The ETS announcement, after close of business yesterday, accepted most of the Climate Commission’s 2023 recommended unit limit and price settings for the ETS. The only significant difference is with auction volumes, where the Government has gone with unit levels for 2024 and 2025 which look to be 50% higher than those recommended by the Commission.

These unit limit and price settings were not due until 30 September 2023. As is known, in December last year Cabinet rejected Shaw’s broad agreement with the Commission’s 2022 advice. Following that rejection, NZU prices dropped from $88 to around $50. Earlier this month the High Court found there was no proper basis for Shaw to implement that rejection by way of regulations. In deciding on new settings, Shaw moved a lot faster than expected, doubtless with the PM’s approval.

The Government, and Shaw, no doubt lost votes when they wrongfully meddled with the ETS market mechanism that most informed people believe was working as it was meant to. They may have won some of those voters back last night, but not many, because the real political damage resulted from the ill-advised ETS Review that remains to be fixed. That drove NZU prices down to as low as $34.

The fact that last night’s announcement was not the appropriate place to pull the Review, or at least announce that no existing forests would ever have investment assumptions based on non-discriminatory participation in the ETS changed, once foresters had made 28 year plus commitments in planting those forests (i.e. grandfathering to prevent expropriation of existing property rights), doesn’t excuse the fact either of these should have been done weeks ago.

As pointed out in an earlier press release (Scoop/10 July), the Review has resulted in most of next year’s planned forest plantings being scrapped. This further deepens the hole in our NDC deficits. Each year’s cancellation of planting 60k ha of new forests will likely cost each New Zealand household around $350 a year. That is a real cost of living hit.

Households will not feel that cost for some time. But what many will feel is loss of income from all the jobs associated with propagating and planting trees. Those are voters, often in marginal seats, who will blame the Government, and Shaw, for using dodgy assumptions to disincentivise forestry in the ETS for political or ideological reasons.

Politicising such peoples’ livelihoods is likely to lose many more votes than it gains, especially when the cheerleaders of such actions will have voted for Labour/Greens anyway.

Maybe these voters forgive the Government and Shaw’s attempts to pretend the economics support changing the ETS rules after foresters have committed to forestry investments, and don’t mind their intransigence when the market exposes those economics as flawed. But those directly or indirectly impacted by this pig-headedness are unlikely to be so forgiving. It wasn’t so long ago the government was encouraging investors to plant 1 billion trees, and that is what they did.

The real losers from the Review’s ill-advised attempt to disincentivise forestry in the ETS with flawed economics are Māori. Because Māori own around 35% of plantation forests in New Zealand, Māori, and future generations of Māori, will be disproportionately affected by the proposals in the Review to disincentivise forestry.

It would not be unexpected if they seek to challenge any expropriation of their existing property rights under the Treaty of Waitangi, Declaration of Rights of Indigenous People, or the Convention on the rights of children.

What Shaw and the Government should now be hearing is the steady drip of Māori voters leaving them for Te Pāti Māori.

The PM is usually keen to hose down electoral fires. If the Greens have “gone to the mattresses” on pulling the review, or at least grandfathering existing forests from it, what are they hoping to gain from this, other than saving the blushes of Shaw and his officials. Given Shaw’s shaky standing in the Greens that seems unlikely.

The ETS Review is a dead horse one way or the other. There is no way any PM can allow a potential, unjustified and unnecessary $9 billion plus hit to our NDC deficit on his or her watch, nor signal to overseas investors that the rules can be changed at any time by a capricious government after overseas investors have committed to long term investments in this country.

The real mystery is why the PM has not stomped on this mad ETS Review before now.

Halt NZU Grab

Campaign Co-convenors: H. Bradbury and S.Thomson

halt.nzu.grab@gmail.com

www.haltnzugrab.org.nz

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