Wagner Nicky: Estimates Debate — In CommitteeText is incorporated into the Bound VolumeWagner Nicky: Estimates Debate — In Committee[Sitting date: 04 August 2011. Volume:674;Page:20375. Text is incorporated into the Bound Volume.]NICKY WAGNER (National): I am delighted to take this opportunity to speak in the estimates debate on Vote Climate Change. It is well understood that climate change is one of the most difficult issues for Governments today so it is to the enormous credit of the Minister for Climate Change Issues the Hon Dr Nick Smith that New Zealand’s modified emissions trading scheme has been introduced so smoothly and that in a relatively short time it has so effectively changed investment patterns in our economy. New Zealand introduced its emissions trading scheme because it is the lowest-cost way to reduce our emissions on greenhouse gases. As an environmentally aware country with a“clean green” brand we need to be serious about reducing greenhouse gas emissions. Putting a price on carbon is the most credible and least costly way to reduce emissions. That is because theemissions trading scheme passes on the costs of reducing emissions to emitters as they are best placed to find the most cost-effective way of doing this.How well has our emissions trading scheme done? Well forestry entered into the scheme in 2008 and since then there has been a sharp switch from deforestation to afforestation. Deforestation hit a record of 4000 hectares between 2005 and 2008 but since forestry entered the scheme new forest plantings have grown each year with 8000 hectares expected in 2011. This change reflects both the significant cost of permanently removing forests and the valuable income stream from new forests in the emissions trading scheme.The increase in afforestation has had a dramatic impact on New Zealand’s net emissions and it is essential to meeting our Kyoto obligations over the period 2008-12. On 1 July 2010 energy transport and industry entered the scheme. Emissions from electricity have grown 130 percent since 1990 which is the largest increase in any sector but the emissions trading scheme has changed that. In 2010 the industry achieved a 12-year high in renewable generation of 79 percent.Hon Steve Chadwick: I raise a point of order Mr Chairperson. I have been listening very carefully to the speech but I have not heard estimates mentioned yet. We have had a wonderful history about the emissions trading scheme which Labour introduced but we have not heard yet about estimates. This is a Budget debate on Vote Climate Change.The CHAIRPERSON (Eric Roy): I think the member has been talking about current things that are in the estimates. She should perhaps make the comparative illustration but she has not been too far from the mark. This is a caution to all members: this is the estimates debate.Hon Clayton Cosgrove: I raise a point of order Mr Chairperson. Again with respect as you would quite rightly concur the estimates are forward-looking documents as to how the Government proposes to spend public funds. Although I am sure the emissions trading scheme forms part of that the member has given us a history lesson in respect of the emissions trading scheme and talked about industry and how manyforests have been felled and what have you. The estimates are about how the Government proposes to spend money. The member has not been around long enough—New Zealand Bill of Rights Act aside—to work that through.The CHAIRPERSON (Eric Roy): I have cautioned the member. Current policy is relevant but the whole speech should not dwell on that. It is really the estimates that we are referring to.NICKY WAGNER: I think it is particularly relevant that the costs of afforestation will make sure we meet the Kyoto Protocol. If we do not meet that protocol it will be very expensive for our Government when we look at the 2008-12 period.I will focus on renewable generation. I think it is important that we understand that increased renewables will help us in the future in managing our carbon footprint. The growth of renewables has increased. I think we have already mentioned in the Chamber that 1340 megawatts of renewable generating capacity has been consented in the past year with no fossil fuel plants. That is a fivefold increase in renewables compared with the last decade and that will help us manage the cost of carbon.During the last 12 months the emissions trading scheme has performed well and we expect it to continue to do so. Actual emissions have proven to be significantly less than those estimated and it was expected that over the first reporting period the combined industrial electricity and transport sectors would have emitted approximately 18.8 million tonnes but emissions were only 16.3 million tonnes. That means that our liability is absolutely decreased.We can clearly see that a price on carbon has now been factored into New Zealand’s economy and that this price is helping us to achieve the Government’s goal of reducing emissions and managing the costs of New Zealand’s international climate change obligations.I would like to reflect on the fact that New Zealanders do enjoy our beautiful country they do appreciate its great outdoors and they are very keen to do their bit towards managing climate change even if it is costing them. I think the emissions trading scheme is helpful in this.