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Please Don't Throw Out the Emissions Trading Scheme

Please Don't Throw Out the Emissions Trading Scheme

Chuck out the bathwater - keep the baby. With two coalition partners recommending axing the Emissions Trading Scheme in favour of a carbon tax, Ekos is concerned that the new government will upset the apple cart and set us back another decade in climate change policy.

Ekos Executive Director Sean Weaver says that while the previous governments failed to make best use of emissions trading, the incoming government has a great opportunity to tune the Emissions Trading Scheme engine to make it run more effectively.

A carbon tax is designed to put a carbon price into the economy, and send an investment signal to favour less carbon intensive development. Weaver said that New Zealand already has a carbon price in the economy delivered by the Emissions Trading Scheme.

"The NZETS is essentially a carbon tax in drag. The government instructs upstream entities in the energy sector to buy carbon credits, and these companies then finance this by increasing their prices to raise that money. This puts the carbon price into the economy at the top end."

"The carbon price needs to be higher to send a stronger signal, but we do not need to ditch the Emissions Trading Scheme to get there,” he said.

“We need to stop giving “get out of jail free cards” to heavy emitters, and limit international outsourcing of carbon credits. This will drive the domestic carbon price upwards, and stimulate investment in both energy efficiency, and much needed reforestation of millions of hectares of marginal, erosion-prone farmland that ought to be under forest cover,” Weaver said.

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Some critics of the NZETS have suggested that emissions trading itself is to blame. But Weaver disagrees. “I don’t blame cricket for match fixing, and I don’t blame emissions trading for political manipulation by big emitters. You can get just as much manipulation of a tax instrument when big emitters put pressure on governments. The key is to transition step by step to a more effective system” Weaver said.

"The NZETS has survived electoral cycles, and this morning the private sector woke up to a price on carbon and noticed that the economy didn't fall over. But if you scrap this system and try to introduce a carbon tax, you are going to destabilise a delicate policy balance well worth conserving," he said.


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