8. JACQUI DEAN (National—Waitaki) Link to this
to the Minister for Climate Change Issues
What are the impacts of the changes this Government has made to the emissions trading scheme on costs for consumers?
Hon Dr NICK SMITH (Minister for Climate Change Issues) Link to this
This Government amended the emissions trading scheme to halve the impacts on consumers by requiring only one unit for every 2 tonnes of emissions for the transport and electricity sectors, and by putting a cap of $25 per tonne on the price. This reduced the cost per household from $330 a year to $165 a year, or $3.17 per week, to be precise.
Which officials were responsible for calculating the $165-per-year or $3-per-week cost of the emissions trading scheme for the average household?
Hon Dr NICK SMITH Link to this
The figure was produced by the emissions trading group of officials in Treasury. The methodology was included in the original regulatory impact statement on the legislation. The analysis is based on a household using 8,000 kilowatt hours of power and driving 28,000 kilometres per year, and on a power price increase of 1c per kilowatt hour and a petrol price increase of 3c per litre.
John BoscawenDoes the Government’s forecast of the increased value of electricity generation assets of $821 million, shown on page 136 of the Budget document, include the windfall profits to energy companies like Mercury Energy, which announced yesterday a 3.3 percent increase from 1 July on account of the emissions trading scheme; if not, why, not, and if so, how much of that $800 million - plus is due to those windfall profits?
Hon Dr NICK SMITH Link to this
The increase announced yesterday by Mercury Energy was 3 percent, which is less than the 5 percent that the Government has indicated to consumers will be the cost of the emissions trading scheme. No, the change in valuation is not a reflection of the emissions trading scheme. It is quite complex, having both the emissions trading scheme and the complexities of the electricity market, to determine the exact impacts. I note that neither Genesis nor Meridian Energy is planning to increase its price in the short-term. The Government will be watching the power companies closely, and if we believe that they are unfairly putting up prices as a consequence of the emissions trading scheme, we reserve the right to have some form of inquiry.
What reports has he received of the price impacts on consumers of other countries’ emissions trading schemes, noting claims that New Zealand’s emissions trading scheme is leading the world and is the most expensive?
Hon Dr NICK SMITH Link to this
Twenty-nine of the 38 countries with Kyoto Protocol commitments have an emissions trading scheme. I am advised that the power price increases range from between 23 percent and 33 percent. A specific report in 2008 on the European emissions trading scheme put the price impact at between €10 and €12 per megawatt hour, which would relate in New Zealand terms to between 1.8c and 2.2c per kilowatt hour—that is, more than double ours. The 5-percent increase imposed by our amended emissions trading scheme is very modest and is far from world leading.
Does he agree with his colleague the Minister of Agriculture that under current Government policy the cost of the emissions trading scheme for the average dairy farmer will be $3,900 per annum for the period 1 July 2010 to 31 December 2012, $7,800 per annum for the period 1 January 2013 to 31 December 2014, and $10,200 per annum from 1 January 2015, as calculated by Meat and Wool New Zealand; if not, why not?
Mr SPEAKERThe member asked him whether he agreed with the Minister of Agriculture and some figures used by the Minister of Agriculture, as I understood the question. The answer should not start with: “The member is being misleading”, because the member has not alleged anything; he has asked the Minister whether he agrees with some figures someone else has used.
Hon Dr NICK SMITH Link to this
No, I do not accept the accuracy of those figures, for a very simple reason: this Government has made it plain that we will not be proceeding with the step-up in the emissions trading scheme in 2013 or with the addition of additional sectors unless there is progress by our key trading partners. So the figures the member is using for 2013 and beyond are quite misleading.
Has the Minister received any advice on the price impacts for households of adopting a 40 percent emissions target by 2020?
Hon Dr NICK SMITH Link to this
I have seen economic analysis that shows that to meet that sort of reduction in emissions, the price of carbon would need, in New Zealand, to be $500 per tonne. This would involve the cost being 40 times what our emissions trading scheme would cost, or $120 a week. It beggars belief that some members are complaining about the power price increase of our very modest emissions trading scheme while, at the same time, they are promising a 40 percent reduction in emissions by 2020. Members opposite should reflect on those contradictory messages.