The Government could be buying a fight with iwi over its refusal to curtail the flood of cheap imported units emitters can use to meet their obligations under the emissions trading scheme.
Legislation amending the scheme, reported back by the finance and expenditure select committee yesterday, rejected calls from the forestry sector to limit imported carbon.
Analysis by Chris Karamea Insley for the Climate Change Iwi Leadership Group argues Maori have been disproportionately hit by the crash in carbon prices in the past year.
As major owners of commercial forests, iwi have received 30 per cent of the New Zealand units (NZUs) allocated to date under the ETS.
The collapse in NZU prices from around $20 a tonne in the first year to about $3 now has wiped more than $500 million, or 85 per cent, off the value of those units, Insley says.
That could rise to over $700 million under some pending Treaty settlements.
As it is, it subverts some recent Treaty settlements which had been completed on the basis that ETS policy would remain stable and credits transferred as part of the settlement would retain their value, he says.
If imports of units were restricted to a point that delivered an NZU price of $15, that would restore $360 million of the $500 million of lost value, Insley's analysis shows.
Emitters would only face a price less than half of the $15, given the indefinite extension of the "transitional" buy one, get one free provision and some continuing dilution by cheap imported units.
The Labour Party in its minority report on the bill said: "If the Government does not move to put restrictions in place, then we will see a further collapse of the carbon price in New Zealand as we become a dumping ground for tens of millions of cheap international units that will have nowhere else to go due to significant restrictions on their inclusion in other schemes."
The implications for the forestry sector were catastrophic, and the wider effect would be to have no effective price on carbon at all, despite that being the central reason for having an ETS in the first place.
Climate Change Minister Tim Groser said he had asked officials to look into the environmental integrity of some imported units, following concerns raised that the restrictions the Government placed on some units last year were not encompassing enough.
The legislation was reported back with only minor changes, but with strongly critical minority reports from Labour, the Greens and New Zealand First, all calling for the bill to be dropped.
It would "eviscerate an already weak emissions trading scheme to the point of irrelevance," the Greens said. It sought only to protect short-term commercial interests, at a time when the world was moving from concern to alarm over climate change.