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NZ sets tough targets -

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NZ sets tough targets

The World Today - Friday, 4 July , 2008 12:35:00

Reporter: Kerri Ritchie

ELEANOR HALL: Across the Tasman, the New Zealand Government is also in the process of bringing in
an emissions trading scheme.

It has set some tough environmental targets with the aim of making New Zealand carbon neutral on
energy consumption by 2040.

And the minority Labor Government is now trying to gets its emissions trading scheme through
Parliament, before an election later this year.

As New Zealand correspondent Kerri Ritchie reports, that has involved plenty of debate about the
costs for business and consumers.

KERRI RITCHIE: New Zealand's Climate Change Minister David Parker says he's optimistic the
Government's proposed emissions trading scheme will get the green light.

DAVID PARKER: This has got ... had the longest, most thorough process of anything that has gone
through Parliament since I have been in Parliament.

KERRI RITCHIE: He acknowledges it has its critics.

DAVID PARKER: But what they want is for taxpayers effectively to bear the burden of increasing
emissions rather than emitters. So if you take some of those criticisms with a grain of salt,
because they are sometimes self-serving.

KERRI RITCHIE: Labour needs 11 more votes for the bill to become legislation, and there has been
plenty of negotiation behind closed doors.

But before giving their support, the minor parties want the Government to come up with better
compensation options for households which would be hit by higher costs.

David Parker says New Zealanders have to think long-term.

DAVID PARKER: Emissions trading schemes actually save costs to the economy, they don't cause cost
to the economy. We all have in a developed world an obligation to take responsibility for increases
in emissions. That arises from the Kyoto Protocol, not the emissions trading scheme.

The emissions trading scheme puts the right incentive into the economy to reduce emissions and
therefore reduces the cost of your international obligations. It doesn't cause a cost, it reduces

KERRI RITCHIE: Compared to other developed countries, New Zealand is a bit unusual when it comes to
its greenhouse gases. About half of all emissions come from agriculture.

But it's the business sector which seems to be making the most noise about the scheme, especially
the plan to apply pollution caps to all industry by 2013.

One steel company has already asked for an exemption saying its plant would become uncompetitive

Peter Neilson is chief executive of New Zealand's Business Council for Sustainable Development. He
says there's a lot of uncertainty.

PETER NEILSON: In business it is not always quite so clear. Some business processes at the moment
are very hard to change so, for example, the Government is proposing that we will have agriculture
in our scheme from 2013.

Nobody else in the world has yet done that. If we do that, we can't easily fix how animals produce
methane. We can do something about nitrous oxide, but some of those issues will be much more
difficult to hatch.

But it is very similar to the situation you have with coal. Some of the technical processes don't
change very much simply because we increase the price. We can't adjust them very rapidly but on the
other hand if we don't have that price signal, we don't have any incentive to change our behaviour.

KERRI RITCHIE: He says the scheme is still facing plenty of resistance.

PETER NEILSON: People in areas such as aluminium, metal smelting, steel cement, those sectors tend
to be very large users of both energy and also often have processes that produce large amounts of
emissions, and often can't see a quick way of reducing their emissions.

So for those industries, the concerns are always going to be about what are the transition
arrangements? How much protection can they get in case we have this price in New Zealand, but they
face competition elsewhere from people who aren't paying their price.

That's an issue that faces every country whether it is the European Union, Australia, New Zealand
or the US. And people are having to grapple with how do you protect? We are proposing to do it by
giving firms free allocations up to 90 per cent of their 2005 levels of production as a bit of a
cushion for 10 years and then beginning to phase out.

There will always be debate about whether that is inadequate, too generous, not generous enough.

KERRI RITCHIE: But Peter Neilsen says while the Government's bill isn't perfect, it has his

PETER NEILSON: We have to do this but lets try and make sure it is as comprehensive as possible. In
Australia, your big issue is obviously how you are going to deal with coal-based industries because
your electricity system is very, very dependent on coal, wherein in New Zealand we've actually got
currently about 60 per cent of our electricity comes from renewables, and we plan to increase that
to 90 per cent over the next decade or so.

So there is a distinctly different issue in Australia than it is for New Zealand, but effectively,
you know, that atmosphere doesn't care whether the emissions come from a coal plant or a cow, its
still a problem.

ELEANOR HALL: That is Peter Neilsen, the chief executive of New Zealand's Business Council for
Sustainable Development. That report from our New Zealand correspondent, Kerri Ritchie.