NZ not a ‘magical little world’, Key says of Goff ETS plan

NZ not a ‘magical little world’, Key says of Goff ETS plan

by Paul McBeth and Pattrick Smellie

May 23 (BusinessDesk) – New Zealand’s agricultural sector won’t face the cost of the emissions trading scheme in 2015 unless other countries come to the party, Prime Minister John Key says.

The Prime Minister told reporters at his weekly post-Cabinet press conference New Zealand can’t “throw our biggest export earner to the wolves” by bringing agriculture under the ETS without other countries doing their part.

The government will only include agricultural emissions if farmers have a “reasonable chance” of competing internationally.

The sector was given a holiday from inclusion until 2015, though that’s only if a review, due in July, recommends requiring agricultural emissions be covered by the scheme.

“The test is whether other countries join them,” Key said. “We don’t live in some magical little world, where New Zealand can impose whatever costs it wants and say that that has no impact on our ability of our exporters to compete.“

We have the only unsubsidised agricultural sector in the world, and you don’t see our farmers moaning about that, and nor do you see any political will to change that.”

Key’s comments come after Opposition Leader Phil Goff yesterday flagged an early inclusion of farming under the ETS to help fund the return of a research and development tax credit.

If Labour leads the next government, it plans to include agricultural emissions in 2013, which it claims will fund its $800 million programme.

However, the Sustainability Council of New Zealand says farmers could cut their greenhouse gas emissions by more than 10% today, at a profit.

Executive director Simon Terry says MAF analysis released more than two years ago established such a cut in on-farm GHG emissions was commercially viable with existing technologies.Much of the reduction was possible through reductions in nitrous oxide emissions, rather than methane.

Terry says those figures are relevant again now, given Labour’s announcements. The costs of the ETS would “only come to book if farmers do not cut the first 10% of their emissions”, says Terry.

If they can achieve 13% cuts, “which MAF figures show could be achieved at no economic cost by dairy farmers”, then the cost of imposing the ETS should be negligible in the short term.“To the extent there is a net cost after mitigation, it will simply reduce the scale of tax free capital gains on land values that the great majority of pastoral farmers can expect to receive on cashing up,” says Terry, linking the dots between Labour’s ETS and farm income tax pushes.

“Only the minority that bought in at the peak would suffer an outright loss, and should have been fully appraised of the risk of a carbon tax.”NZ is “easily NZ’s best source of emission reductions”, accounting for an estimated 73% of the potential for emission reductions across the economy that cost less than $30/tonne in 2010, the report found.

Terry also dismisses PM John Key and Fed Farmers claims that domestic dairy prices will rise to reflect ETS costs.

“As agricultural prices will remain the same internationally, domestic prices will only rise to the extent that dairy and other pastoral producers break from the previous pattern of benchmarking local prices against international ones.”

(BusinessDesk) 17:53:32

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