Shaw JamesHon JAMES SHAW (Minister for Climate Change): Thank you Madam Chair. I just want to thank Sarah Dowie for her contribution then; she is a staunch advocate for the people of Southland. On the point about the aluminium smelter—she raises some very good points about the impact on that industry that particular plant and by extension other plants around the country like the steel mill and so on out the south of Auckland. And one of the things that she said was that she is worried about politicians picking winners and losers. Of course the way that we've designed the architecture—well before I got here—was that the way to move to a low-emissions economy without politicians picking winners and losers was actually via the emissions trading scheme (ETS) and to ensure that the settings of that produced a price that companies would adjust to and that would provide an incentive to avoid the price shift. Remember that the whole point of the emissions trading scheme or any scheme that puts a price on emissions whether it's a carbon tax or an ETS or anything else—the point isn't to raise revenue it's actually to avoid paying the price and the way that you avoid paying the price is by investing in low-emissions technology. And actually in the field of aluminium right now in Sweden and in Canada there is a hydrogen-based zero-emission form of smelting—Sarah Dowie: Expensive. Hon JAMES SHAW —that is expensive but you can see that that technology is starting to arrive. And so what I'm suggesting to her is actually that the bill that I introduced yesterday the emissions trading reform bill is actually the place where questions around the impact of ETS unit price free allocation and so on in relation to the smelter in her area are more appropriate. However she also referred to Supplementary Order Paper (SOP) 404 which is around a requirement for the Climate Change Commission to undertake a review on the use of forestry and what we mean by removals from land use. Now I just wanted to say that in our view it's unnecessary and in fact possibly dangerous to have that in primary legislation. And there are actually already provisions in the bill on forestry offsets versus actual reduction. This is one of those very rare areas where environmentalists and farmers are actually speaking with one voice and we saw that reflected in the submissions that came through which is about the concern that essentially industrial or transport emissions will be offset using forestry rather than being reduced; the sort of get out of jail free card" for those industries and those sources of emissions. The Environment Committee recommended changes which the Government has adopted so I just wanted to point these out: there's a new section 5Q(1)(c) which allows the commission to recommend changes to the target relating to greenhouse gases emissions and removals to which the 2050 target or part of the target applies. So removals in that context in New Zealand right now specifically means emissions sequestered from forestry. So the commission actually already has the ability to do what this is SOP is asking to do. There's also a new section 5Q(1)(d) which allows the commission to recommend how the target or part of the target may be met including limits on removals or offshore mitigation. This was actually one of the points that the Parliamentary Commissioner for the Environment recommended which is to say well if the commission is looking at placing limits on offshore mitigation it makes just as much sense for it to be able to provide recommendations on limits to onshore offsets i.e. forestry. So that's been written in in new section 5Q(1)(d) inserted by clause 8. Also there's a new clause 5Z(2)(b)(ixa) which requires the Minister when setting emissions budgets to have regard to "the implications or potential implications of land-use … for communities" and she spent much of her speech referring to the impacts or the potential impacts of land-use change on communities.Now I wanted to just mention that yes there has been afforestation recently and just for some numbers: in 2018 approximately 9000 hectares of new forest were planted. We think that in 2019 it'll be something in the vicinity of 10000 maybe up to 30000 but more likely at the lower end of that thousand hectares—Hon Nathan Guy: What was that? 10 to 13?Hon JAMES SHAW: 10000 to 30000 hectares. I just wanted to point out that over the past decade 70000 hectares was deforested primarily for conversion to dairy. So we've had 10 years where 70000 hectares was cut down and converted to other land uses. That is actually one of the reasons why our net emissions have gone up because we have deforested large areas of the land and so we've removed that sequestration potential to convert it to food production essentially. You have to remember also I mean if you're speaking historically that there was colossal deforestation after colonisation right? Almost the entire country went from being forested to unforested over the course of 120 years. So land-use change has always taken place in New Zealand. Now we understand that when it takes place that does have an impact on communities and on the economy both in terms of exports and the domestic economy and so on which is why these new clauses were written into the bill particularly this one about the importance of land-use decisions for rural communities.The other thing that I wanted to say is that we don't think that it's appropriate to set hard limits on forestry offsets now in primary legislation without policy work to determine what those limits should be. To Ms Dowie's point if you immediately remove forestry as an offset option for industrial emitters that actually will drive up the ETS unit price for the aluminium smelter because it'll have fewer options on where to go to offset its emissions. So there is a significant impact in the other direction for the rest of the economy of doing it that way and so we think it's important that the commission as the Opposition have said takes the time and is able to consider all these matters more fulsomely than during this particular process where obviously we haven't had the opportunity to do that.Now I do want to say that we did draw heavily on the advice from the Parliamentary Commissioner for the Environment. Our understanding is that he does support the changes that were made by the Environment Committee and introduced into the legislation. Just in relation to Supplementary Order Paper 404 again we actually do hear the concerns and we believe that we have addressed those concerns in the amendments that have come through the select committee process."