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Time To Talk Economic Sense On Kyoto Protocol

Tuesday, 20 November 2001

The debate over climate change policy will not be advanced by selective and misleading interpretations of economic data, says the Convenor of the Ministerial Group on Climate Change, Pete Hodgson.

Mr Hodgson was responding to a statement today by EMA Northern chief executive Alasdair Thompson.

“It is plain silly to say that the Kyoto Protocol will put up energy costs by a certain amount because economic modelling tells us so,” Mr Hodgson said. “Economic modelling has significant limitations and it is misleading to cite the results without recognising those limitations.

“The Australian Bureau of Agricultural Research Economics [ABARE] modelling cited by Mr Thompson is useful but far from conclusive. The figures on possible increased energy costs Mr Thompson attributes to ABARE in fact come from research done by the New Zealand Institute of Economic Research [NZIER] for the wood processing strategy.

“The ABARE report suggests GNP could rise by 0.05 to 0.52 percent, an overall positive effect on the New Zealand economy that Mr Thompson apparently chooses to overlook.

“Further, the modelling necessarily makes assumptions that may not reflect the final mix of government policy. Both the ABARE and NZIER reports assume that a set emissions price will apply across the economy, and take no account of any policies designed to offset adverse effects. Nor do they make allowances for the effects of the National Energy Efficiency and Conservation Strategy, fuel switching, or any incentives to reduce greenhouse gas emissions.

“I am disappointed to see Mr Thompson seeking to invent a story of economic doom and gloom. Good business leadership will lead to New Zealand maximising economic opportunities. Regrettably the converse is also true.”


Ends

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