Smith Nick: Climate Change (Emissions Trading and Renewable Preference) Bill — First Reading 
Smith Nick: Climate Change (Emissions Trading and Renewable Preference) Bill — First Reading 
[Volume:644;Page:13791] 
Hon Dr NICK SMITH (National—Nelson) 
: 
 National supports the first reading of the Climate Change (Emissions Trading and Renewable Preference) Bill because we believe that an emissions trading system is the sensible approach for New Zealand to take in response to the huge challenge of climate change. In fact back in 1999 the National Government did a large amount of policy work on this subject and it concluded that an emissions trading system was the right way forward. When the current Government proposed a carbon tax National members said that an emissions trading system was a better option. Then 18 months ago when we produced  
A Bluegreen Vision for New Zealand 
 we again said an emissions trading system was the right way forward. The irony is that at that time Labour heavily criticised the proposal. We now welcome the fact that there is consensus between the major parties that an emissions trading system covering all sectors and all gases is the right way forward. 
The reason National believes that emissions trading systems are the foundation for a sensible climate change policy is that pricing signals are the best way in which to incentivise people in forestry agriculture energy and transport to make better decisions in respect of the environment. We think that a little country like New Zealand needs to take into account the decisions that other countries are making as we respond to the challenge of global climate change. We look at the United States where 23 states are now part of emissions trading schemes. We look at Canada we look at the European community and we look at the decision of both the previous Government of Australia and the new Government all of which have come to the same conclusion that an emissions trading system is the right way forward. 
National believes there are a number of very important detailed issues in how emissions trading systems are put together and believes also that this bill needs very heavy scrutiny. The Acting Minister Trevor Mallard noted the issue of whether we should accept into our market Kyoto-compliant units from those Eastern European countries. In truth that will probably make it less expensive. It will make it more unstable and it may mean it has less environmental integrity. National members look forward to detailed work at the select committee to make the right choice around that important issue. 
There is the big issue about allocation plans. New Zealand has major industries such as agriculture forestry steel aluminium and cement. National does not want to provide a bill that simply exports those industries and jobs offshore because of the costs that we impose on them in New Zealand. The proposition in the bill for an allocation plan of units to those industries that face competitive issues is the right way to address that. But National raises questions about the very rapid level of removing that assistance where effectively from 2012 to 2025 all of that assistance will be taken away. If that is broadly in line with where the international community moves that would be appropriate. Having just returned from an international parliamentary conference in London and the United Nations conference in Bali I think the Government is being overly optimistic about the level of international progress and that is an issue that we will want to visit. 
Furthermore New Zealand needs to understand that in respect of the areas of forestry and agriculture this emissions trading system is unique. To date no other country has attempted to put land use and the issue of agricultural emissions into an emissions trading scheme. We in National will want to scrutinise those provisions of the bill very closely at the select committee because New Zealand will pay a high price if we get those provisions wrong. In National’s proposal for an emissions trading system we felt that we should put the electricity sector first rather than the transport sector. The argument is over 1 year. We will not argue heavily about that although I raise the question of timing. Why has the Government decided to put our landfills that emit emissions at the very last point—in 2013—when all of the evidence is that that is some of the lowest-hanging fruit of which we can for the least cost make the most gains? National’s preference would be to see that sector come in earlier. 
I must make comment on the proposition in this bill to put a ban on new thermal generation. We have seen a real hotchpotch of Government policy in this respect. Let me recite the history. The Government intervened in the electricity market in 2002 in levying all New Zealand electricity consumers to build the new Whirinaki oil-fired power plant. It then came along in 2003 and rejected the Dobson hydro scheme which would have produced renewable energy. The Government intervened and stopped it. It then came along in 2004 and through legislation blocked Project Aqua the biggest renewable energy project this country has seen in a long time. The next year the Government provided a guarantee for the massive new E3P gas-fired generator at Huntly. And now it will put a ban on new thermal. I simply ask the Government: where is the consistency? One moment it is intervening to stop renewables and to provide Government guarantees for thermal—as for the oil-fired power station and the gas-fired station—and the next minute it does a massive U-turn and wants to completely reject and ban them. Albeit I have to say I think the ban in the bill is something of a Clayton’s ban in that there are some gigantic outs. 
I think what is really going on with those provisions is that under this Government we have seen a trebling of the amount of electricity produced from coal. The Government is deeply embarrassed by that. It knows that will be an albatross around its neck as it goes into the next election and it is trying to cover its base with this Clayton’s ban on thermal generation to save it from its appalling record in that regard. National says that we want to heavily scrutinise all of those issues in the select committee. 
I will also comment on the wider debate around climate change. I am somewhat amused by the debate around climate change in New Zealand as to whether we are going to be a world leader or a fast follower. I have to say that is like arguing over whether we want the gold medal or the silver medal when we are last in the heats. If we look at this Government’s actual record on emissions we see that it is pretty appalling. If we look at the United Nations and its report on emissions we see that of the 36 countries that have commitments under the Kyoto Protocol New Zealand’s record is the fourth worst. Our emissions have gone up by 25 percent. I compare that with our near neighbour Australia. Australia is on track to actually meet its Kyoto Protocol requirements with a growth of 4 percent in its net emissions. 
The truth is that because of the shenanigans we have seen in public policy in New Zealand despite ratifying the Kyoto Protocol in 2002 it is now 2007 and we have lost 5 years. The loss of those 5 years in which there has not been any substantive policy on climate change has seen us now with this bill only 2 weeks prior to the Kyoto Protocol coming into effect. We must be honest and say that this bill includes retrospective controls on industries like forestry. The Government has had 5 years to do its work and it let us down. 
I draw Parliament’s attention also to the international council on integrity around climate change which when it takes into account record and policy again ranks New Zealand at the very bottom end. Labour promised when it came to Government that it would reduce emissions by 20 percent by 2005. It has not. Emissions have gone up by 12 percent. National wants to play a constructive role in getting the right sort of emissions trading system for New Zealand because climate change is an issue that is bigger than any party in this Parliament or than any single country. We want to take a responsible approach to it.