Political Battle On Emissions Trade Scheme Means It Will Be Hard To Pass
June 18th, 2008
Ian Templeton at Parliament
• Substantial changes to ETS Bill.
• Govt will struggle to pass it.
• Widespread business opposition.
Major changes to the Emissions Trading Scheme in the Govt’s flagship climate change legislation are embodied in the report of Parliament’s Finance and Expenditure Select Committee. They’ve been welcomed by Climate Change Minister David Parker, who says the fundamentals of the emissions trading framework remain intact. But both National and the Greens, for very different reasons, say the Bill is still seriously flawed. Parker himself concedes the supporting parties still have reservations about some of the scheme’s details “and we are continuing to work with them.” National says it will vote against the Bill, ACT wants it scrapped, United Future is opposed, and independent Taito Philip Field is understood to be opposed. The Maori Party also has reservations.
This indicates the Govt is still struggling to get the numbers to pass the Bill, though Helen Clark is confident the Govt will succeed. Greens co-leader Jeanette Fitzsimons says she has given Labour a list of further proposed changes. “While we don’t need every one of them, we do need a decent package of them. I think they know for example if there’s no movement at all on agriculture, then we are unlikely to support it.” Clark has previously said the Govt will not budge on the agricultural sector because of its agreement to leave the sector out until 2013. Parker confirmed “the sheer practicality” of bringing in agriculture to the ETS earlier than 2013 makes it too difficult to put it in place before then. The amended Bill leaves undefined the point of obligation for agriculture, whether it be on the farm or at the processing level. That leaves the industry so far in the dark there is little incentive to start reducing emissions before 2013.
The Govt, besides needing the votes of the Greens, is pressing NZ First to vote for the scheme. But as of Sunday NZ First leader Winston Peters was saying his party had “serious reservations” about it. This suggests his bid to get substantial electricity cost rebates for SuperGold cardholders is still being worked on. The problem is the Govt calculated electricity would increase by 10% if the price of carbon was fixed at $15 a tonne. At $25 a tonne, electricity would rise 18%. But the price of carbon is already at $40 a tonne. National says the Govt will score windfall profits from the way the ETS is designed. It says officials advised the committee the scheme would generate an estimated $21bn in revenue from the sale of emissions permits. This is double the amount earmarked for the Budget 2008 tax cuts.
In its report back the Select Committee said many submitters had suggested NZ should move in line with, rather than ahead of, its trading partners. However the NZ ETS in taking an all-sectors approach was consistent with initial indications on the design of the Australian scheme. “We believe the NZ ETS would promote equity and cost-efficiency in managing emissions. We believe the proposed staging of entry would balance the readiness of sectors to monitor, report and verify, their emissions.”
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