The NZ Emissions Trading Scheme - November 2008 Update

As part of the confidence and supply agreement between National and ACT, the implementation of the Emissions Trading Scheme will be delayed pending a review by a select committee. 

The agreement states that there will be a review of the “ETS legislation and any amendments or alternatives to it, including carbon taxes, in the light of current economic circumstances and steps now being taken by similar nations”.  The terms of reference for the select committee have not yet been agreed, although ACT has produced a draft.  (The agreement, including draft TOR, is available here.)

Most commentators are expecting the outcome to be a modified emissions trading scheme, with legislation passed by the end of 2009.  Both John Key and Bill English have stated this as the most likely outcome, although a carbon tax cannot be ruled out.

At this stage, it is unclear how the forestry sector, which has been operating within the scheme since September, and how the work underway to define the detailed regulations for the stationary energy and industrial processes sector, will be affected.

This delay to New Zealand’s response to the climate change issue is interesting in several ways.  

Despite the tight economic conditions, there is still a broad consensus amongst governments worldwide that action on climate change should not be delayed.  This international consensus is likely to be strengthened once Barack Obama is inaugurated as President of the US. 

Whilst there may be a temporary reduction in focus on environmental issues amongst consumers, it is reasonable to expect this to be relatively short-lived.  The imperative for New Zealand remains to live up to its “clean, green” image.  Taking meaningful action on climate change is a key component. (Recent data from the UN Climate Change Secretariat showed that New Zealand has the sixth worse record, of 40 industrialised countries, on percentage growth in emissions between 1990 and 2006.)

And finally, it is an interesting fact that over 90% of voters supported parties which stated support for an ETS in their policy statements, with over 96% supporting parties which accept human-induced climate change as a reality.

Once further information is known we will publish an update.