Proposed Aust ETS Similar To NZ’s – Both Token Gestures
July 23rd, 2008
Chris Mole, Associate Editor
• Emitters to face full costs.
• Schemes cover all industries.
• Free allocations included.
The Govt is trying to highlight similarities between the proposed Aust and NZ emissions trading schemes, while National and business lobbies are focusing on the differences. What is clear, though, is both schemes will essentially result in more paper shuffling and bureaucracy on both sides of the Tasman. They will do little, if anything, to reduce greenhouse gases. In this, the environmental lobby groups are absolutely correct. Govts in both Canberra and Wellington are caught between a rock and hard place, trying to juggle competing interests from business sectors on which their economies depend, versus demands from environmentalists to take a tough line on emissions.
So what both Govts are proposing is a token gesture, to look as if they are doing something, at least, while placating business at the same time. The end result will be a new industry for those smart enough to milk the emissions trading system for financial benefit. Looking at the proposed schemes from this perspective, the spin coming from politicians in Wellington and Canberra is largely irrelevant. But for the record, Climate Change Minister David Parker notes the Aust and NZ schemes share a fundamental principle – carbon emitters will face the full marginal cost for increases in emissions while reductions are rewarded in the same way. Both schemes will also cover all sectors and all greenhouse gases, and both include free allocations to affected industries, which will be phased out over time.
Among the differences between the schemes, free allocations proposed for industry in NZ are even more generous than in Aust. In Aust, 30% of permits will be allocated free to emitters in trade-exposed sectors (including agriculture), while in NZ an estimated 63% of the country’s projected gross emissions in 2013 will be covered by free allocation to trade-exposed industry and agriculture. However, the proposed rebates on fuel taxes in Aust substantially equalise the overall effect.
Meanwhile, National’s Nick Smith claims the Rudd Govt’s proposed ETS “differs significantly” from the NZ proposal and could tempt NZ businesses to jump the Tasman, although he’s light on detail as to exactly why. Smith says the “intensity approach” proposed in Aust for energy-intensive industries contrasts with that of NZ and “will put our industries at a disadvantage.”
He also notes the Aust Govt is proposing a fiscally neutral scheme, whereas the Clark Govt is “set to profit by more than $23bn” from the NZ scheme. Business NZ CEO Phil O’Reilly also believes the Aust scheme will give businesses across the Tasman a competitive advantage. But O’Reilly’s reaction has surprised Aust Treasurer Wayne Swan, who was in Wellington last week. Swan finds it difficult to understand how Business NZ has formed a conclusive judgment at such an early stage.
Copyright © Media Information Ltd
NZ Energy & Environment Business Week
Amalgamated Dairies