Editorial: Tax breaks for oil companies not good look

Industries that need protection or tax concessions are unlikely to make the economy stronger. Photo / iStock

Editorial

Some people think New Zealand was unwise to strip itself of industry protection before asking this of others in free trade negotiations. Some of the same people are criticising the Government for calling on others at the Paris climate conference to abandon fossil fuel subsidies when we still provide tax breaks for oil and gas exploration here. They were wrong before; they are right this time.

Industries that need protection or tax concessions are unlikely to make the economy stronger. We should do away with these distortions, regardless of whether other countries do. John Key was in no position to be delivering a call on behalf of 40 nations at the Paris conference for an end to subsidies of carbon fuels. This country does not subsidise the fuels or their extraction, but it does all it can to attract prospectors, especially offshore, and does not tax their rigs and seismic vessels. As the Prime Minister said, "It makes no sense to be calling for emissions restrictions on one hand while subsidising emissions on the other."

Many are saying he was in no position to be proclaiming any environmental principles at Paris in view of his Government's weakening of the emissions trading scheme, continuing encouragement of oil and gas exploration and the next emissions reduction target it is offering at this conference. National remains determined to ensure New Zealand is a follower, not a leader in the international response to global warming, but even a follower might require more ambitious commitments.

Besides the underwhelming target, New Zealand has offered $200 million to the fund for helping developing countries reduce the emissions and another $20 million for the international project seeking a way to reduce greenhouse emissions from farm stock and agriculture generally. None of it saved us from the first "Fossil of the Day" award by one of the international activist networks attending the jamboree.

We might have had an excuse to drag our feet when the world's two biggest economies, producing 45 per cent of global greenhouse gas emissions, were doing nothing. The United States and China had declined to ratify the Kyoto Protocol. But that excuse disappeared a year ago when the US and China made a pact to bring reasonable commitments to Paris for the post-Kyoto decade to 2030.

China is planning to ensure its emissions peak by 2030. The US is aiming to reduce its emissions level in 2005 by 27 per cent by 2025. New Zealand is offering to reduce its 2005 level by 30 per cent by 2030, which looks respectable until it is compared to the European Union's commitment to a 40 per cent reduction on its 1990 level by 2030.

The base year of 1990 is the one that matters for the warnings from climate science and New Zealand's 2030 target equates to a reduction of just 11 per cent on 1990.

If all goes to plan, the scientists calculate the world will be 3C warmer by 2100, which is 1C past the point at which global warming could be "catastrophic". Paris will not save humankind from the need to adapt to a warmer and stormier planet.