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Emitters' change of heart on price capping welcome

June 13 2008

Media Release

Heavy emitters' change of heart on price capping welcomed

Business leaders have welcomed a change of heart in principle on price caps by heavy emitters. The Major Electricity Users’ Group (MEUG) is reported in today’s National Business Review as opposing an up to $40million fund the Government has set aside to cushion the price of generating base load power from the Whirinaki diesel-fired power plant. The move to stop power users facing the full impact of spot prices will stop them receiving the price signal to keep demand down, the MEUG is reported as saying. The New Zealand Business Council for Sustainable Development says today it welcomes the heavy emitters’ reaffirmation that there should be no intervention in markets to cap prices and distort price signals.

This indicates a change of heart from the group’s support of an intervention in the emissions trading market to cap prices and limit its members' exposure to an emissions price on an open market. In its submission on the bill which will introduce an emissions trading system, the group calls for a “consistent application of a safety valve to cap emission unit prices”. “The change of heart is welcomed. We hope this principle is reflected in the heavy emitters’ approach to the emissions trading system.

We hope it does not indicate a split among heavy emitters, but an embrace of market principles,”Business Council Chief Executive Peter Neilson says. “The Business Council supports putting a clear price signal at the margin on emissions, to encourage emitters to change behaviour, as the major energy users propose for power consumers. As the MEUG now effectively acknowledges, having a price cap / ‘safety valve’ will reduce the incentive to cut emissions.”

The proposed emissions trading policy provides for a gentle phase in of the emissions pricing and generous support until 2030 for heavy emitters facing a risk of competition from overseas’ producers not immediately facing a carbon price.


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