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Monday May 4, 2009

Media Release

Business leaders: Emissions trading policy delays causing major investment blight

Lack of emissions trading policy certainty is causing major investment blight.

Business leaders told the Parliamentary Select Committee reviewing the Emissions Trading Scheme this afternoon indecision is stalling hundreds of millions in investments in sectors which will both benefit from or fear having a price of carbon.

The New Zealand Business Council for Sustainable Development - whose 73 member companies' annual sales of $59 billion equate to about 43% of gross domestic product in dollar terms - told MPs their review created a golden opportunity to develop the multi party agreement on emissions trading which New Zealanders wanted. Policy should be decided and passed into law by September this year.

All sectors and gases should be included in the ETS no later than the timetable in current ETS law.

Business Council chairman Nick Main told the committee investment blight was affecting hundreds of millions worth of job-rich investments in forestry, clean energy and biotech, and also holding up decisions on reinvestment and new investment in emission intensive industries, like steel.

Continuing the current ETS policy uncertainty beyond the next few months would be "bad for business and the country".

The Business Council also formally presented the committee with the findings of the country's biggest current survey of New Zealanders' attitudes to climate change. Covering 2,851 people in February, it finds 64% think the time has passed to doubt climate change science, 76% believe climate change is a problem, 65% believe the effects have already begun to happen and 44% believe it will be a threat to their personal lifestyle within their own lifetime. People are more inclined to believe the country should act more quickly, and more support the ETS (42%) than oppose it (11%).

New Zealanders also support the Government signing a replacement for the Kyoto Climate Change treaty, even if some poorer but major emitting countries fail to commit to cutting their emissions.

The Business Council says an ETS also:

• lowers the long-term cost of New Zealand's emissions reductions

• provides the Government with revenue from selling emissions units (estimated to be at least $1.6 billion a year from 2013) to recycle into significant complementary measures, to help households and businesses reduce emissions, spur new research and help rapidly commercialise New Zealand's new clean technology inventions, potentially worth billions in export earnings

• Improves our standing in international negotiations on a post-Kyoto agreement.

The Business Council says recent international changes also make it important to act quickly.

Since the Business Council's main submission was made on February 28, President Barack Obama and Secretary of State Hillary Clinton have firmed the USA's position, draft cap and trade bills have been produced in the USA and Australia, and the USA has hosted the Major Economies Forum on Energy and Climate, involving 16 nations and the European Union:

The Business Council told MPS:

"We believe:

• The USA and China will probably agree a package and take it to Copenhagen

• Australia's Government could fail to achieve Senate support for its emissions pollution reduction scheme law, and - without a double dissolution and renewed mandate in both Federal houses of Parliament, Australia may not be able to enact its CPRS until 2013 to 2015

• New Zealand will become a postscript in international negotiations if we don't step up and take action

• New Zealand needs to drive hard for deals on forestry and agriculture, and ensure the rest of the world imposes a price on agricultural emissions - where we have a major lower carbon-content advantage

• By driving agricultural emissions into the new world agreement, New Zealand can also take advantage of its agricultural emissions reduction technology breakthroughs. This will open sales of methane-reducing technology to a world market of a billion farm animals."

The Ministry for the Environment, when reporting a net emissions surplus forecast for 2008-2012, had warned this did not mean the country did not need an ETS. It said any agreement in Copenhagen in December this year is likely to mean tougher targets for New Zealand after 2012. An emissions trading scheme will be an important means of reducing our greenhouse gas emissions to meet those targets. For those reasons, the net surplus projected was irrelevant to decisions on the future of the ETS.

The Business Council told MPs the country is best to:

• do all it can to ensure other nations put a price on emissions, specially agricultural emissions

• press ahead with reducing emissions at the lowest possible price (which means through a cap and trade scheme)

• have ETS law which is flexible enough to adapt to what the rest of the world agrees, and protects our competitiveness-at-risk industries

• commit to a 20% emissions reduction target by 2020, with further reductions possible if the new treaty covers our major emitting industries' overseas competitors

• provide investment and carbon price certainty, affecting billions in planned investments

• introduce a wide range of highly effective and popular complementary policies to boost forestry planting, ensure the rapid take up of emissions-lowering technology and the rapid global commercialisation of world-leading New Zealand technology to lower emissions and produce new low-emissions biofuels

• recycle ETS revenues to help households and businesses adjust, generating huge energy and infrastructure efficiencies, health gains and emission reductions through upgrading our homes and vehicles.

Mr Main said: "Any suggestion we can wait for other nations or go slower is an argument for further delay, and a higher cost of eventual adjustment.
"The faster your emissions are increasing, the greater the rate of reduction needed to get down to the agreed limit.

"As leaders in proposing well researched, evidence-based, long-term sustainable policy options for New Zealand, we urge you to act immediately in providing policy certainty in a way which seizes this major opportunity to both lower emissions and position New Zealand to protect our environment, our children's futures, and grow jobs and trade.

"After 15 years of failing to produce any substantive, effective policy to cut emissions, it's time to say enough is enough. It's time to make bold, balanced, effective policy."

The Business Council's full submission to the select committee and the national climate change survey of New Zealanders' attitudes to Climate Change are at www.nzbcsd.org.nz

ENDS

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