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Report back of emissions trading bill

17 June 2008

The Climate Change (Emissions Trading and Renewable Preference) Bill has not been changed sufficiently to allay concerns that industry will struggle to stay profitable in New Zealand, according to the Greenhouse Policy Coalition, which represents large industry across a range of sectors.

Catherine Beard, executive director of the Greenhouse Policy Coalition, says all the major concerns raised by industry in the Select Committee hearings remain, and there will be grim times ahead for New Zealand workers if the Bill is passed into law in its current form.

“With the price of CER’s (the units most NZ companies with obligations will have to buy) now at NZ$40/tonne of carbon dioxide and these units are linked to EUA’s which are predicted by carbon analysts to reach $80/tonne this year, any deals done by the minor parties to minimise the cost on low income households will risk being no more effective than a chewing gum tax rebate.”

Catherine Beard says as an example, analysis of the impact of the European emissions trading scheme on the electricity price in Germany, was that wholesale electricity prices in Germany rose 9% during the 6 months before the introduction of the EU ETS, but 57% in the 6 months afterwards (Trautmann, 2007)( 466 European Management Journal Vol. 25, No. 6, pp. 464–474, December 2007).

Catherine Beard said while increased costs for consumers in the EU have been largely around increased electricity prices, the New Zealand scheme which is much broader in its coverage will impact on every part of the economy. “Food prices, petrol prices, electricity prices, air travel, - everything will be impacted by the emissions trading scheme due to its comprehensive coverage and no limits on how high the price of carbon can go.”

“Instead of putting energy into compensation packages for low income earners, all political parties would be serving the public better by putting energy into ensuring we don’t have the most expensive emissions trading scheme in the world.”

“Middle income earners will bear the brunt of the price increases from the proposed scheme, with no compensation package and higher mortgage interest rates as a result of inflationary pressures.”

“Unless we have a scheme that enables our industries to continue to be profitable in New Zealand, all we will achieve with the emissions trading scheme is a transfer of wealth to developing counties (as NZ companies buy CER’s arising from developing country projects) and eventually a relocation of industry to countries where they do not have to face these costs. This will result in fewer jobs in New Zealand, lower wages and a smaller tax base.”

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