What are the key features of the Government’s announcement on emissions trading?
The emissions trading scheme and other initiatives announced today, such as the 90 percent renewable electricity target, will roughly cut in half our current projected Kyoto Protocol deficit. The major feature of the emissions trading system is that it will apply to all sectors and all gases over time in a way that is fair to industry and consumers, while also being good for the environment.
What does the Minister consider are further key features of the emissions trading scheme announced today?
The scheme has dates of entry for different parts of the economy, and theses dates are staggered. First in is forestry, which is in with full devolution of all benefits and costs to forestry. Transport comes in on 1 January 2009; electricity, stationary energy, and process emissions come in on 1 January 2010; and agriculture comes in on 1 January 2013. The other important point I make is that there is no free allocation to sectors that will pass on the cost anyway, but there is a generous allocation to those who are exporters at risk.
Can the Minister confirm that National’s statement in 2005 that: “An emissions trading system, not a carbon tax, is the best way forward on climate change policy.”, and National’s blue-green vision document of a year ago that stated: “We should introduce a tradable emissions permit system to manage New Zealand’s greenhouse gas emissions.”, and our statement in February this year that: “Forest owners and not Government should receive carbon credits for trees planted since 1990.”, have all been adopted as Government policy, despite the Government arguing against them for all of the last 8 years?
What I can confirm is that at the last election National said we should pull out of the Kyoto Protocol. National said there should be no devolution of any credits to foresters, and National voted against the first two readings of the permanent forest sinks initiative. It is true that when it was obvious that emissions trading would be the preferred Government priority in this area, National followed suit. It is also true that the so-called offer of the National Party to devolve credits to forestry, even until today, was for 50 percent of forest credits. We have promised 100 percent devolution. Having said all of that, I repeat what I said in response to the first question: we look forward to working with all parties constructively as we advance New Zealand towards emissions trading and carbon neutrality.
Will the Minister outline how low to modest income earners will be compensated for the increased costs of electricity that will result from an emissions trading scheme, as was announced today, and will he also advise as to whether any such compensation will be linked in any way to the price of electricity, or perhaps the price of carbon, and thereby fluctuate somewhat?
I am not in a position to give final details on that issue. There is plenty of time to work that through, because, of course, the price effects are not coming for a couple of years yet. It will be clear by the time the legislation is finally passed by the House what is anticipated in that regard. Suffice it to say, the Government is already putting significant focus on improving people’s efficiency in their use of energy so that they use less of it and, therefore, have to pay for less of it.
Is it likely that the household price of electricity will increase as a result of a new emissions trading scheme, and, if so, does the Minister have plans to mitigate the effect of that on low-income households and fixed-income households; if not, why not?
It is expected that the cost of petrol, at current prices of carbon, would increase by about 4c a litre in 2009. The cost of electricity is expected to go up by around 5 percent in 2010. But we need to get this in perspective. Even when we lump all of those costs for a household together, the effect of those increases is substantially less than what has been the effective price increases in petrol in the last 3 or 4 months alone.
I raise a point of order, Madam Speaker. What was really central to my question was whether the Minister had plans to mitigate the effects of those price increases on households. I do not believe the Minister addressed that part of the question.
Can the Minister confirm today’s latest figures on emissions, which show that for every year Labour has been in office emissions have grown at a record rate, to the point that they will be 10 million tonnes—20 percent higher than when Labour came into Government—and that the hard yards of implementing an emissions trading system and of constraining emissions will be left to the next Government?
I think this framework will be very important and will endure for a long time. In terms of growth of emissions, it is true that New Zealand’s emissions have grown ever since industrialisation began in New Zealand—that is a factor of both economic growth and population growth. Of course, sometimes emissions have not grown as much under National, because National runs recessions rather than growth. Nonetheless, it is true that the projection that was released today will be modified substantially next year because the balance will go down considerably as a consequence of our announcements.