MEUG weighs in on ETS timing

Wednesday 28th April 2010

The Major Electricity Users Group is adding its voice to growing industry calls to review the timing of New Zealand's emissions trading scheme, especially now that Australia's has been placed on hold.

"The announcement yesterday by the Australian Government of a significant delay to an ETS in Australia is a game-changing event that will impact every New Zealand householder and business," said MEUG's executive director Ralph Matthes.

"To continue implementing the NZ ETS as if nothing has happened is simply putting one's head in the sand. Government needs to assess the situation now and not wait to review the situation next year."

He said New Zealand households and businesses would be paying approximately $240 million a year more for electricity because of the ETS, which will apply in the first instance only to the greenhouse gas emissions from stationary energy plants - in particular, gas and coal-fired power stations, food processors, smelters and steel mills.

The ETS will apply a carbon price of $25 a tonne, and only half the costs incurred will be met by industry and consumers in the first three years' of the scheme's operation.

Environment Minister Nick Smith has opposed any change to the ETS timing, partly because other countries are moving to implement carbon-reducing economic mechanisms, partly because delaying the ETS would be a blow to the commercial fortunes of the plantation forestry sector, and partly because forest plantings are creating a bill for the taxpayer that the ETS helps to offset.

The Energy and Environment Business Week newsletter this week says the government faces having to fill a $700 million temporary "hole" created by the fact forest owners will be allocated $1.1 billion in carbon credits in 2010/11, more than earlier estimates.

"By honouring commitments to give credits to the forest sector and softeningthe costs for consumers and businesses, the government will be making a significant loss on the ETS," Smith told the newsletter.

Smith reiterated in a statement early this afternoon that the ETS would go ahead as planned.

Businesswire.co.nz

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