Trans-Tasman Emissions Trading Scheme Alignment Full Steam Ahead
March 25th, 2009
Climate Change Minister Nick Smith is identifying a common trans-Tasman view on a carbon price cap as one of two “first order” issues to be resolved as NZ and Aust move to harmonise their emissions trading schemes. Speaking to NZ Energy & Environment Business Week after talks in Canberra with his Australian counterpart, Penny Wong, Smith’s comments should allay some of the alarm among major energy users in NZ about the potential for carbon price volatility to place additional burdens on corporate balance sheets already stressed by the credit crunch.
This issue was high among concerns expressed at hearings on the impact of NZ’s ETS, as currently legislated, by the special Select Committee appointed to review the NZ scheme. Smith named the first order issues in harmonising Australasian emissions trading as:
• Harmonisation with respect to a price cap for carbon trading.
• Exporting AAU’s (Australian ETS units) and the importation of international units.
He says “if there are significant difference on those points, a trans-Tasman ETS is very difficult. There will only be a joint approach if it’s in both countries’ interests.”
However, there is considerable potential for carbon trading to occur between the two economies, precisely because they have such different carbon emissions profiles, with Aust being one of the highest emitters per head of population because of its heavy reliance on coal for electricity generation.
Smith says harmonising timing is less critical, although he believes it is “highly desirable that a cement or steel or aluminium business in NZ is facing the same costs at the same time as Australian businesses.”
Smith and Wong are to establish a joint officials’ working group and agreed terms of reference during the Canberra visit, with Smith seeking “significant progress by the time of the next Prime Ministers’ summit, in the spring.”
Smith says it’s too early to say what the impact of this work will be on the timetable for NZ’s ETS, which is supposed to come into force on January 1, 2010, citing the need for a conclusion from the Select Committee inquiry first.
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