5 May 2008
The Treasury has just revalued New Zealand’s Kyoto Protocol deficit to be worth over $1 billion based on a price of NZ$22/tonne of carbon, a 165% increase in the price of carbon over three years (38% compounding per annum).
Catherine Beard, executive director of the Greenhouse Policy Coalition, says this is the sort of price trend that the economy will be exposed to if the Climate Change (Emissions Trading and Renewable Preference) Bill is passed without amendment.
“As it is currently drafted, the Bill does not allow for a transparent and predictable price cap which would prevent the economy being battered by a high cost of carbon – which would cause significant economic pain.”
Catherine Beard said if the government had undertaken a purchasing programme for carbon credits three years ago when the price of carbon was valued at $8.48 a tonne, they would not now be proposing to transfer such a large liability to industry and putting jobs and wages at risk with a carbon price of over $22/tonne and rising.
“What we are looking at with this Bill is a large wealth transfer to developing countries, whether the government pays for the credits or whether industry pays for the credits, due to limited abatement opportunities in New Zealand. The main question we should ask is how do we meet this international obligation and do the least damage to the economy.”
Catherine Beard says if the government is serious about meeting the Kyoto Protocol liability at ‘least cost’ to the economy then why have they not had a carbon purchasing programme in place like other governments, to minimise the risk from a carbon market where the prices are only going one way - and that is up.