Changes to the ETS announced by the government are designed to maintain incentives for emission reductions, without loading large extra costs onto households, employers and exporters.
“Today’s decisions are a reflection of the balanced and responsible approach this Government has taken to reducing greenhouse gas emissions. They offer Kiwi exporters, employers and households certainty in a challenging and changing world economy,” Climate Change Issues Minister Tim Groser says. . .
“We have considered in-depth the recommendations of the ETS Review Panel, listened to what those affected by the ETS are saying, and reviewed what our trading partners are doing. We also considered feedback through community consultation, including written submissions, a series of regional meetings, and hui.
“The National-led Government remains committed to doing its part to reduce greenhouse gas emissions, but it is worth noting that we are the only country outside Europe with a comprehensive ETS. In these times of uncertainty, the Government has opted not to pile further costs on to households and the productive sector.
“The Government remains an active and engaged participant in the on-going discussions focused on global agreements, and the changes announced today offer us useful flexibility to adapt in the future, while still demonstrating our commitment to doing our fair share,” says Mr Groser.
Not surprisingly the left reckon this is disastrous.
However, Business NZ says the government has taken a reasonably balanced approach to carbon pricing in its amendments.
The protections – companies having to surrender carbon units for only half the carbon they emit, and a cap of $25 per tonne in the price of emissions –recognise the fact that New Zealand is ahead of most of the world in accepting a price on carbon.
BusinessNZ Chief Executive Phil O’Reilly says the changes will maintain incentives for emissions reduction while shoring up New Zealand companies’ ability to compete against companies in other countries.
“The move recognises the financial constraints not only on businesses but also on consumers. It guards against increases in the price of electricity and fuel that would otherwise occur because of an unequal international playing field.
“This is not a softening of the ETS. The changes announced today will not reduce the costs currently faced by New Zealand business and consumers.
“We should remember that the current cost of carbon, although relatively low, is still more than is being faced by our trade competitors, and will doubtless increase as the global economy recovers.
“While these amendments do not make the environment harder for business, neither do they make it easier. Moreover the frequent reviewing of the scheme’s design also loads uncertainty costs onto New Zealand business.
Federated Farmers says the changes, which include delaying the entry of agriculture into the scheme, are one step towards reality:
The New Zealand Emissions Trading scheme (ETS) has taken a big step towards forward, yet remains the harshest treatment of any agricultural production system on earth.
“The Government realises even tougher measures would hurt not just agriculture but the wider economy,” says Dr William Rolleston, Federated Farmers Vice-President and climate change spokesperson.
“Both our Chief Executive, Conor English, at the Rio+20 Earth Summit and our President, Bruce Wills, at the World Farmers Organisation, got the same message; targeting primary food production in ETS-type policies is anathema to sustainable primary food production.
“In a world preoccupied with the survival of their economies and with food security, there is no point in trying to lead where others will not follow.
“Yes biological emissions account for some 47 percent of New Zealand’s emissions profile. They also represent 68.1 percent of our merchandise exports and indeed, 100 percent of the food we eat.
“New Zealand is able to not only feed itself, but produces enough food to feed populations equivalent of Sri Lanka.
“This is why it is positive the Government has listened to Federated Farmers and will keep agricultural biological emissions out of the ETS until at least 2015.
“We have retained the one-for-two surrender obligation we asked for, along with the $25 fixed price option. Federated Farmers also wanted offsetting for pre-1990 forests and opposed the reduction of pre-1990 forest allocations. The Government has listened to that too, but those who do offset will be penalised.
“We are pleased the Government has chosen not to further complicate matters by imposing additional restrictions on the importation of overseas emissions units.
“Despite what some Opposition parties are likely to say following these changes, our ETS remains the harshest on any agricultural production system, anywhere in the world.
“Unlike other countries where agriculture is given special treatment, farmers here, just like every other business and family, pay the ETS on the fuel and energy we use. This not only impacts a farm’s bottom line, but the cost of turning what we produce into finished goods for export.
“Australia’s new Carbon Tax is really aimed at Australia’s 300 largest companies. Meanwhile, Australian farmers are being financially rewarded for boosting soil carbon levels on-farm.
“Since 1 January, all agricultural processors in New Zealand have been filing emission returns accounting for agricultural biological emissions. We are still counting emissions no other government is contemplating, including our cousins across the Tasman.
“While agriculture emissions here grew 9.4 percent between 1990 and 2010, the dollar value these generated for NZ Inc exploded almost five-fold. Our sector’s emission growth needs to be put into context alongside a 59 percent increase in electricity emissions and 60 percent for transport.
“What’s more former Labour Cabinet Minister, the Hon David Caygill, found emissions in every single unit of agricultural product have fallen some 1.3 percent each year, for the past 20 years.
“We do not need an ETS to improve our productivity. Global competition has done that for us.
“That New Zealand’s farmers are among the world’s most carbon efficient, is an inconvenient truth New Zealanders are not hearing from Opposition politicians.
“We can do more but that will be through productivity gains and research leadership exemplified by the Global Research Alliance on Agricultural Greenhouse Gases.
“In a world of increasing food deficit, our hope is for Opposition parties to realise being a carbon efficient food exporter is global leadership,” Dr Rolleston concluded.
The Kyoto Protocol was the triumph of politics and bureaucracy over science and negotiations have yet to reach agreement on its successor.
There is nothing to be gained for the environment and a lot to be lost from the economy if agriculture is forced into the scheme when none of our competitors faces similar costs.