• Business, farmers seek changes.
• ACT opposes ETS and Kyoto.
• Host of amendments likely.

Big business and farmers are breathing easier after the election of a National-led Govt, which is likely to make significant changes to the Emissions Trading Scheme. National’s likely coalition partner, ACT, wants to scrap the ETS and withdraw from the Kyoto Protocol altogether and there will also be intense pressure from business and farming lobbies to radically revamp the ETS. One of the key differences in this new Parliament will be the lack of influence of the Green Party. The Greens have had a significant role in shaping Labour’s energy and environment policies during the last nine years but the new Parliament will see ACT exerting a totally different kind of influence on the Govt.

Although National says it is committed to Kyoto and the concept of emissions trading, there are many National MPs who are privately sceptical of human-induced climate change. Thus, it is likely everything will be up for negotiation under a new National-ACT coalition. Within the farming sector, there is real concern about the implications of emissions trading for NZ’s number one export industry, and Federated Farmers will be lobbying hard to have food production excluded from the ETS. Federated Farmers President Don Nicolson says he is looking forward to sitting down with the new Govt to discuss the ETS, as well as reform of the Resource Management Act. Nicolson says the world needs more food from NZ not less, so the new Govt must move quickly to exclude farm animals from the ETS. This will give farmers confidence to invest in the future. As NZ is the only country to include farm animals in an ETS, there’s a real risk many NZ farms will become uneconomic, Nicolson argues.

It is unlikely National will scrap the ETS altogether. The Party made a commitment to emissions trading before the election and will feel obliged to honour it. Bill English told NZ Energy & Environment Business Week National will essentially stick to its proposed amendments to the ETS as outlined in its submission to the Select Committee. It will look to “balance environmental and economic interests” which means it won’t impose costs on businesses that will threaten their international competitiveness. National’s submission states climate change is “the most important environmental challenge of our time” and it supported the Govt’s decision in principle to introduce an ETS. But National believes the rushed legislative process has resulted in a law that has major deficiencies.

Even among those within National who are sitting on the fence over climate change, one of the key arguments used to support emissions trading is the threat of European consumers boycotting NZ produce if the country doesn’t show its commitment to reducing emissions. National’s Trade Spokesperson and former Trade Official Tim Groser is strongly pushing this line. ACT’s Rodney Hide, however, insists this is a phoney argument and believes NZ’s trade will not suffer one iota if the country scraps the ETS.

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