Media release
April 3, 2007

Support for emissions trading scheme post 2012

In its submissions on the Draft New Zealand Energy Strategy and accompanying discussion papers, Business NZ proposes a broad based emissions trading market – post 2012 – as the best way to minimise greenhouse gas emissions in the long term.

Business NZ chief executive Phil O’Reilly says if a robust emissions trading market could be put in place and New Zealanders are made aware of its parameters and likely impacts sooner rather than later, it would provide a clear signal for investment decisions that will help New Zealand companies.

Mr O’Reilly says as well as influencing investment decisions in the short term, establishing the structure of the market and communicating that widely is also likely to be more effective, less costly and less disruptive than any interim measures the Government has proposed in its Transitional Measures discussion paper.

He says business is particularly concerned about the proposed narrow-based tax on thermal generation which would lead to distortions in the market and increased electricity prices without any real reduction in greenhouse gas emissions.

“It’s essential that no action is taken in the next five years that will compromise our ability to compete on the international market in the long term,” says Mr O’Reilly.

In order to assist debate and provide leadership from the private sector, Business NZ has sponsored a study into an emissions trading scheme, which will be released next week.

Carried out by the New Zealand Institute for Economic Research, the study drew participation from all sectors of business including farming and energy and was funded by Genesis Power, Mighty River Power, Contact Energy, New Zealand Steel, Fonterra, Fletcher Building, Rio Tinto Aluminium and Solid Energy.

Business NZ submitted that while an emissions trading scheme was the preferred option, New Zealand should only look to implement one when its international trading partners were doing something similar.

Mr O’Reilly says the recently announced Howard Task Force on emissions trading in Australia suggests a similar approach is being adopted across the Tasman.

In its submission, Business NZ said the country should move cautiously in response to concerns about climate change.

“We must not be rushed into action that is detrimental to our economy when the rest of the world is not taking the same route,” Mr O’Reilly says.

All the submissions emphasise the importance of robust cost-benefit analysis with stakeholder input for all proposed policy actions.

They also call for certainty from the Government with regards to its future obligations to sustain investment levels in new plant or technology in the transitional period.

Business NZ says strong coordination of Government climate change policies is needed in order to minimise the cumulative impact on business and to minimise the cost.

Business NZ also submitted that it is important the country’s energy strategy is developed independently of the climate change strategy in order to ensure New Zealand businesses have security about future energy supplies at the lowest possible cost.

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