Issues

Climate Change

Emissions Trading Scheme

As a result of the New Zealand Government’s commitment to the Kyoto Protocol, the Emissions’ Trading Scheme (ETS) has been proposed in order to fund the New Zealand liability.

Essentially, the ETS will require payments for activities that produce greenhouse gases. For the wood processing sector, the major impact will be on those companies purchasing electricity, natural gas and coal. Additionally, transport fuels and logs will be affected and this will have an impact on all businesses.

The Castalia Report discusses the impact on the wood processing sector in more detail.

Click here to see the pan-industry letter to the Prime Minister on Emissions Trading Scheme and Climate Change Policy Settings (March 2010)

Click here to see the pan-industry letter to Tim Groser on International Climate Change Negotiations Beyond Copenhagen (March 2010)

WPA Response to National Governments ETS Review (Feb 2009)

• WPA accepts that New Zealand has entered into an international agreement to respond to the risk of effects of human induced global warming.
• WPA does not accept that New Zealand’s economy should be compromised by the methods that Government may use to mitigate fiscal liability under an international agreement such as Kyoto. WPA requests that in the interests of rebuilding investment confidence within New Zealand the Government should consider making a statement to this effect.
• In order to minimise unwarranted transaction costs and to provide a level of surety into the impost of any emissions costs, WPA seeks to have the current ETS replaced either with a hypothecated low level carbon charge, charged against the Greenhouse gas emissions that are readily measurable and manageable by those responsible for the emissions, and controllable using currently available technology; or if the decision is to persist with an emissions trading scheme the cost of emissions within the NZ economy should be capped.
• Funds from a carbon charge or capped ETS should be applied to domestic initiatives which reduce greenhouse gas emissions and for paying New Zealand’s liabilities under a current international agreement through the purchase of carbon credits.
• That all gases produced from all sectors enter any scheme at the same time.
• If a capped emission trading scheme is determined by the Select Committee to be the preferred option, then recognition must be made of those within the industry who have been early adopters and have reduced their emissions below a threshold level. The current threshold applicable to New Zealand emissions is emissions from 1990. Recognition should include a rebate for emissions below the threshold level, in recognition that under the current international agreement New Zealand has been issued with carbon credits at 1990 levels.
• That a border adjustment be applied to all products with an embedded emissions component imported from and exported to countries without an equivalent domestic cost on emissions. The adjustment should be commensurate with a cost of emission equivalent to that paid by the New Zealand producer of similar products.
• That the electricity market and electricity pricing are reviewed to ensure that non fossil fuel generation does not have an emissions cost applied directly or indirectly. This may involve review of the ‘functioning’ of the current electricity market and for increases in the marginal cost of electricity as a result of emissions charging being rebated.
• That multi generational carbon stores be encouraged where organic material including wood and paper waste are managed to permanently sequester and/or store carbon. Such stores should be recognised as a method of reducing emissions to the atmosphere. WPA members expectation that the value of wood and wood products to consumers relative to more emissions intensive alternatives such as steel, concrete and aluminum will rise with it the consequential price-driven differential demand for low embodied GHG products.
• WPA considers that the distinction between pre 1990 and post 1989 forests dictated by the current international agreement should be removed from New Zealand's domestic measures, and from New Zealand’s international negotiating strategy.