MAJOR ELECTRICITY USERS' GROUP

Regulatory Impact Statement fails to impress

“The Regulatory Impact Statement (RIS) referred to Cabinet on 21st August 2007 and released today in support of the proposed Emissions Trading Scheme (ETS) announced 20th September is under-whelming considering the impact the proposals will have on the economy,” said Ralph Matthes, Executive Director of Major Electricity Users’ Group (MEUG).

“The ETS package is complex and small changes can have significant effects. For example the New Zealand ETS will commence in 2008 with different sectors then progressively added in. In contrast the Australian ETS will commence in 2012. At a carbon price of $30/t CO2-e New Zealand consumers will pay approximately $2.3 billion for their energy needs before the Australians commence paying anything.

“The RIS did advise Ministers of the impact of a range of forecast carbon price sensitivities of between $15/t and $50/t – yet in the announcements of 20th September only the lower range was mentioned. In subsequent work shops officials have acknowledged the current price in the EU is equivalent to approximately $30/t. These differences are significant. According to the RIS at $15/t households will pay between $100 and $200 pa more while at $50/t they will pay between $330 and $660 per annum extra. MEUG estimate that across the whole economy consumers will pay approximately $608 million more for their energy at $15/t and at $50/t they will have energy bills that are over 2 billion dollars per annum more.

“New Zealand needs to do it’s bit for climate change, but not at any cost and certainly not without having adequately tested all the options and key sensitivity analysis such as the optimal timing to introduce a market mechanism for pricing greenhouse gases compared to the timing planned by our most important trading partners,” concluded Mr Matthes.

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