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Jobs At Risk With Emissions Trading Scheme

29 NOVEMBER, 2007

More Jobs And Investment At Risk With Proposed Emissions Trading Scheme

An update of a survey of businesses across a wide range of sectors shows the proposed emissions trading scheme as it is currently designed will result in significant job losses and just about halt new investment in some key sectors.

The updated survey includes responses from 41 firms (up from 32), including meat companies, pulp and paper mills, iron, steel, shipping, cement, dairy, mining and supermarkets. New responses have been received from companies in the horticulture and fishing industry sectors.

At a carbon price of $30/tonne these firms will be collectively facing increased costs of $257 million in direct energy costs, which does not include secondary round price increases that their suppliers will be passing on.

This increase in operating costs will put at risk close to 3000 existing jobs and nearly 700 new jobs had planned investment gone ahead.

Due to the fact that any new investment will face the full cost of carbon for every tonne of CO2 produced, $1.6 billion of planned new investment is unlikely to go ahead, with most of that investment being redirected to other countries that have less stringent climate change policies in place.

The survey was carried out by Greenhouse Policy Coalition and the Major Electricity Users Group, which are industry associations representing many of New Zealand’s largest employers and energy users.

Catherine Beard, executive director of the Greenhouse Policy Coalition says a carbon price of $30/tonne CO2 was chosen for the survey because that is what it would cost firms at today’s carbon prices and the survey presumed no free allocation of allowances. “Of the firms that responded to the survey only 14 of the 41 companies would be allocated partial protection via free allowances under the government’s current proposals.”

Ralph Matthes, executive director of the Major Electricity Users Group said there is a growing view that the economic risks of the proposed emissions trading scheme have been underestimated and this is borne out by the survey results which show significant economic hardship will be experienced by companies across a wide range of industry sectors.

Catherine Beard said the scheme would be improved if intensity based targets and price safety valves were adopted, which would be more consistent with the approach being considered in Australia.

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