MAJOR ELECTRICITY USERS' GROUP

Significant costs to consumers in the details of the proposed emissions trading scheme

“New Zealand consumers and businesses will pay nearly $600 million more in 2009 than their Australian counterparts because of the misalignment in timing of the New Zealand and Australian Emissions Trading Schemes,” said Ralph Matthes, Executive Director of the Major Electricity Users’ Group (MEUG). He said “these estimates are based on $30/t CO2-e, but with recent carbon prices in excess of $40, the calculation is probably on the low side.”

Mr Matthes said that comments yesterday by the Minister for Climate Change Issues, Hon David Parker, that there wasn’t much value in aligning the timing and details or our Emissions Trading Scheme with Australia seems to trivialise this $600 million impost on New Zealanders. The attitude of the Minister towards the Australians starting in 2010, and our starting in 2009 and that this alignment was good enough ignores the trans-Tasman competitive pressures, the exodus of labour to Australia and the growing pressure on costs within New Zealand.

“There is so much at stake with the proposed Emissions Trading Scheme, so many uncertainties and the costs of getting it wrong are too high to be flippant about considering a proper alignment with the Australians.

“Australia is looking at earliest having their scheme in place by 2010 whereas the Bill before Parliament proposes the New Zealand liquid fuels sector will be liable from 1 January 2009. For households and businesses that means petrol and diesel prices will rise 1 January 2009 whereas comparable households in Australia won’t see their costs rise until 2010. These types of price increases will not be faced by consumers in any other country in the Asia Pacific rim in this short time frame.

“Because New Zealand will likely be short of New Zealand Units in 2009, oil companies are likely to enter international markets to buy units ahead of their obligation to surrender credits to the government. Hence petrol and diesel prices may well rise before the end of this year because of the proposed scheme.

“The alignment of timing and other details of our Emissions Trading Scheme with that of Australia needs to be seriously considered. If that is a better solution than the proposal currently before Parliament, then the Bill will have to be fundamentally altered. It’s best to get it right than rush in a scheme that will lower households living standards and harm every business in New Zealand” concluded Mr Matthes.

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