Reasons to be Optimistic on APEC Climate Talks

13 July 2007

Media Release

Reasons to be Cautiously Optimistic about APEC Talks on Climate Change

Prospects for a Kyoto II Treaty with a cap on international emissions are improving day by day and the APEC talks will provide more progress down that path.

Speaking to student leaders in Wellington today about the upcoming APEC talks, Peter Neilson the Chief Executive of the Business Council for Sustainable Development said the tide of public opinion in developed countries was moving to pressure even reluctant governments to take an action on climate change and adopt binding targets. He said:

• Australia and the USA both have climate change policies that are widely unpopular. They are under intense pressure from their State Governments which are more in tune with public opinion on the issue.

• In New Zealand while only 10% of the population think we don't need action on climate change, 80% of the population want action.

• In China and India the receding snow line in the Himalayas means that increasingly water is not getting to their farmers and rivers are expiring long before they get to the sea. The legitimacy of the National Government in both countries is at risk if the growth in the rural sector continues to lag behind the booming cities. While China and India don't want caps on emissions, consumers and competitors in developing countries with caps on emissions and paying for emissions will lobby for import taxes on emission intensive products from countries not trying to at least reduce their emission intensity.

• A price on carbon emissions, while it will increase the cost of emission intensive products, also encourages changes that will reduce costs for most sectors from reduced fossil fuel use. Numerous opportunities exist to reduce emissions that will actually increase business profitability. Putting a price on carbon will accelerate the take up of these innovations.

New Zealanders want to be world leaders in addressing climate change and business needs to recognize that the public want to hear about the solutions not just the problem. The Business Council was an early advocate for a cap and trade market for emissions because it enables the Government to set an emissions cap and then for business to meet that cap for the least cost to the country. A carbon tax cannot do that unless it happens to be at exactly the right level which is an almost impossible condition to achieve.

Many parties represented in the Parliament have already rejected a carbon tax so it is not really a realistic prospect given our recent history.

Suggestions that Governments can buy carbon credits more cheaply than business is somewhat surprising given that most Governments around the world are investigating carbon trading schemes because they consider business are better placed to manage the carbon price risk than the Government.

ENDS