6. GERRY BROWNLEE (National—Ilam) Link to this
to the Minister of Energy
Does he stand by his statement to the Energy Efficiency and Conservation Authority Biofuels Conference on 24 April 2007 that an emissions trading scheme “is a flexible way for business to find the least cost means of reducing their carbon footprint”?
Hon DAVID PARKER (Minister of Energy) Link to this
Yes, and that view is shared by the New Zealand Treasury, a substantial number of other countries, and many USA states.
Has he noted in the Government’s biofuels obligation discussion document that it anticipates that a 1 million tonne carbon dioxide reduction for the first Kyoto Protocol period would cost the motor fuels industry $125 million in capital costs, or about $125 per tonne of carbon dioxide reduced; if so, why does he think the industry would spend $125 a tonne, when the Government claims it can buy that tonne in a trading market for just $13?
Two points are to be made there. The first is that the National Party supports that policy, I thought, and the second is that the cost is an inevitable cost of changing over infrastructure. That one-off cost has to be met before New Zealand can roll out biofuels.
Why does the Treasury website estimate that a tonne of carbon dioxide emission credits can be purchased in a trading market for just $13, when the capital cost of reducing a tonne of emissions through biofuel use is estimated by the Ministry of Transport to be at least $125, and which of these Government departments is right?
I repeat that to have any biofuels of any percentage there is a need to update New Zealand’s infrastructure in order to deliver those biofuels—whatever the volume is. The factor that the member gives as to the cost per tonne is just a division of that cost across the volume within that period.
Shane JonesSupport comes from the forestry sector and many business groups, as well as individual businesses, and virtually all environmental groups. The leader of the National Party is also on record as saying he favours an emissions trading scheme. Support has also been expressed by other parties in this Parliament, and I look forward to continuing constructive dialogue on that topic.
Heather RoyIn light of that answer, has the Minister responded to the 6 June letter from the Greenhouse Policy Coalition, Federated Farmers, the Road Transport Forum, the Major Electricity Users Groups, the Business Roundtable, Business New Zealand, the New Zealand Chambers of Commerce and Industry, and the Wood Processors Association regarding emissions trading and the need for an adequate consultation process based on proper analysis; if so, what was his response to their combined concerns that there has not been consultation in good faith with officials working on a scheme, before consultation has even concluded?
I have received two similar letters; I have responded to the first one, and the response to the second is in process and will go out this week. In terms of the process, emissions pricing has been extensively discussed in and around New Zealand over many years. We are not redesigning the wheel here; many elements of an emissions trading scheme will be uncontroversial, and can be readily adopted from overseas experience. My having said that, we are not going to rush things at the expense of getting them right, and there will be more than adequate opportunity to consult sectors and interest groups in respect of general design—
No, not concurrently; actually before any legislation is introduced into the House. There will be more than adequate consultation on scheme design issues generally, but, in addition, we also envisage additional engagement around sectoral implications before any one sector comes into the scheme.
If a tonne of carbon dioxide emission offsets can be purchased for $13, why should the industry be forced to invest in technology and infrastructure when the cost will be in excess of $125 a tonne, or are the carbon value estimates on the Government’s website inaccurate?
I suspect that the reason the Government supports this policy as a good initiative is the same reasoning that the National Party applied when it came out in favour of the policy, which is that biofuels by their very nature are a new technology that require some new infrastructure, and that new infrastructure has to be built irrespective of what volume of biofuels is delivered.
Who will ultimately bear the cost of that infrastructure being put in place, and can the Minister confirm that the gross emission reduction arising from the use of biofuels at the current mandated levels excludes the cost of emissions produced in their manufacture and distribution?
The cost, in respect of the infrastructure costs that oil companies will pay, will be passed on to consumers. I think the estimate at the time was that by 2012 it might have a 1c per litre effect on fuel prices overall.
Can the Minister give the House an assurance that his Government does not intend raising the excise on either existing motor fuels or biofuels?