Business Council backs emissions trading

13 April 2007

Media Release

Business Council backs emissions trading, calls on Government not to keep climate change tax revenue

The business organisation whose members' turnover is equivalent to 40% of the country's GDP says the most important message relating to climate change is that there'll be a price on carbon, and multi party support is needed on it.

Government should introduce a scheme to cap and trade emissions – and make sure it does not keep any revenue it might raise from climate change taxes.

The New Zealand Business Council for Sustainable Development, in its submission on Government climate change policies, says:

* Stable long term policy is needed to manage climate change and this should be achieved through cross-party agreement

* A price needs to be set on carbon and it should eventually apply to all sectors

* Moves are needed to stop the emission problem expanding, and major emitters should face the full cost of the additional carbon they emit above 2006 levels

* Emitters like the dairy industry, which does not yet have an emissions solution for methane, could be provided with credits for their 2007 level of emissions (produced at world's best practice levels) for 10 years. This would expose the dairy sector, for example, to a price on carbon on additional output, but give it time to develop a solution for its methane problem (the largest emissions source in New Zealand)

*Confer both carbon liabilities and credits on forest owners. This will be the most effective way decisions are made on future land use at the margin

*Do not use any increased revenue from climate change to increase the overall tax burden. The introduction of GST in the 1980s came with major tax cuts, and climate change can be managed so any revenue is recycled into emission reduction research and incentives to take up low-emission technology.

The Business Council does not agree with a narrow tax on the energy sector alone before 2012. Energy is not the only emission-producing sector that could grow rapidly before 2012. It notes a single letter to stationary energy investors was sufficient to stop investment in emission intensive generation.

The Business Council says the Government can get traction in cutting greenhouse gas emissions before a pricing system is introduced. It should provide subsidies for those taking up low emission technologies, including for:

*Insulating homes and buildings
*fuel efficient, low emission cars
*solar power
*teaching fuel efficient driving
*replacing incandescent light bulbs, and
*planting trees or keeping pests out of regenerating native bush

Opportunities like these, and others to incentivise forest planting and invest more in alternative sources of energy and reducing methane emissions from ruminant farm animals, will also deliver "co benefits" to the country and individuals.

"New Zealanders will be quick to understand that there are not only energy and greenhouse gas emission reductions, for example in insulating homes and Incentivising low-emission vehicles, but that they also provide significant health benefits. The quality of life will be significantly enhanced, while the country also enjoys lower health bills and better air quality," the Business Council's Chief Executive, Peter Neilson, says.

The Government also needs to launch a sophisticated communications campaign to ensure its policies are effective. There is widespread support among New Zealanders and business people for this, it says, and cites extensive research.

While the Government needs to protect sectors so their competitiveness is not put at risk, by providing time for dairying to acquire technology, for example, there may be opportunities to "get ahead of the game".

These include sectors facing carbon pricing taking up the latest technology, and marketing advantages. The current food miles debate shows New Zealand needs to be seen as a world leader.

Full copies of the Business Council's submissions are available at http://www.nzbcsd.org.nz/project.asp?ProjectID=37

ENDS

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