28 September 2004

Big Kyoto liability looming

The news that Ireland has abandoned carbon taxes should prompt the New Zealand Government to think again about its commitment to the Kyoto Protocol, says Business NZ.

Chief Executive Simon Carlaw says Ireland has concluded that costs outweigh the environmental benefits, and New Zealand should similarly consider whether it will gain more benefit than cost.

He says a recent report on the effects of ratifying the Kyoto Protocol shows the liability is large enough to warrant it being included in the Government's financial statements.

An analysis by Castalia Strategic Advisors shows New Zealand facing a contingent liability of at $9 - $14 billion over the next 20 years.

Mr Carlaw says the Government policy of exempting agricultural emissions and protecting certain businesses from paying carbon tax means that New Zealand will have to buy emissions units from other countries to meet its Kyoto obligations.

"While carbon taxes should largely cover the cost, the contingent liability should be disclosed. The Castalia Report makes it clear that the expectation of carbon tax revenues does not absolve it from disclosing the contingent liability.

"More importantly, the Castalia Report underlines the fact that $9 - $14 billion will be removed from the pockets of New Zealanders over the next 20 years - a huge amount that will have an enormous impact on our economic growth prospects. This is exactly the reason why Ireland has made the move it has, and the reason why Australia and the US have declined to join the Protocol and instead taken a more sensible response to climate change.

"The New Zealand Government should now face up to the consequences of its actions and put its Kyoto liability on its balance sheets."

The Castalia Report is on: www.businessnz.org.nz/file/773/040903%20DisclosureKyotoLiability.pdf

ENDS

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