Fishhooks in emissions trading review
31 October 2007
Fishhooks in emissions trading review - Business NZ
A review by the International Energy Agency of New Zealand's proposed emissions trading scheme is not the glowing endorsement it appears to be, says Business NZ.
While it is being promoted as "praise" and a "positive review", there are in fact two big fishhooks in the review, says Business NZ energy analyst George Riddell.
"The first is the impact of 'hot air' credits on the price of carbon, making it much higher than the Government estimates. A higher than estimated price for carbon will mean a more negative economic impact on all New Zealanders than has so far been acknowledged.*
"The second relates to timing. The IEA's analysis was of the NZ Government's Framework Document which contains no information on the proposed timetable for implementation. The IAE correspondence indicates an assumption that our trading system will be developed over a period of years instead of only a few months. Business NZ would be interested to hear the IEA's view on the actual timeframe being adopted by the NZ Government.
"With those two caveats, the IEA's review is far less rosy than New Zealand would wish.
"We agree there are opportunities from a less carbon intense future and business has been in support of carbon trading for some time but the risks from a rushed introduction are major. More care and time are needed to get a workable system," Mr Riddell said.
*So-called 'hot air' credits are the credits that were allocated to Russia and the Ukraine for industries that have since collapsed, destroying the value attached to the credits. 'Hot air' credits are not accepted in the European trading system, with which New Zealand will seek to be integrated. It is the trading of the 'hot air' that the NZ Government and officials have indicated will keep the price of carbon low in the NZ market. Losing this opportunity would see New Zealand facing a much higher price than estimated by the Government.