Foresters, broker bat back heavy emitter arguments

Foresters, broker bat back heavy emitter arguments for ETS delay

Delaying the emissions trading scheme would cost the country more in the long run, say forest owners.

The country’s only specialist information service on the carbon markets, Carbon News (www.carbonnews.co.nz) reports this morning.

The Government is under pressure from some business lobby groups to delay the July 1 entry of the first wave of emitters into the scheme until schemes are in place in more countries – especially in Australia and the United States.

Yesterday, Climate Change Issues Minister Nick Smith said that such a move would be unfair on the forestry sector, which has been in the scheme since 2008, but that the Government would consider delaying other changes scheduled for 2013.

Carbon News says any delays could include postponing the entry of the agricultural sector into the scheme (now set for 2015), and extending the allocation of free credits to some heavy emitters (a transition programme designed to protect trade-exposed industries from unfair competition from countries with no price on carbon).

However, Forest Owners' Association chief executive David Rhodes says delay could be costly and one of the country’s carbon brokers OMFinancial is calling the lobby groups’ arguments “trite”.

Rhodes told Carbon News: “Government has received independent advice previously that the cost to the New Zealand economy of initiating an early transition will be less costly than an abrupt transition at some later point when, in the meantime, emissions have been allowed to rise without restraint.

“We won't know what efficiencies are possible until a price signal exists.”

Rhodes says that while there is a lack of clarity about the specific way in which other countries will deal with their emissions, the political will to do something remains undiminished.

The New Zealand Government has already delayed the introduction of emitters to the scheme by six months, is giving trade-exposed industries free credits, has set a maximum price on carbon of $25 a tonne and has said it will meet half the cost of emissions for the first two years, he says.

“On top of that, this ETS is a very different beast to that which was to have been introduced by the previous government in that it is intensity-based approach, meaning that industries can still increase total emissions levels without penalty so long as they can do it more efficiently.

“Compare all this with forestry which has been in the ETS since 2008 and has received a fraction of that level of relief for its significant pre-1990 forest emissions obligations."

Meantime Carbon News quotes broker OMFinancial as saying: “At last count there are 16 Emission Trading Schemes around the world in various forms so for lobby groups here to say New Zealand is sticking its neck out in regard to having its own ETS is a little trite.

“There is certainly a lot of press recently about a push from lobby groups to pressure the government to delay the ETS. Given the ETS will be reviewed in 2011 and forestry is already in the scheme – why does the government need to do that now?

“The reality is New Zealand needs to grow trees to reverse the trend of deforestation. OMFinancial does not think the government will buckle.”

ENDS

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