OECD Scorecard On NZ Calls For More Environmental Action

Tuesday, 16 June 2015, 11:08 am
Press Release: NZ Energy and Environment Business Week

OECD Scorecard On NZ Calls For More Environmental Action

The NZ Energy & Environment Business Alert Editors say the OECD's recent report on the NZ economy has a lot to say about policy in the Energy & Environment sector. The Paris based organisation says NZ needs to deliver a tougher Emissions Trading Scheme, do more on water quality and look at land, environmental and capital gains taxes to address environmental issues.

NZ Energy & Environment Business Alert says the report also looks at:

Transport:
It says transport emission intensities are high (reflecting low use of public transport and poor average vehicle fuel economy. NZ has considerable potential to reduce vehicle GHG emissions, which are responsible for most transport emissions (19% of the total), by moving towards a plug-in hybrid/electric vehicle fleet. Such vehicles are a good fit, given NZ’s high proportion of renewable electricity generation and its commuting patterns. These vehicles are exempt from paying the Road User Charge until 2020. However, there are few public charging points, reducing their practicality. The Government should consider how it could contribute in a cost-effective way to the development of a network of charging points.

GHG Emissions:
NZ is expected to over-achieve its Kyoto Protocol commitment to reduce net GHG emissions (including land use, land use change and forestry) to the 1990 level over 2008-12 and is on track to meet its unilateral reduction target of 5% from the 1990 level by 2020, taking into account the surplus achieved during the first commitment period. As NZ did not make a second-period commitment (2013-20) under the Kyoto Protocol, it has been excluded from international trade in Kyoto Protocol GHG units from 2015. This limits the potential of the ETS as, in effect, the ETS has become a purely domestic scheme.

Water Quality:
Updates to the National Objectives Framework For Water envisaged in 2016 and 2019 should develop limits on a broader range of urban contaminants, such as heavy metals, and broader measures of ecosystem health, such as the Macroinvertebrate Community Index. As these policies will probably limit dairy farming or at least impose costs associated with obtaining permits, bank lending to the dairy sector should be monitored. It calls on the Government to continue to encourage the development of market-based mechanisms where possible to manage the supply and quality of fresh water. Allow water consents to be tradable and apply pollution-rights trading to address water and air pollution, with no free rights for newcomers.

NZ Energy & Environment Business Alert says the Government has taken little notice of OECD recommendations in the past. The Organisation has previously suggested the Government remove preferential tax treatment for petroleum exploration expenditures and the income tax exemption on offshore oil and gas activities for non-resident companies. For the petroleum sector, it called for the elimination of revenue-based royalties and movement to a pure profit-based regime; if significant discoveries are made, switch to a rent-based system. To ensure proceeds are shared with future generations, they should be clearly designated for debt repayment or, if significant discoveries are made, for sovereign wealth fund contributions.

But no action was taken. Income tax exemptions which were to expire at the end of 2014 were extended until the end of 2019. The exemption now excludes operators of drilling rigs of modular construction installed on an existing offshore platform and includes operators of electromagnetic surveying vessels.

NZ Energy & Environment Business Alert says there is little expectation the Government will take too much notice of these latest recommendations.

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