Court SimonSIMON COURT (ACT): Thank you Madam Speaker. Well I've just obtained the latest research on industrial allocations from the Parliamentary Library and it makes for very surprising reading. I'll share some of this detail with the House.Firstly I just want to talk about the premise of the bill. Industrial allocations for emissions-intensive trade-exposed industries—what does that mean to people who might be watching at home? What it means is that for businesses like Golden Bay Cement; New Zealand Steel; New Zealand Aluminium Smelter; in fact orchards; glass manufacturers; hydrogen peroxide manufacturers; lactose manufacturers—that's another word for milky stuff—pulp manufacturers; fibre; forest products; methanol—New Zealand produces 3 percent of the world's methanol—packaging and industrial paper; protein products—we're talking meat products—wood panels—those are the things we make houses out of—tissue paper. Who knew that dozens of orchards and hothouse tomato growers depend on an allocation of emissions credits under the emissions-intensive trade-exposed category? These are all businesses that through no fault of their own either have inherited industrial processes or ways of working which mean that they produce carbon dioxide when they make stuff—stuff that we use to build and stuff that we eat.So here's the dilemma: some of these businesses—like say growing tomatoes in a hothouse—you might say "Well look if they were to pay their fair share of their carbon price maybe it would be too expensive by the time they've burnt some kind of fuel to put the carbon dioxide into the hothouse to make the tomatoes grow faster; maybe they should just grow tomatoes outside in the two or three months of the year where you can do that in New Zealand." Well that's all very well. That might have worked when New Zealand's population was 1 2 or 3 million but we're 5 million and most of us want to eat tomatoes all year round and we'd prefer to buy New Zealand tomatoes rather than imported tomatoes because we're Kiwis and we like to support local businesses.And then we think "Well what about concrete? What about the cement that goes into concrete?" It's all very well to say "Well instead of burning coal to crack the limestone to make cement we could burn some other material. We could burn waste timber. We could burn shredded tyres. We could burn something else." Well that's all well and good. That's what Golden Bay Cement are already doing. They've significantly reduced their emissions from the energy component of making cement. In fact the cement and concrete industry will tell you that they've reduced their emissions by over 15 percent in the past 10 to 15 years. But there's one problem with making cement or steel or aluminium in that it's a chemical process that produces carbon dioxide and currently there's no replacement for that process—no economic replacement. Sure there's benchtop scale systems which would show you that you can make cement with hydrogen gas; well that's an incredibly expensive high-tech fuel that would no doubt be better used in other industrial applications even fuelling vehicles rather than burning in vast quantities to crack limestone to make cement.It's the same with steel. In New Zealand New Zealand Steel at Glenbrook uses locally sourced iron sand and coal from the Waikato to make steel. Now there is no other chemical process that we could call on in terms of getting enough heat or getting enough energy to turn iron sand dry sand into steel. It's coal.So here's the problem to solve: do we apply the current emissions trading scheme price of about $70-odd a tonne to these emitters which include tomato growers and the people like Oji Fibre who take all of the cardboard and paper that your councils pick up in your recycling and they take it to big processing plants and they use natural gas to boil up all of this paper and turn it back into a recycled quality product. Do we hit them with the full emissions trading scheme price of 72 bucks a tonne? Or do we say "Nah look we're going to give them this free allocation." If we don't give them the free allocation—if you look at the explanatory notes in the bill—the advisers to the Minister are quite clear: these businesses will simply instead of paying their full cost of emissions under the emissions trading scheme relocate to another country. And that's what their business leaders have told me: "We don't need to be in New Zealand." Big Japanese and European companies they don't need to be in New Zealand making stuff. What they said to me is: "If you want this stuff you can send us a purchase order and we'll send it to you by ship and then we'll send you the invoice—it will cost quite a lot more and it might take a bit longer to get to you. And by the way for a country of 5 million people when the rest of our markets are 500 or 300 or a billion people you might not be at the top of the list for deliveries."So here's this wicked problem that this bill tries to solve with industrial allocation of essentially Government-funded credits. And that's where we come down to the real problem. So Minister Shaw in his crusade to save us from the climate emergency—I mean let's just reflect on that for a minute: Minister for climate for five years who has failed to bring the climate adaptation bill to the House the bill that would have potentially helped us resolve some of the issues around where we build and what climate resilience looks like hasn't done that. But what he has done is insisted that the carbon price needs to be much much higher in a very short space of time in order to encourage businesses like these which benefit from these allocations—that they reduce their emissions much much faster. Of course they have to do it much much faster because he's flown off to climate conferences in places like Glasgow and Sharm El-Sheikh—which I understand is a resort town; an unusual place to hold a climate conference—and made promises on behalf of New Zealanders New Zealand businesses and future New Zealanders who aren't even born yet that we would meet the most outrageous targets for carbon reduction that even his own officials—officials at the Ministry for Business Innovation and Employment the Ministry for Primary Industries Ministry for Environment and Treasury said "We don't know how you're going to meet them Minister. We don't think it's a good idea to announce them." But he announced them anyway.Here's the real problem. Over the past five years the cost of providing these free allocations to industry has gone up enormously. At the same time that the carbon price has gone up from around $20 a tonne the cost of these emission credits has gone from about $270 million in 2017 to over $2 billion of taxpayer funds budgeted in 2023—$2 billion. That's the problem.The Government's approach the Green Party's approach and every other party in this House's approach to combating climate change is fundamentally flawed because it looks at New Zealand as if all of our emissions need to be controlled within New Zealand in a bubble even though it's a global problem. What the bill identifies very clearly is that if we put these companies' carbon charges up they're simply going to leave we'll export the emissions to another country—they'll still happen; it'll just cost us a lot more to buy the same stuff.So what would ACT do? Well what we've said is that we should tie our emissions reduction targets—those are the targets that different Ministers of different Governments have gone to wonderful conferences in Paris and Sharm El-Sheikh and Glasgow and made these announcements and commitments on our behalf—to those of our top five trading partners and get actual reductions in emissions. But guess what! They're not reducing their emissions because their populations are growing and their energy demands are growing. So what are we going to do about it? Well the ACT Party says "Do you know what? We could also let New Zealand businesses offset their emissions offshore through certified schemes." At the end of the day we should in fact be focusing on mitigation. Thank you Madam Speaker."