Early Ratification Of Kyoto Protocol Opposed

FRIDAY 25 JANUARY 2002

Early Ratification Of Kyoto Protocol Opposed

The New Zealand Business Roundtable is urging the government not to ratify the Kyoto Protocol on climate change in advance of other major countries and unless the benefits to New Zealand can be shown to exceed the costs.

Releasing its submission on the government's recent consultative document, Business Roundtable executive director Roger Kerr said that a measured approach to the Protocol, including much more analysis of the impact of ratification on New Zealand, was needed.

"Ratification could have far-reaching and harmful implications for economic activity in New Zealand, and for the living standards of New Zealanders. It could put the competitiveness of many major industries at risk, yet any environmental benefits arising from the Protocol would barely be discernible."

The submission points out that:

• There is still major scientific uncertainty about the extent of any global warming due to human activity.

• Moderate warming could be beneficial, for the world as a whole or for New Zealand.

• The Kyoto measures would have a minimal effect on global temperatures.

• The economic costs would be very large, and would divert resources from better uses.

• New Zealand emissions are insignificant on a global scale, and it makes no sense for New Zealand to take action in advance of major emitters.

• The United States, which currently accounts for about 25 percent of the world's emissions, will not be ratifying Kyoto, nor will China and India which are projected to account for half the world's emissions by 2012.

• In the absence of broad international action, New Zealand could lose industries to other countries and suffer economic losses for no global reduction in emissions.

• Studies have suggested that significant reductions in New Zealand's economic growth would result from action to meet the Kyoto commitments. Moreover, the estimated losses in gross domestic product (GDP) could seriously under-estimate the costs of ratification.

The submission also observes that the government's assessment of the impact of ratification on agriculture, forestry and other industries is at odds with the industries' own assessments. The minister of energy had also argued that the economy would not be damaged because higher energy costs would be offset by a depreciation of the exchange rate, but this is effectively a real wage cut. Other problematic government claims are criticised in the submission.

Mr Kerr said that the Business Roundtable believed that the conflicting assessments of the government and a large cross-section of the business community pointed to the need for more in-depth examination. The case had not been made that New Zealand should move in advance of important trading partners, including Australia and the United States, and that real income losses should be imposed on the community for doubtful environmental gains. More practical steps could be taken to improve energy use and reduce emissions.

"Ratification of the Kyoto Protocol would not advance the government's commendable goal of restoring New Zealand's income levels to the top half of the OECD rankings", Mr Kerr concluded. "There is widespread business sector opposition to early ratification and action that would damage New Zealand's competitive position. The consultation process will be a key litmus test this year of the government's expressed concern to pursue business-friendly policies and listen to business views".

For further information:

Mr Roger Kerr
Executive Director
New Zealand Business Roundtable
Tel: (04) 499-0790
25 January 2002

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