Anderton Jim: Climate Change (Emissions Trading and Renewable Preference) Bill — First Reading 
Anderton Jim: Climate Change (Emissions Trading and Renewable Preference) Bill — First Reading 
[Volume:644;Page:13793] 
Hon JIM ANDERTON (Leader—Progressive) 
: 
 I am glad National has joined the 21st century. Last year it was in climate change denial. Last year the National Party was taunting this Government and saying that New Zealand should follow the example of Australia and the United States and not sign up to the Kyoto Protocol. The interesting thing is that had we not signed up we would now be following Australia to Bali to sign up. What would that make us? It would make us followers like some other party in this House that I know. The truth is that if we had followed that advice we would be a laughing stock now. It is a bit rich to be getting advice on the Kyoto Protocol and climate change from the National Party when it has been in denial all along. 
New Zealand is exposed to climate change in multiple ways. We face a choice: we can strongly seize the benefits and reduce the liabilities or we can sit on our hands as the Opposition would have had us do and be exposed to enormous risks. We are more dependent on climate and climate change than any other developed country because more of our economy is based on climate-dependent production. In our export markets consumers and regulators are already asking hard questions about the sustainability of our produce. Unless we can say that our exports are from the first truly sustainable country in the world we will increasingly be shut out of markets upon which we rely. Fortunately for New Zealand climate change is not only a risk but an opportunity. As consumers are turning away from environmentally damaging products they are also turning towards environmentally responsible production and are prepared to pay a premium for it. If we can get our own house in order New Zealand can take advantage of this opportunity. 
The emissions trading scheme is a landmark in our efforts to address this crucial issue. It puts sustainability at the heart of our economy. The underlying principle behind the emissions trading scheme is that it should cover all sectors and all gases. It therefore has profound effects on the future of our primary industries. The nature of the effects on forestry and agriculture in particular deserves special attention. Agricultural sector emissions represent almost half of New Zealand’s total greenhouse gas emissions. These emissions are currently significant because they are a major source of emissions growth. 
It was not plausible for New Zealand to leave our major industries out of the emissions trading scheme. It would have meant at the very least that the cost of the sector’s emissions would need to be paid elsewhere in the economy. So all sectors are in the scheme but we have also had to design a trading scheme that allows for a smooth transition. Emissions trading allows flexibility in land use while ensuring that decision makers consider the true costs including the environmental costs of their choices. 
We can particularly see the strength of the emissions trading scheme in the forestry sector. A couple of decades ago the Government used to provide subsidies to farmers to farm marginal lands more intensively—in other words to cut down their trees. We ended up with eroding hill country and inadequate protection for our soils waterways and communities. Emissions trading turns that around. In Gisborne there is a river on land where farmers were subsidised to cut down all the trees. The bed of the river rose 50 feet. The Government was then asked to pay to help with the flooding that resulted. Emissions trading makes for less erosion because the scheme gives an economic incentive to plant more trees. Protecting against erosion helps the environment and protects communities. It is much better for farming business than over-intensification of marginal land. The emissions trading scheme allows forest owners to benefit from the value they provide to the rest of us when the forests store carbon. 
The forest sector will enter the emissions trading scheme on 1 January next year. Forest land will be designated as either pre-1990 or post-1990 forest land. Owners lessees and rights holders of forests planted after 1989 can join the scheme if they choose to. They will then receive New Zealand units when their forests grow and surrender units if their carbon stocks decrease. Depending on the price of carbon it is likely to be worth at least several hundred million dollars to the forestry sector. 
One advantage of the emissions trading scheme is that it allows the benefits and costs from the Kyoto Protocol to be devolved. In fact the more that costs and benefits are devolved the more effectively the trading scheme works. It puts the incentives closest to the contributors to the problem and to the solution. From 1 January owners of exotic forests first planted before 1990 will be liable for emissions if they choose to convert their forest to another land use—for example if they move from forestry to agriculture. If someone owns a small forest such as a forest smaller than 50 hectares and it was planted before 1990 then he or she can be exempted from the scheme. Naturally if no liabilities are faced no free allocations will be received. 
Deforestation is the second largest source of greenhouse gas emissions globally. Therefore we have to do something about it. Reducing deforestation is one of the lowest-cost options for reducing emissions. It is also important to address it immediately as forestry is the one area where individuals can bring forward their emissions to beat any future measure. The Government is easing the transition for the sector. It will meet the cost of 21 million tonnes of deforestation emissions from exotic forests until 2012. An allocation will also be made to cover a further 34 million tonnes of deforestation emissions after 2012. The assistance given to pre-1990 exotic forest owners is equivalent to the historic rate of deforestation over the current exotic forest estate. The first reporting period for deforestation of pre-1990 forests will conclude at the end of 2009 at the same time as transport. The two sectors will be able to trade emission units between themselves. In total the assistance package offered to pre-1990 exotic forest landowners is worth around $825 million at a carbon price of $15 a tonne. This is a very substantial commitment. 
The Government is still looking at the question of indigenous forests. There has been some consultation with owners of indigenous forests planted before 1990. It is unlikely that much of our native forest can be chopped down now because it is largely protected. For example we have stopped cutting down 1000-year-old beech trees on the West Coast and the region has already been compensated for that. 
Other sectors like agriculture will not come into the emissions trading scheme for a number of years. They still need certainty and for that reason the bill includes provisions about that point of obligation. Back in 2003 the Government agreed to meet the cost of non - carbon dioxide emissions from agriculture until 2012. In return the sector increased its research efforts on cost-effective abatement technologies. That agreement has been kept and agriculture will not come into the emissions trading scheme until 1 January 2013. In the meantime the agricultural sector will start measuring and reporting its emissions before trading begins from 2011. 
There is more work to do in deciding some issues affecting the sector. One crucial question is where the point of obligation can lie. Options include at the farm level at the process or company level or at the sector level. At the moment the Government preference is for a process or company level point of obligation but we will work with the sector closely to develop a practical and cost-effective system that rewards good environmental practice. The Government will work with the sector on these and other issues and the issue of a phase-out of free allocations by 2025 is still on the table for discussion. The bill we are introducing today has review provisions on this that will ensure we consider developments with our major trading partners. 
This issue of climate change and the policies that this and other Governments will follow to reduce emissions is one of the most complex and vital issues that we have ever faced in this Parliament and probably one of the most complex and vital in terms of the planet—all of us are in this together. We now have a comprehensive package of measures to rebuild capacity in order to address New Zealand’s land-management challenges. New Zealanders expect our primary industries to play their part. Our markets expect us to play our part. We have to get started with a vision of a sustainable and carbon-neutral New Zealand. This Climate Change (Emissions Trading and Renewable Preference) Bill gives us a historic place to start and I commend it to the House.