 10 May, 2017

Long-Terms Plans, But What About The Emissions Trading Scheme Now?

INSIGHTS ABOUT THE NEWS - Away from the headlines of political confrontation a remarkable process of political consensus is forming around long-term climate change policy direction. However, businesses are worried about policy stability in the near to medium term.

Climate Change Minister Paula Bennett has taken a more consensual approach than her predecessor Tim Groser and her efforts have extended by the tireless work of Green MP Kennedy Graham to build up the Parliamentary cross-party group GLOBE NZ.

This has helped create some semblance of agreement about how to meet long-term targets under the Paris Agreement. Politicians find it easier to agree about long-term targets, but over shorter time frames they find it more difficult because decisions have an immediate impact on the economy and voters.

Agriculture is not included in the ETS. Farmers once ridiculed the idea as a “fart tax” and inclusion will raise rural voters’ hackles. Labour and the Greens want animal emissions included, though Labour has talked of large free exemptions for farmers. Petrol and diesel are in the ETS but levels are so low they gain little notice. The aim of the ETS is not so much to raise revenue as to incentivise Kiwis to lower their carbon footprint (but if there is no ability to reduce emissions it is just a tax). With migration fuelling population growth and a high number of inefficient cars per capita, NZ has barely made a start on this.

Ministers are hoping the Productivity Commission’s investigation into the costs, benefits and risks of transitioning to a low carbon economy will also make it clear the trade-offs and decisions are not easy ones. In the meantime, Bennett wants political parties to back the Emissions Trading Scheme to give businesses some stability over policy settings.

Labour is still in favour of an ETS, NZ First are extremely sceptical and want it scrapped, and the Greens have been silent on the issue recently after campaigning to replace it with a carbon charge at the last election. Bennett says parties may argue about the details and how much teeth the ETS should have, but if carbon trading was the base all sectors would be able to plan.
See More Information At Trans Tasman's Sister Publication - The New Zealand Energy & Environment Business Alert

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