Hon David Parker
Minister Responsible for Climate Change Issues

16 June 2008
Media statement

Minister welcomes progress on emissions trading bill

Climate Change Minister David Parker today welcomed a select committee report on legislation to establish an emissions trading scheme.

“The Finance and Expenditure Committee has read 259 submissions and listened to 160 oral submissions in 58 hours of hearings,” David Parker said. “The changes recommended by the committee as a result of their consultation will improve the Bill.”

“I’d like to thank the members of the select committee who have engaged constructively with this challenging piece of legislation.

“I know the supporting parties still have reservations about some of the details of the scheme, so I thank them for their support thus far, and we are continuing to work with them.”

The fundamentals of the emissions trading framework reported back into the House remain intact, David Parker said.

“The proposed inclusion of all sectors and all gases in the emissions trading scheme remains unchanged. Also retained is the staged entry of sectors into the scheme by 2013.”

The government proposed two significant changes to the Bill last month – deferring entry of transport fuels to the emissions trading scheme until 2011 and deferring the phase-out of freely allocated emission units to industry for 5 years to further protect them from competition with firms in other countries that do not have to account for their greenhouse gas emissions. Both changes have been adopted by the select committee.

“There is good news for owners of forests bought before late 2002 that qualify as pre-1990 forests in the Bill. The number of free emission units they’ll be allocated has been increased from 39 to 60 per hectare. Eighteen units will be allocated to future Treaty claimants who receive Crown Forest land. Both these changes better assist the forest owners who face the greatest costs from the emissions trading scheme and provide sufficient incentives for alternative land uses, such as renewable electricity generation.

“Much discussion was had about bringing the agriculture sector into the emissions trading scheme earlier than 2013, but the sheer practicality of it makes it too difficult to put in place before this time. However, the agriculture and waste sectors will be able to voluntarily report their emissions from 2011 and reporting will be mandatory from 2012 to ensure that the sectors are well prepared for their entry into the scheme on 1 January 2013. This approach will also encourage emissions reductions before 2013.”

Further changes to the Bill include allowing foresters to offset the emissions caused from harvesting their forests by planting new trees on another piece of land if in the future such offsetting is allowed for in the international agreements beyond the Kyoto Protocol’s first commitment period.

Changes have also been made to the allocation plans and criteria for free emission units to provide more certainty to business and incentives to develop new emissions-reducing technology. This includes enabling allocation plans to create a reserve of emission units for new business investment within the cap.

The review process for the emissions trading scheme has also been strengthened so that reviews happen more often and they are conducted by an independent panel.

The Climate Change (Emissions Trading and Renewable Preference) Bill was reported back to the House on 16 June and will have its second reading in the next few weeks.

ENDS

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