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Government has negotiated itself into a corner over ETS auction

If the coalition government wants a “strong and stable ETS”, as the Minister for Climate Change has recently stated, the price of petrol and diesel will rise, causing inflation and public disapproval, according to Degrowth Aotearoa New Zealand (DANZ).

“The four failed auctions of ETS units during 2023 was the result of the Labour Government interfering with the advice of the Climate Commission and the subsequent market uncertainty” said Deirdre Kent of DANZ.

“Frankly, the Emissions Trading Scheme (ETS) is never going to work. Many emissions intensive but trade exposed companies are virtually exempt. Examples are NZ Steel, NZ Aluminium Smelter and Golden Bay Cement. And then the government interferes with the top level and bottom level of the price of units” she said. “So it isn’t a normal auction at all.”

“What with agricultural emissions being exempt, less than half of New Zealand’s total emissions are ever accounted for by the ETS.

Government painted itself into a Corner on ETS

“The current government has got itself into a sticky corner during the coalition negotiations. It now plans to use the money from ETS auctions for tax relief. It was hoping for nearly $1 billion from the latest auction.

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“But if it doesn’t interfere and allows the price to rise, the Government will quickly lose popularity. Nobody wants the price of petrol to rise. And if diesel prices rise then this causes inflation since almost all our goods are transported in diesel powered trucks. So much for paying attention to the cost of living.”

Petition Alternative to ETS

So DANZ has recently given a petition to an MP asking the "That the House of Representatives investigate an energy rationing scheme such as Tradable Energy Quotas (TEQs), which we believe could address both potential shortages of fossil fuels and the climate emergency."

Green MP Scott Willis will be presenting the petition to Parliament in the near future. “TEQs is a fossil fuel rationing scheme that is certain to reduce emissions, and is fair to all” Kent said. “It would also work for any any potential shortages of fossil fuel in the future.”

Kent said that Tradable Energy Quotas was examined by the British Parliament in 2009 and found to be the best of the schemes on offer. But it was said to be “ahead of its time”.

“We think its time has come”, she said.

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