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ETS subsidy removal one small step on long road

ETS subsidy removal one small step on long road

26th May

Caritas Aotearoa New Zealand welcomes today’s Budget announcement of a long-overdue phase out of the two-for-one subsidy in the Emissions Trading Scheme allowing some businesses to pay one emissions unit for every two tonnes of pollution they emit.

However, in order to meet the Government’s intention that it’s time for businesses to move towards paying market price for their emissions – as stated by Bill English in his Budget speech – other parts of the scheme are long overdue for change, says Caritas Director Julianne Hickey.

“This includes the $25 cap on the price of New Zealand emissions units, the free allocation of New Zealand units to some industries and businesses, and the continuing exclusion of our biggest single contributor to greenhouse gases: agriculture.”

Bill English said the subsidy removal would add an extra $356 million over the next four years (about $85 million a year) to the Government’s books.

Budget details, however, show that $225 million will be spent next year in free allocations of New Zealand emission units to some businesses. While the Supplementary estimates show the government had to spend an extra $115 million last year (2015/16) on free allocations due to uncertainty over New Zealand market prices and higher than expected uptake by some eligible sectors.

“A government genuinely committed to greenhouse gas emission reductions would also be ending tax breaks, subsidies and other financial support for fossil fuel exploration. It would also more actively encourage and support businesses and households to move towards a carbon-free future,” says Ms Hickey.

“Global monthly temperature records have been broken for each of the last 12 months and India has this week experienced 51oC temperatures. Caritas is working with communities that have had to move as a result of rising seas and coastal erosion in our Pacific region. In the region we have also seen in recent months the serious loss of food and water supplies and other devastation caused by extreme weather – such as cyclones and droughts. Clearly we are in the midst of global climatic changes and New Zealand’s commitment to the Paris Agreement requires much more of us in both immediate and long-term fiscal planning than this Budget provides.”


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