As he announced a further slowdown of New Zealand’s emissions trading scheme, the Minister of Trade and International Climate Change Negotiations, Tim Groser, said the government “has opted not to pile further costs onto households and the productive sector”.

The contrast with the Gillard government could not be clearer. The amendments announced will retain the ETS, but in a holding pattern, to see what Australia does.

Transitional arrangements to help the initial costs of the scheme have been extended. In particular, there has been an extension of the “one for two” scheme whereby obligations are reduced to require one emissions unit for two tonnes of emissions produced.

Agriculture has also been pushed off further into the future, and will not be included until at least 2015, pending a review that year. As the farming sector (primarily livestock) is responsible for around half New Zealand emissions, this is a significant decision.

Further, there has been no attempt to stop to the dumping of cheap European credits on the New Zealand market that has mercifully kept the price in the $6 to $8 range.

These decisions indicate the inherently cautious and managerial nature of the John Key’s National government, for which the issue of climate change has always been one of political expedience rather than principled conviction. Pre-Copenhagen 2009, when worldwide ETS schemes were fashionable and Australia a likely participant, the Key government committed to a scheme. Ever since then, and particularly since Kevin Rudd’s political misfortunes, the National government has slowly backed away from the scheme. “We have . . . listened to the ETS Review panel, listened to those affected by the ETS . . . and reviewed what our trading partners are doing,” Mr Groser said. This is a refreshingly realistic acknowledgment that while NZ wants to play its part, it cannot save the planet by itself. Meanwhile, unilateral action could certainly cause economic strife, competitive disadvantage and a subsequent drop in living standards.

In common with Australia, NZ’s scheme is premised on a meaningful international market. None currently exists, and if Australia fails to enter one, Kiwis will be left out on a limb. Economic pain for little or no environmental gain is not sensible policy. “We’re not prepared to sacrifice jobs in a weak international environment when other countries are moving very slowly,” Mr Key said.

As the NZ economy is gaining ground in business attractiveness, revisiting its ETS must be high on its list of priorities, especially if Australia’s carbon tax is dumped. 

Source: NZ delays carbon scheme