ETS changes 'unlikely' despite pleas

John Key. Photo / Mark Mitchell

Prime Minister John Key says his Government is unlikely to amend its emissions trading scheme (ETS) before it takes effect on the energy and transport sectors in July despite calls from business groups, farmers and Act.

Nine business groups, including Business NZ, the Road Transport Forum and the Major Electricity Users' Group, wrote to Mr Key and other ministers last month to express their concerns about what they saw as the "widening disconnect" between New Zealand's ETS and the policy responses to greenhouse gas emissions among our major trading partners.

Yesterday, Mr Key acknowledged the concerns raised in the letter, but said his Government intended implementing the ETS in its current form and on time.

"I'd say it's unlikely it would be amended," he told reporters at the launch of the Global Research Alliance's inaugural meeting on agricultural greenhouse gas emissions.

Signatories to the letter said they supported the Government's stance that the ETS "should be aligned with Australia's as far as possible" and that New Zealand "should move in line with, not ahead of its trading partners".

But they said the international environment had changed, particularly now there was no Australian scheme with which to align. There was also uncertainty about the prospects for a United States scheme and about New Zealand's access to a "broad and efficient liquidity international carbon market".

The business groups fear New Zealand companies bearing the cost of the domestic ETS will be competitively disadvantaged compared with rivals from countries with no effective carbon pricing mechanism, a view that is shared by Act and Federated Farmers.

However, Mr Key said the scheme was being phased in very slowly and export businesses would enjoy up to 95 per cent relief on their carbon costs under the ETS, "so the impact is very, very small on those export-facing businesses".

"It is true that they also are consumers of electricity and petrol and there will be some costs there but I do think it's important that New Zealand gets started in terms of dealing with climate change."

The ETS takes effect on July 1 and it is estimated it will lift retail electricity prices by 5 per cent and add 4c a litre to the cost of petrol and diesel.