Send The Bill Somewhere Else
May 14th, 2008
NZ should be a world leader in climate change? Yeah right. Everyone cheered when Helen Clark said her Govt aimed to create a carbon-neutral country. But when it comes down to “will you pay?” everyone runs hard in the opposite direction. Economic realities (and politics as well) caught up with the Govt last week. In postponing the entry of transport fuels into the emissions trading scheme from 2009 to 2011 (another election year) the Govt was not only recognising it had under-estimated the impact of its climate change policy on the average household, but it would pay a heavy electoral price on its own account. No-one votes in favour of a petrol price rise. The Govt argued new figures on its Kyoto liability give it more flexibility to phase in the Emissions Trading Scheme. The deficit reported in May 2007 of 45.5m units has been revised down to 21.7m units for the first commitment period of the Kyoto Protocol.
This means the liability facing the country is halved from $1bn to $481.6m. But does anyone think a NZ Finance Minister will ever sign a cheque for this, and send it off to countries which haven’t lifted a hand to curb their emissions? You can just see NZ being first in the queue to pay off its Kyoto liability, ahead of say, Aust, Japan, or Germany and whoever else, if you could find anyone to agree on how precisely each country’s liability is calculated.
The latest Shape NZ poll for the NZ Business Council for Sustainable Development shows 58% either agree or strongly agree with the Govt’s reasons for postponing the entry of transport fuels into the ETS. So the Govt can say it’s responding to popular opinion. But does anyone believe it will be any easier to introduce higher fuel taxes in 2011 than in 2008? Talk of achieving carbon neutrality seems increasingly hollow. But the theme then was NZ could become a truly sustainable economy, not by sacrificing living standards but by being smart and determined. The rhetoric sounded good: it implied the transition could be painless. Now the real cost is becoming known, the story-line changes.
What could be even more painful is apparent in the scenario painted by Solid Energy’s Don Elder, who suggests the Govt’s emissions trading scheme legislation has embedded in it a massive change to the country’s tax structure. The ETS could produce a tax windfall of up to $80bn over time for the Govt. The Govt disputes his analysis. There is however little doubt there will be windfall gains for the big state-owned electricity generators from the switch to renewable energy. Energy Minister David Parker says the Govt has looked at a special tax to claw back those gains, but ruled out. Instead low-income households will be compensated for the increase in their power bills. NZers may be suckers for “world firsts,” but, please, send the bill somewhere else.
Copyright © Media Information Ltd
NZ Energy & Environment Business Week
Amalgamated Dairies