Households Will Bear The Brunt Of Emissions Trading
May 7th, 2008
The Sustainability Council has released a report showing households, road users, and small businesses will meet 90% of the estimated $4.4bn costs of the Emissions Trading Scheme over the next five years. The report concludes this will involve huge transfers of wealth but will only reduce NZ’s greenhouse gas emissions by 2%. It will still leave gross emissions about 30% above the Kyoto target by 2012. It also shows of the total $4.4bn in payments resulting from the ETS up to 2012, about $1.8bn will go in windfall profits to generators of renewable electricity. The Council’s Executive Director, Simon Terry, argues the best way to remove these flaws in the ETS is to charge all sectors of the economy equally on their greenhouse emissions.
This includes agriculture and large industrial emitters, who will be heavily exempted and rebated under the current rules. Terry says rather than offering blanket subsides to agriculture and major industries, all emitters should pay the carbon charge on the same proportion of their emissions. If spread equally in this way, the cost of the Kyoto bill would be fully covered if all emitters paid the world price on about a third of their emissions from 2008 to 2012. Terry adds a key benefit from sharing the Kyoto bill equally across the whole economy is it would create an incentive for agriculture, especially dairy farmers, to reduce emissions. Terry notes a preliminary Govt study shows agriculture holds over 60% of the total volume of emission reductions available in NZ for $30/t or less.
If this potential could be exploited, NZ’s Kyoto bill could be significantly reduced, while the abatement technologies could form the basis of new export industries. The report also criticises the “unnecessary” creation of a new carbon currency (the NZU) which will enable massive transfers of wealth to take place off the Govt’s balance sheet and “out of clear sight.” Terry argues instead of creating a new carbon currency, the ETS could simply use existing international carbon currencies which have been established under Kyoto.
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