Carbon trading – more work needed

Media release
20 September 2007

Carbon trading – more work needed

Business will be pleased that the Government’s intentions on carbon trading are clearer, but there is still concern about the economic consequences, says Business NZ.

Business NZ Chief Executive Phil O’Reilly says enterprise is willing to play a leadership role in working through the detail of the emerging scheme.

“It would appear that a lot more work will be needed. The reassurance given to consumers in today’s announcement - that costs will not greatly increase - is based on the premise that the scheme “might knock 0.1 per cent off New Zealand’s GDP growth over five years.”

Mr O’Reilly said it was hard to see how this figure had been arrived at, since nobody knows what the price of carbon will be over this period.

“International trading is required to get the lowest cost possible for carbon credits, but we are a long way away from proper international trading.

“Current European trading is in limited sectors of the economy only and covers carbon dioxide only. New Zealand appears to be the only country attempting a cap & trade scheme across all sectors and covering all six greenhouse gases.

“The price of carbon in the European market has been reasonably volatile, ranging between a few cents per tonne and $30-$40 per tonne.

“If we don’t know the cost of carbon, how can we say the impact of the scheme will be only 0.1 per cent of GDP growth?

“To get an economic impact of only 0.1% it would be necessary to have just about every country in the world carbon trading, and we are not going to get that in a hurry.

“It will be important that Government engages meaningfully with business on the process and numbers involved and we are pleased at the initial indications that Government is willing to do so.”

ENDS

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