A lot of misinformation about the ETS is being bandied about as the Finance and Expenditure hear submissions on the proposed changes to the ETS. I will be appearing before them on Monday.
Parliamentary Commissioner for the Environment Dr Jan Wright told the Committee that changes to the ETS will make “taxpayers subsidise the cost of pollution indefinitely” and she described this as “a very poor way” of subsidising jobs?
I don’t know what she is a doctor of but it can’t be economics or science. If it was science she would know that carbon is not a pollutant and therefore emitters of it are not polluters. People who use the term polluter and pollution in regard to carbon emissions do so out of ignorance or malice. I’m not sure which applies to her.
If she was a doctor of economics she would know that the taxpayers are not subsidising anyone. No taxpayer money is being paid for any emissions. Consumers pay at the fuel pump and in power bills for the emissions the fuel producers and power producers have to purchase NZ units for because the producers pass these costs on to consumers. If the producer does not have to pay because they are given free allocations or as in the case of bio emissions they are not yet in the ETS then no one pays, not the producer, nor the consumer, nor the taxpayer because there is no liability, there is nothing to pay.
This is what I put in our submission to the F & P Committee on this issue in regard to bio emissions.
Taxpayers subsidising farmers
It is suggested by some that if farmers do not pay for their emissions, the taxpayer has to. This is not true. The liability under the ETS is only created once a sector faces surrender obligations. Until that date there is no liability. Not one dollar is taken from a taxpayer and paid to anyone because farmers are not paying for bio emissions. There is no taxpayer subsidy. Some suggest that farmers are being subsidised because they are not paying through the ETS to meet our international commitments. This is not true. On the matter of international obligations, New Zealand has none after its obligations under the Kyoto Protocol expire at the end of this year
New Zealand is meeting its Kyoto obligations, for what they are worth, and would have done so without an ETS. There is no reality in the suggestion that taxpayers are paying the farmers share.
Even the forecast fiscal cost of $35.796M for delaying the entry of bio emissions is not a cost that will have to be met by the taxpayer. Likewise it does not represent income that the Government can use. This is because carbon unit flows do not impact on the Government debt position or cash position. Carbon units are an intangible asset. The $35 million figure is a fiscal cost assumed to exist because farmers would not surrender that amount of NZ units to the Govt. The surrendering of NZ units constitutes a credit to the Government to cancel the liability it creates for itself when it gives out NZ units to foresters. The $35 million does not represent money that the Government can use because in reality the farmers’ money goes to a forester or an offshore interest. All the Government gets is a credit to offset the liability it created for itself when it gave the NZ unit to the forester in the first place.
Dr Kennedy Graham of the Green’s harangued Tim Groser about it in Parliament on Thursday and seemed genuinely confused. The Greens and Labour hold dear to their misperception that the taxpayer is subsidising emitters and Graham was finding it difficult to understand a reality that does not fit with his bias.
Dr Kennedy Graham: Why has the Government cut support for jobs-rich cleantech businesses while continuing expensive subsidies for businesses that are contributing to climate change?
Hon TIM GROSER: We do not consider these subsidies. This word is used—thrown around loosely—by people who have no understanding of the international jurisprudence around this, or any concept of materiality on subsidies.
Dr Kennedy Graham: Having clarified to the House’s satisfaction the matter of subsidies, in light of tabling the document, and to put it in another way that is comprehensible to the Minister, why is it fair that taxpayers pay for 95 percent of the cost of large greenhouse gas emitters’ pollution?
Hon TIM GROSER: Well, our households are paying their share of the emissions trading scheme, as are all New Zealanders, including farmers. The reality is that we are on track to meet our commitments and probably to have a surplus, so we will not end up subsidising anybody.
In the end a confused Graham asked his final question almost in desperation hoping that Groser would relieve him of his ignorance on this matter
Dr Kennedy Graham: If greenhouse gas emitters do not themselves pay for the costs of the pollution now, who does?
Hon TIM GROSER: Well, provided they are part of the covered scheme, an industrial polluter—which includes processed food producers—will be paying their share of the costs of the scheme.
It would help if Groser did not use such big words like jurisprudence and genuinely tried to inform these people about how the ETS works. When Graham asked in his final question “who pays?” Groser could have just said “nobody”
Groser could also educate his associate Minister of Simon Bridges who doesn’t have much of a clue as evidenced by this answer he gave in parliament this week
Hon SIMON BRIDGES (Associate Minister for Climate Change Issues) on behalf of the Minister for Climate Change Issues: New Zealand remains on track to meet its first commitment period obligations under the Kyoto Protocol to maintain its average emissions at 1990 levels during the period 2008 to 2012. In fact, New Zealand is expected to exceed its commitment.
Bridges is wrong, NZ did not agree to maintain its average emissions at 1990 level at all. Emissions are either gross or net. Net emissions are gross emissions less forestry removals. You can not talk about emissions without specifying gross or net.
Gross emissions are up 20% and net emissions nearly 60% since 1990. Under Kyoto the 1990 target is set using gross emissions and our emissions we measure against that target are net emissions. It is a cheat really but who cares?
I find it really bizarre that the opposition let him get away with misleading information like this, except that they probably don’t realise it is misleading because none of them appear to know what they are talking about.