Smith seeks ETS review update to account for Australia

Smith seeks ETS review update to account for Australia

Aug. 1 (BusinessDesk) – Climate Change Minister Nick Smith is seeking an update from the emissions trading scheme review committee to take account of Australia’s recent announcements to implement a carbon price.

Speaking to the 7th Australia-New Zealand Climate Change and Business conference in Wellington, Smith said he intended publishing the review and future direction of the scheme next month.

“The issue is how quickly we progress the scheme,” said Smith. Entry levels and the ending of the existing half-obligation are the two key questions.

Smith said he had found no evidence of business closures because of the ETS in its first year, and that industry free allocations had been an important factor.

In the meantime, he released the Government’s first report on the operation of the ETS, which showed a significantly lower level of free carbon credit allocation to trade-exposed industries and less use of international carbon credits than forecast, while the number of businesses seeking relief from the scheme was higher.

The 1.76 million tonnes of allocations to trade-exposed businesses was 25% below expectations, while 98% of emitters had used “forestry and other New Zealand units” to meet ETS obligations, “with very few using overseas units or the fixed price option,” said Smith.

Demand for relief was three times higher than forecast, at around 300 firms, largely reflecting the needs of a large number of small businesses with high emissions – principally export horticulturists.

“It is encouraging that New Zealand’s net emissions are down for two consecutive years after a 23% increase between 2000 and 2008,” Smith said. “We are on target to comfortably meet our Kyoto target with a projected 21.9 million tonne surplus.

“Without the ETS, we would be exceeding our target by 19.5 million units and face international costs of $485 million.”

The largest single recipient of free allocations was the Rio Tinto aluminium smelter at Bluff, which received 4.36 million New Zealand Units, with the 736,000 NZU’s allocated to the urea industry being the next largest.

Allocation of NZU’s to the forestry sector were dramatically lower than forecast, the report says.

“Over the five years from 2008-2012, it was anticipated that 76.1 million NZUs given to pre-1990 foresters. However, just over one quarter have been allocated to date,” the report says.

“This may change, as post-1989 foresters can claim units up to 2012, and pre-1990 forestry owners can apply for an allocation until Nov. 30, 2012.”

ETS’s don’t have to be identical to link satisfactorily, the Australian Parliamentary Secretary for Climate Change, Mark Dreyfus, told the conference.

He praised New Zealand for having moved to a debate about what the ETS should cover, rather than the Australian debate, which remained on whether or not an ETS should be introduced.

Smith said the ETS was now generating barely one letter to his office a week, compared with more than 1,000 a week previously.

(BusinessDesk)

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