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Economic models support action on climate change

17 June 2009

Economic models support action on climate change

New economic modelling shows that New Zealand can continue with an Emissions Trading Scheme at little economic cost and Green Party MP Jeanette Fitzsimons says it is a clear message to Government to stop dithering and get on with it.

“The Green Party welcomes the report’s validation that a price on carbon is a good thing economically,” said Jeanette Fitzsimons, Green Party Climate Change Spokesperson

The report, co-authored by the NZIER and Infometrics, resolves the conflicting advice their earlier reports gave the Government and calls for an Emissions Trading Scheme (ETS). It states that “the introduction of a carbon price will not significantly affect New Zealand’s potential growth rate.”

Ms Fitzsimons said “the cost of fighting climate change is inconsequential compared to the cost of doing nothing. It is the difference between a 50% growth in incomes by 2025 or a 48-49% growth in incomes.”

The report does have its flaws, giving mixed signals about the purpose of an ETS, Ms Fitzsimons said. “The whole point of an ETS is to send clear investment signals that point us away from carbon intensive industries and towards a low carbon economy.

“This is why it is wrong to suggest that allocations can be made on an output basis – getting more free allocations the more you pollute just doesn’t make sense.

“The report is also wrong to claim that there are few opportunities to reduce emissions without reducing output. The Government has stacks of reports showing that there are huge opportunities to reduce emissions through low or no cost energy efficiency measures.

“The home insulation scheme is a perfect example of how we can reduce emissions without reducing industrial output, with a net economic benefit to the economy.

“While I appreciate that some parts of our agricultural sector are difficult to measure, we must make sure that there is some kind of investment signal for farmers in the ETS. We have already given them a five year holiday – plenty of time to improve the science.

“The message from today’s report is clear – we are going in the right direction already and we should stay the course, adapting our ETS to conditions as we go, not abandoning it,” Ms Fitzsimons said.

The full report is available at:


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