Government heading to a more effective Emissions Trading Scheme with an end to subsidy

The New Zealand Wood Council says the government decision to phase out a polluters’ subsidy in the Emissions Trading Scheme (ETS) is a step in the right direction, but much more needs to be done.

The Minister for Climate Change Issues, Paula Bennett, has announced the elimination of a two for one subsidy for air polluters, and she says this will mean many sectors will pay full market prices for their emissions by 2019.

The Wood Council’s chair Brian Stanley says he hopes this is just the first step in making the ETS really work.

“We’ve seen this subsidy, on top of bogus units from Eastern Europe, in the past few years, have made the ETS a standing joke. The ETS was set up to make a disincentive to produce greenhouse gas emissions, and on the other hand to work as an incentive to store carbon. Unfortunately, it’s done neither.”

Brian Stanley says the government needs to work more to achieve a true cost mechanism.

“If an industry in this country, and that includes agriculture, is responsible for net emissions then it should be covered by the ETS. The phasing out the two for one subsidy is an ideal precedent. The government can now set up a timetable for bringing in agriculture. Even if this isn’t an immediate fix it will provide certainty for investment. That is important if someone is deciding at this moment whether to invest in forests or in farm animals.”

Brian Stanley also says the government needs to make an ETS allowance for how wood and wood products endure after a forest is felled.

‘Foresters are given an ETS bill when they harvest, on the assumption that all the wood is obliterated at that point – which is clearly nonsense. Often the timber will lock up carbon for a longer period than the tree it came from. This has been recognised internationally since 2011 and there is enough good information to measure and justify it,” Brian Stanley says.

“We have submitted to the government that deferred liability ought to be factored into ETS calculations and made equitable through the value chain. It will ensure carbon emission obligations are met when the evidence says they fall due”.

“There is also the factor of encouraging more use of wood in New Zealand as environmentally positive.”

Brian Stanley says the issues, of ETS exemption and presumption of no carbon-life in wood after harvest, are both indicative of how the ETS has been treated as a crude political instrument in the past, instead of a genuine measure to reduce New Zealand’s net greenhouse gas emissions.

“New Zealand’s climate change policy instruments need to be equitable, science-based and effective. Paula Bennett’s signal on subsidies indicates a recognition of this, but it needs more.”

ENDS

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