May 8, 2008

What Scope Leakage From The Agricultural Sector?

Brian Fallow analyses the Government's new emissions trading policy and expresses concern at what amounts to a massive new subsidy proposal for industry. He is particularly worried about the treatment of agriculture which he sees as less likely to head offshore than heavy industry.

The Hive is also concerned at the potential implications of this subsidy programme for our WTO commitments, and we have yet to see the legality of what is being proposed justified.

We are more worried than Fallow though about the scope for leakage from agriculture. We note in particular that we have yet to see any other country proposing the application of an emissions trading regime (applying across all greenhouse gases) to the agriculture sector. If the price goes high enough, the prospects for New Zealand pastoral agriculture are potentially bleak.