Don’t Subsidise Pollution campaign spokesperson Alex Johnston, of Common Grace Aotearoa, comments on the Government’s Draft Emissions Reduction Plan:

“In less than a year, the government has created a 17 million tonne hole in meeting our future targets through cutting so many climate policies.

This Emissions Reduction Plan is delaying the transition into the zero carbon world of the future through propping up the pollution of big industry and swamping the country with pine trees.

This is a dangerous gamble with our future and a short sighted and selective understanding of what “least cost” option means.

By relying almost entirely on forestry offsets in the secondary market, within a decade they will have no control over the ETS market and will have to actually pay foresters for the credits that they then give out for free to big polluters in the 2030s.

The government identifies the handout of free carbon credits to major polluters as a risk to the 2050 target, but hasn’t identified doing anything about that.

It’s time to stop subsidising pollution and offsetting our way through a climate crisis, and instead take responsibility to cut emissions at the source. There are decarbonisation options available to industries like aluminium, concrete and fertiliser which industrial allocation is holding back.

Ending free carbon credits by 2030 could easily fill the 17 MT hole through shrinking the ETS cap, while also generating hundreds of millions of dollars to support industry to decarbonise. The European Union is leading the way here with a legislated plan swapping out free credits for a Carbon Border Adjustment Mechanism.

We urge the government to put a strategy for ending industrial allocation into this plan, to allow the ETS to do its job properly and make big polluters pay for their emissions.”

Notes:

The Plan released today shows that under the government’s policies proposed policies, New Zealand is projected to miss the third emissions budget by around 17 million tonnes. (New Zealand’s Second Emissions Reduction Plan Technical Annex, Table 13).

The Climate Commission’s forecast industrial allocation volumes from May 2024 shows that over 50 million emissions units will be allocated for free to heavy industrial emitters between 2025 and 2035 (Climate Change Commission, NZ ETS unit limits and price control settings for 2025–2029 Technical Annex 1)

If allocations were phased out by 2030 and half of the otherwise freely allocated units were cancelled, then the emissions cap could be shrunk by 17.9 million tonnes. The other 17.9 million units could be auctioned to polluters to raise revenue for supporting industry to decarbonise.

Calculations available upon request.

About the Don’t Subsidise Pollution campaign

The Don’t Subsidise Pollution campaign is a coalition of climate advocacy organisations, communities of faith and construction industry groups who want an industrial future for Aotearoa that is green, creates good jobs, and ensures a fair distribution of effort in cutting climate pollution. Visit https://www.endfreecredits.nz/ to learn more.

The coalition is calling for Minister of Climate Change and Cabinet to:

End free carbon credits: accelerate the phase out of free industrial allocation in the Emissions Trading Scheme to end free credits by 2030.

Cut pollution: use funds generated from ending free credits to contribute to the upfront costs of decarbonising emissions intensive industries (in the form of loans or in return for equity stakes).

Unlock green jobs: protect jobs with a Carbon Border Mechanism (like the EU is introducing), green infrastructure investment via a Ministry of Green Works or public procurement, and fund a just transition for any affected workers.

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