The National Government believes New Zealand, as a responsible international citizen, must act to reduce its greenhouse gas emissions. Most of the science points to climate change happening, and it’s one of those issues where, if you wait to be 100 per cent sure, it will be too late to do anything about it.
Our moderate emissions trading scheme (ETS) will help us reduce emissions in ways that result in the least cost to society and the economy.
I have been asked on several occasions to explain where the money from our ETS will go. First and foremost, the ETS is not a tax. Our ETS will not generate revenue for the Government. It involves those emitting paying a price and those reducing emissions like foresters receiving a payment.
During the Kyoto period to 1 January 2013, emitters will pay $900 million, foresters will receive $1600 million, and the Government will pay the balance of $700 million.
The money is earmarked for forestry because forests act as a massive carbon sink and they are our best way of ensuring we are accountable for our emissions resulting from electricity use and the burning of fossil fuels.
The world is set on a path to constrain emissions and countries have to adapt to a price being placed on emissions. In proceeding with the ETS, New Zealand is doing what 30 other nations around the world are doing. We are ensuring we are responsible global citizens and sometimes this means making decisions that aren’t popular but will have long term benefits for future generations.
The sooner New Zealand starts this process, the easier the transition will be rather than waiting and having to go harder later.
For the average Kiwi household it is estimated the ETS will cost $3 a week through increases in electricity and fuel costs. This is half what Labour’s ETS would have cost and is a relatively modest amount to do our fair share in fighting climate change.
To put this in the context of the Budget 2010 tax reforms, including the impact of higher GST, the average household will receive an extra $25 or $1285 a year in the hand.
As a small trading nation it is in New Zealand’s long-term interests to have an ETS to protect our clean, green brand. Doing our bit now to curb the growth of emissions puts us in the right space to protect our brand, market access and economy. It is vital to our future prosperity that we ensure there are no barriers to our overseas markets.
I can assure people that we will be reviewing the ETS next year, and at regular intervals thereafter, so we can reassess our approach relative to international progress and the latest science. This measured and moderate approach is the sensible way for us to make progress.