Public subsidizing polluting industries | The Jackal

18 Sept 2012

Public subsidizing polluting industries

Today, the NZ Herald reported:

The bigger issue is how to deal with the carbon costs ahead. The ETS is not bringing in enough income to pay the nation's carbon bills. Five years since its start, the scheme is a tax that has not even paid for itself.

The Government is facing a significant carbon account deficit, and emissions are projected to far exceed targets in future.

Yet draft legislation before Parliament would dump requirements to properly provide for future carbon bills and would instead put costs on to future taxpayers. These changes would breach an election promise to make them fiscally neutral and would remove billions of dollars of future revenue from the ETS.

Personally I think taxpayers' subsidizing polluting industries is entirely unacceptable!

Asked whether there is a deficit of 51 million tonnes, Groser stated: "They've got it completely wrong because the only target we've got is this target to meet the [Kyoto] first commitment period."

The minister's error is made clear by a chart the Treasury prepared, where the title says it all: "From Kyoto Surplus to Government Fiscal Cost Under the ETS". As the Treasury explains, to assess the government's overall carbon position, it adds together the Kyoto position and the net result of ETS comings and goings. The result is a deficit of 51 megatonnes of CO2 equivalent.

The overall deficit would be $300 million at today's low carbon price of $6 a tonne. As it will be paid back in future when prices are expected to be much higher, it would be a $1.3 billion debt at even the Government's conservative price of $25 a tonne.

But that is just the existing debt. The bigger issue is how to deal with the carbon costs ahead.

The even bigger issue is the impact on the environment if we don't reduce our carbon emissions.  National is effectively corrupting the ETS in a way that gives polluting industries free license and public money. It appears that they're in complete denial that anthropomorphic climate change exists, and that there won't be any economic impact from the environmental damage it causes. How stupid is that?

The government's ignorance on this issue is about as short sighted as it gets, with runaway climate change already at our doorstep. The speed at which things are changing has exceeded all scientific projections, and the potential cost to our productive industries will far exceed any short-term economic benefit the government hopes to achieve from its changes to the ETS.

National's Climate Change Response (Emissions Trading and Other Matters) Amendment Bill (PDF) effectively kneecaps the ETS and ensures that New Zealand will fail to meet its international obligations. Giving the public only two weeks to make submissions on that bill, the amendments to the Climate Change Response Act 2002 puts a very flimsy case for economic growth ahead of the environment... In other words it lets the polluters off the hook.

Many polluting industries are already highly subsidized in New Zealand by the government through cheaper power prices, tax write-offs and government investments. They simply don't require more public money to subsidize their CO2 emissions in order to remain competitive.

One can only conclude that National is putting our futures at risk because they're greedy... Either that or they're completely insane!