ETS defenders want 50% limit on foreign carbon credits

BUSINESSDESK: Politicians are in for an ear bashing from environmentalists and foresters at select committee hearings today on the need to limit New Zealand industrial carbon emitters' use of foreign-sourced carbon credits to 50% of total obligations.

The push, led by Commissioner for the Environment Jan Wright, is opposed by the large emitter lobby, with Business New Zealand arguing any move to pump up rock-bottom prices for New Zealand Units will undermine the "least cost" principle that drives the emissions trading scheme.

Dr Wright, an officer of parliament, broke with parliamentary convention yesterday when she released a statement drawing attention to her submission, to be presented orally at parliament today, in which she described proposed amendments to the ETS as making "a farce of our response to climate change".

The cumulative impact of the reforms proposed in the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill would be to lock in "big polluters", as Dr Wright called carbon-intensive industries, "to pay for only 5% of their emissions indefinitely".

"In such circumstances, there is no way New Zealand would reach its legislated target of a 50 percent reduction in emissions by 2050," she says.

Dr Wright and other submitters also called for a cap on the total number of foreign-sourced credits that could be surrendered under the New Zealand ETS.

Unlike most other countries with an ETS-style carbon pricing system, New Zealand allows large emitters to buy as many foreign credits as it likes.

The glut of European Union emissions reduction units has dropped global carbon prices under $4 a tonne in recent weeks, far lower than ever envisaged when the government imposed a $25 a tonne upper limit that emitters would face in the transitional phase of the scheme, which Dr Wright argues is now indefinitely locked in.

Also supporting the 50% cap on foreign credits are forestry farming submitters such as New Zealand Carbon Farming Group, which called for New Zealand "to introduce, without delay, a cap on international carbon units of 50%".

"A cap ... would not only deliver on the government's stated ETS objectives, but would also deliver a host of other long-term sustainable environmental, reputational and economic benefits to New Zealand," the submission from the country's "largest supplier of post-1989 sourced carbon credits" says.

Dr Wright's submission says "there is a balance to strike between allowing some international trade in carbon credits (so the least cost carbon reductions can occur worldwide) and making sure that investment also contributes to creating a domestic low carbon economy".

"New Zealand credits [NZUs] drive green growth, energy efficiency and forestry within New Zealand."