The Climate Change Response (Moderated Emissions Trading) Amendment Bill passed its third reading yesterday.
If you believed the media you would think the Bill was all about delaying the entry of biological emissions into the ETS. In fact the Bill is about a lot of things with bio emissions just one part.
It significantly changes the ETS by allowing the Government to turn what was a fiscally neutral trading scheme into a cash cow for the Government, because it will now have the ability to auction units. Governments when given a revenue stream almost always increase them over time. I can’t see how a Labour/Green govt will be able to resist tapping into this revenue stream and increasing it at every turn.
The National Government has been criticised for making the Emission Trading Scheme impotent but that is giving them too much credit. Certainly they have reduced the impact of the scheme by reducing the surrender requirements for emitters, but the low price of carbon, caused by a bountiful supply of international units, has exaggerated the impact of National’s tinkering. ($1.00 per tonne yesterday) Initially the Government was going to cap these international units but it was a condition of the ACT Party’s support for this Bill that no such restriction applies.
Despite the common view that the ETS has been made more harmless with these latest changes, it is in my view scarier than it was before. This is because a lot of power has been given to the Minister of Climate Change Issues to alter the settings of the scheme by regulation rather than legislation. A new Minister from Labour or the Green’s could wreak havoc with the existing ETS, just by regulation and with no need to get the support of Parliament. Hopefully John Key won’t allow Nick Smith back into the role when Tim Groser leaves.
Moana Mackey from Labour moved an amendment to include bio emissions in the ETS.
She said that “when agriculture is not in the scheme this means other participants have to compensate for this and reduce their emissions further for NZ to meet its targets. “
She does not understand the ETS, what she says is not true. What one sector does or doesn’t do in regard to the ETS has no impact on another. As for international targets, which are quite separate to the ETS, agriculture is the shining light, with its emissions increasing the lowest.
In the 2010 NZ Inventory of greenhouse gases it says the proportion of emissions from the agricultural sector has been decreasing since 1990
Energy emissions have increased 2.5 times those of agriculture.
Some figures for you
NZ gross emissions 1990 to 2010 up 19.8%
NZ net emissions 1990 to 2010 up 59.5%
Energy emissions 1990 to 2010 up 32.6%
Industrial process 1990 to 2010 up 41%
Agricultural bio emissions 1990 to 2010 up 9.4%
If other sectors were compensating for agriculture, as Mackey claims, then wouldn’t their emission increases be lower than those of agriculture rather than 3 to 4 times higher?
Her amendment failed.