Climate change Emissions Trading Scheme Bill - Speech by Green Party Co-Leader Jeanette Fitzsimons

Climate change Emissions Trading Scheme Bill Jeanette Fitzsimons speech at the first reading of the Bill 12 December 2007

As we debate the first reading of this bill to establish an emissions trading scheme for New Zealand, our representatives are in Bali at the annual meeting of the parties to the Kyoto protocol discussing the nature of an agreement to follow the protocol from 2013.

The science has crystallised around the key number of two degrees warming - beyond which there is little chance of arresting a process of climate change that will continue accelerating. There is a strong and urgent international call for countries to agree that keeping warming below an average of two degrees must be the goal of everything we do. New Zealand has not yet signed up to that goal.

Best scientific advice is that to meet that goal we need to reduce emissions by between 25 percent and 40 percent by 2040. Europe has agreed to that. Australia has just agreed to that. New Zealand has not yet signed up to that either.

The time for debate about whether human induced warming is occurring is over. A few sceptics remain but their arguments have been rebutted repeatedly by the IPCC. Sceptics claim changes in solar activity are causing the warming - sunspots. The IPCC has systematically investigated and debunked that idea.

They say warming has stopped - the world has cooled since 1998. That is an example of how statistics can be used to justify a lie. 1998 was a stand out year. It was much warmer than any previous one. The years since 1998 have not been so warm - but they have still been warmer than any year before 1998. Remove that one anomalous year and the warming trend continues smoothly.

So that is enough talk - it is time to take action.

If we had taken action when the Kyoto protocol was first negotiated, in 1997, on the basis of pretty certain science, our task today would have been much easier. But like most of the world we wasted those 10 years saying "after you - no, after you" while the world burned.

It is also time to put to bed the myth we hear repeated constantly in this house - that New Zealand's emissions are small. In total, yes, because we are a small country. But on a per capita basis we are one of the worst. Per capita New Zealand emits four-and-a-half times what china does, despite our renewable hydro resources and despite all the coal we are selling them which they burn and take responsibility for.

Our extraordinarily high per person emissions are a serious trade risk if we don't reduce them substantially by the time our trading partners demand clean trade.

Compared with Europe our cars average 11 litres/100 km while theirs use seven and our car ownership is the highest in the world. Our homes are poorly insulated, our industry has bad quality electric motors and compressed air systems that leak; we have very little public transport. And that's only the half of our emissions that doesn't come from farming.

Addressing climate change has to use all the mechanisms at our disposal - public information; education; skills training; demonstration, benchmarking, regulation and pricing. This bill is about pricing. It is designed to make fossil fuels and other causes of climate change relatively more expensive and renewable energy and energy efficiency and alternative farming technologies relatively cheaper. It is designed to change behaviour.

Since 1993 the Green Party has been advocating a carbon charge with corresponding reductions to the bottom band of income tax. So we welcomed the Labour Government's 2002 climate change policy which among other things did propose a carbon charge. But because they didn't say what they would do with the money and it seemed just to go into the black hole of the consolidated fund, they lost the political battle and, frightened of even more tractors on the steps of parliament, they abandoned it in 2005. Four years wasted.

We now have a second best system - and the Economist and a number of business people have recently come out in support of our view - of an emissions trading system. Too late, those who now regret their opposition to the very much simpler and fairer carbon charge, with lower compliance and administration costs and real revenue to recycle, must accept their role in killing the better scheme and accept the second best.

It's here, and we have to make it work.

That's why the Greens will support the first reading, but work very hard to improve it at select committee.

The first question is, will this complex system reduce New Zealand's greenhouse emissions? The answer is, on its own, not very much. There is no requirement for any of the emissions reductions to be made in New Zealand. The intention here seems to be to purchase cheap Clean Development Mechanism credits from developing countries which have no caps on their emissions, but need funding from developed countries to improve their energy efficiency, build renewable energy and expand their forests. So far so good, except that there is now published evidence that many of them are poorly verified and in fact fraudulent. We need to do more here.

The Government estimates emissions trading will reduce transport emissions by 0.3 percent. That disappears into the margin of error in any calculation. By comparison, setting fuel efficiency standards for vehicles entering the country, as is now agreed under the Energy Efficiency and Conservation Strategy, will save 25 percent of the fuel those cars use.

This is claimed to be a world first system that includes all sectors and all gases. It does neither.

Half of our emissions are not covered at all until after the first Kyoto commitment period is over. Agriculture, the major emitter of methane and nitrous oxide is totally exempt until 2013. Dairying must be the most profitable sector of the New Zealand economy at present as well as one of the dirtiest. It is the fastest growing source of methane and nitrous oxide emissions. It can well afford to pay for them but has been given a taxpayer subsidy for five more years, during which time it will grow, converting more and more forest area to dairying, aided and abetted by the Government's own company, Landcorp, which does the conversions.

It's not as if there is nothing farming could do. Nitrification inhibitors are now available to significantly cut nitrous oxide emissions but where is the incentive to use them? This huge taxpayer subsidy of well over a billion dollars is founded on an agreement in 2003 which the industry has not kept. That agreement must be reviewed as part of the consideration of this legislation.

Also exempt, but in this case forever, is the methane emitted from underground coal mines. We are accountable for it under Kyoto but once again, in a substantial subsidy this time to the coal industry, the taxpayer will pay.

Unlike a carbon charge, this scheme produces no revenue for the Government to recycle to help the most disadvantaged become more energy efficient so they can cope better with the higher prices. It is quite possible to have higher fuel and power prices, but lower bills, if your home is insulated and you have better public transport and a more efficient car and need to use it less. But any money provided for that will again have to come from the taxpayer because what little revenue the scheme does provide is all going to subsidise farmers.

Some weeks ago I warned that the Green Party is not of a mind to support legislation that leaves all the most critical decisions to regulation over which parliament has no scrutiny.

That's what this bill does.

It is critical for the environmental integrity of the scheme that we do not allow Russian "hot air" - units resulting from the collapse of their industry - into our registry. But that decision is left to an Order in Council decision under new section 30G, as is any decision to link with other trading schemes overseas.

Also without parliamentary scrutiny the minister has wide powers of exemption, may issue new New Zealand Units and auction them, and must make allocation plans.

The hardest decisions of all, and I have been warning of this since the mid-nineties, are those around allocation of free credits to protect firms who are trade-exposed. The timing in this bill allows the Government to be comfortingly vague until after the election about who will qualify for free units and how many, or over what part of their emissions. The crunch decision will be announced after the election in the form of allocation plans.

We considered very carefully whether we could support such a delegation of powers by Parliament. The mitigating factors are that clear criteria are set in the Bill and there will be a process of public submissions. We believe that the Government has listened to our initial concerns about secondary legislation and that this process is workable so will not oppose on those grounds.

We will, however, work very hard with many others who want a system with environmental integrity to have agriculture enter the scheme earlier, at least for the margin of their activities; to ensure coal seam methane is captured in the scheme; to exclude Russian Assigned Amount Units based on hot air with no environmental gain; and in the wider picture, to persuade the Government to sign up to the internationally recognised critical goals of no more than two degrees warming and a very substantial emissions reduction target within New Zealand in the post-1012 period.

ENDS

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