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ETS Relief Needed for ‘Trade Exposed’ Shipping

NZSF Media Statement
Press Release: For Immediate Use

14 May 2009

ETS Relief Needed for ‘Trade Exposed’ Shipping Companies

Provide New Zealand shipping companies with access to emissions credits like other ‘trade exposed’ industries or exempt them from the Emissions Trading Scheme (ETS) until international ships are also subject to an emissions charge. That was the message today from the New Zealand Shipping Federation to the Parliamentary Select Committee hearing submissions on the Government’s ETS Bill.

``New Zealand ships compete directly with international ships to carry cargo along the New Zealand coast. Without relief from the ETS, we hand foreign ships a big advantage.’’

``Fuel is a major cost for shipping companies, 30 per cent of operating costs - and heading upwards. The ETS is going to seriously inflate that cost - yet our main competitors won’t have to pay,’’ said Sam Buckle, Executive Director of the New Zealand Shipping Federation.

Without providing relief for the local shipping industry the ETS will hand international operators another substantial cost advantage (they do not pay levies such as ACC, GST, PAYE), just at a time there is a clear environmental and transport need to grow our domestic shipping industry.

``The Government, led by the Minister of Transport, has been a very strong advocate of coastal shipping and the strategic role it has to play in improving our national supply chains, reducing emissions and decongesting our roads.

``Coastal shipping’s ETS predicament comes down to a policy design oversight. But, it is an unintended consequence that shouldn’t be difficult to resolve,’’ said Buckle.

The ETS means to provide relief for ‘trade exposed’ industries. It is very explicit about that and users of stationary energy (e.g. coal and electricity) will now be able to secure free credits for 90 per cent of their 2005 emissions levels until 2018, with further ETS shelter beyond that point.

Unfortunately, the draft bill did not anticipate the situation of domestic shipping (or fishing) – which are liquid fuel-intensive industries operating in international markets. They will get no shelter at all.

``Access to emissions credits should be based upon a business’ exposure and vulnerability to international competition, not the type of energy it uses. That is a fundamental point of fairness,’’ concluded Mr Buckle.

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