Aug 6, 2008

ETS Only the Greens And NZ First Can Save Things For Labour

NZ Energy and Environment Business Weekly (from the same people who bring us Trans Tasman) have provided an update on the Government's ETS. It is very helpful, particulaary as the Government's Climate Change Leadership Forum is due to meet this afternoon. We hope the authors don't mind us reproducing the article in full. We encourage readers to subscribe to this publication. This update is an example of the high quality of the contents.

ENERGY POLITICS:Support For ETS Bill In Doubt Back To TopThe Govt’s flagship Bills on the Emissions Trading Scheme and mandating bio-fuel into transport fuels are languishing on Parliament’s order paper, and the Govt is struggling to get minor party support for the legislation. The Maori Party has come out against the ETS in its present form, joining the United Future Party which is also rejecting it. Independents Taito Philip Field and Gordon Copeland are also understood to be opposed. This reduces the Govt’s options to the Greens and NZ First, both of which have expressed reservations about the legislation.
NZ First’s position has been there must be compensation for the elderly and other low-income groups for the higher costs they will face when the ETS comes into operation. But NZ First leader Winston Peters has been so preoccupied first with the visit of US Secretary of State Condoleeza Rice to NZ and then with the controversy over party funding from big business the has yet to focus on the proposals which might win over his party. Given NZ First’s precarious electoral outlook, Peters may be reluctant to risk the blame for pushing through a measure which is likely to push up household costs still further.
Critics of the ETS legislation say even if there is enough small party support to get the Bill across the line before the election it may not have a long life. As Catherine Beard, Executive Director of the Greenhouse Policy Coalition, points out, it is hard to imagine how long a scheme would last in NZ if businesses and consumers here face increases in fuel and energy at the international price of $40-50 a tonne of carbon dioxide, while Aust has capped the price of carbon at $25 a tonne. While NZ motorists will be facing an additional $358 per year from the carbon cost of petrol (at $40 a tonne) and the higher priced bio-fuel, Aust will not be burdened with any increase in fuel costs because they will be offset by matching reductions in fuel excise tax. Beard points out NZ consumers will pay no matter how the scheme is designed. Putting a price on all greenhouse gases is a new cost which makes a large range of inputs across the economy more expensive.
Another major difference between the NZ and Aust approaches to emissions trading is the Aust Govt has promised to recycle every cent of revenue collected from the ETS. There has been no such promise on this side of the Tasman and the Govt stands to make around $400m from the ETS by 2013, by having it cover more emissions than those above 1990 levels. There will also be windfall profits for state-owned generators Meridian Energy and Mighty River Power.