Fitzsimons Jeanette: Climate Change Response (Moderated Emissions Trading) Amendment Bill — First Reading 
Fitzsimons Jeanette: Climate Change Response (Moderated Emissions Trading) Amendment Bill — First Reading 
[Volume:657;Page:6863] 
JEANETTE FITZSIMONS (Green) 
: 
 The emissions trading scheme proposed in the Climate Change Response (Moderated Emissions Trading) Amendment Bill is the sort of emissions trading scheme one has when one still thinks that climate change is a hoax. Nothing in the bill is about reducing carbon emissions in order to protect the climate. Nothing in the bill is about protecting the climate. The existing law puts a price on carbon emissions although quite lightly and quite late; this bill weakens that price considerably.  
The key goal of emissions trading must be to put New Zealand on a path towards a low-carbon economy where growth and prosperity happen in those areas with low emissions. That is where we need to be in the future in order to be a prosperous country. That is not what this emissions trading scheme will do. The bill is virtually a carbon copy of the Australian bill which has been rejected twice by the Australian Senate and which may never pass into law there but is apparently good enough for us. By aligning with the non-Australian scheme we are prevented from aligning with the EU which rules out aligning with countries with intensity allocations— 
Hon Dr Nick Smith 
: They’re changing to intensity. 
JEANETTE FITZSIMONS 
: —with a cap—and it prevents us from aligning with where the US and Japan are going. But apparently it is only the little South Sea bubble of climate deniers in the world that we want to be part of. We need to think carefully about whether a scheme that is designed for an economy where farming is a minor source of emissions forestry is not a big player and the issue is mainly coal steel and heavy industry is the best for our economy which is very different from that. 
In “cap and trade” schemes whether for pollution or for fish quotas the “cap” protects the resource or the environment and the “trade” allocates rights efficiently. The proposed emissions trading scheme is not a “cap and trade” scheme because there is no cap. Therefore there is no protection of the climate. Emissions are allowed to—actually they are encouraged to—go on climbing forever. The existing scheme says to polluters that it will help them stay in business competing with firms and countries with no price on carbon but if they want to grow their emissions beyond where they are now then they must factor in the full price of carbon. The proposed moderated scheme says to polluters that if they want to grow their emissions then the taxpayer will pick up 90 percent of the cost of those new emissions for them and the subsidy will reduce only very slowly over three generations. 
The most extreme example of how that will work is Methanex which turns our limited and precious natural gas resource into methanol in two plants in Taranaki. Methanex substantially downsized its operations in 2004-05 as the Maui gasfield was running out and new gas was expensive. Shortly after it became known that the Government would allocate free credits on the basis of total production Methanex announced that it would expand production to the maximum possible in both its plants—2.33 million tonnes of methanol which is six times what it was in 2005 and two and a half times what it is now. If the bill becomes law the taxpayer will pick up the cost of 90 percent of those emissions as well as the cost of its existing operation. Assuming that the carbon price is as the Minister for Climate Change Issues expects—$25 a tonne until 2012 and $50 thereafter—the taxpayer subsidy to just that one company will be around $1 billion over 10 years. 
There is an interesting question here of whether this industry growth along with the new carbon-intensive start-ups that will happen will grow New Zealand’s emissions beyond the number of credits we have been allocated by the initial Kyoto Protocol. Given that agriculture is part of the scheme we may well find ourselves with a deficit.  
The Minister claims that he is putting in place transitional measures to help ease emitters into having to pay for their emissions. I say to the Minister that the transition does not start now; it began in 1992. That was when New Zealand first committed in an international treaty to reducing our emissions and protecting our forest sinks. If no one noticed that in 1992 they should at least have noticed it in 1997 when we negotiated a reduction target at Kyoto in 2001 when we ratified that reduction in 2002 when the Government of the day announced a carbon charge or in 2007 when legislation was introduced for our existing emissions trading scheme. How much notice do businesses need that a carbon price must be factored in to their investment decision-making?  
Some businesses have already factored it in. Contact Energy has put aside its consented gas-fired plant at Otahuhu and turned to geothermal and wind energy. Many people have bought more efficient cars and appliances and have started to take account of their carbon footprint. But the proposed emissions trading scheme is designed to favour those who have done nothing.  
We have had 17 years of transition. How many more years do we need? The Kyoto Protocol set up a transitional period for the world; it was to run from 1997 to 2008 when countries would first be accountable for their commitments to reducing emissions. That was almost a decade of transition and as of nearly 2 years ago the internationally agreed transition period ended and New Zealand has been accountable for all its emissions over 1990 levels.  
There is a real actual dollar cost to the economy. It is much larger than it needs to be because virtually nothing has been done to reduce emissions cost-effectively over that decade. The question as it has always been is who pays the cost—the polluter or the taxpayer? The table in the explanatory note of the bill sets out the costs. In 2030 it is about $2 billion a year and from thereon it phases out very slowly for a couple more generations. It is true as the Minister said that 2030 is a long way away but he is also fond of telling us that climate change is a long-term issue and that we should not worry if no progress is made on reducing emissions for a long time. He cannot have it both ways.  
Under the bill the taxpayer will give Methanex around $1 billion over 10 years. What about the other players? Well the total cost to the taxpayer of exempting agriculture for the first 5 years of the first Kyoto period at $25 a tonne is around $700 million. A further 2 years at $50 a tonne is $281 million. So adding them together by the time agriculture enters the scheme farmers will already have received a taxpayer subsidy of close to $1 billion. After that the subsidy accumulates to $1.2 billion to $1.3 billion depending on how fast agriculture grows. 
When the previous emissions trading scheme legislation was reported back to the House there was a note in the select committee’s commentary from Nick Smith that National wanted to explore bringing in nitrous oxide earlier than 2013 in order to encourage better farming practices. The Government has not done that; instead it has delayed bringing in nitrous oxide and methane by a further 2 years. Subsidising farming in that way will raise land prices. That is where the value gets capitalised making it harder for foresters to purchase land in order to plant trees. It is a slap in the face for every New Zealander who has bought a smaller car moved closer to work so they can cycle or catch the bus put in a solar water heater or bought an efficient wood stove. They expected a return on that investment and it has just been halved. They got a higher tax bill as well.  
Every business that has taken carbon prices into account in its investments decisions replaced its coal-fired boiler with wood waste or a smart boiler with lower power use or done a complete lighting retrofit across its offices will find that its return on investment has just been halved. Every forester with trees planted since 1990 has just seen its local market collapse and the price it can get capped at $25. Local polluters now need to buy only half the units they thought they were going to need and they can get them from the Government at $25. Professor Euan Mason of the School of Forestry has said that this will dampen any enthusiasm for planting more forest in the next few years so New Zealand’s emissions will rise further.  
I cannot see what the Maori Party gets out of this deal. There is absolutely nothing in the legislation. The 90 percent fishing subsidy was already National policy. The forestry conditions have not changed. There will be a Treaty clause which we have not seen. The nicest thing I can say is that the Maori Party has been conned. It has been promised a commitment to be inside some talks and to sit around the table. Well we went down that road once or twice in the past few years and it was not worthwhile.  
In conclusion the one good thing we can say about the bill is that the legislation will not last. It will not endure. New Zealand cannot bankrupt itself in supporting transnational corporations.