Call to end polluter aid draws fire

Climate commitments by John Key (below left) in Paris earned New Zealand a "Fossil of the Day" award by activists. Picture / AP

Greens say tax breaks show support for oil and gas industries but expert believes PM’s pledge on solid ground

New Zealand's call for all countries to stop subsiding polluting industries has prompted intense scrutiny about whether it is doing enough in its own backyard.

Prime Minister John Key made several major commitments at the climate talks in Paris yesterday, including $200 million in climate-related support for other countries and an increased investment in research to reduce agriculture emissions.

Mr Key also presented a communique on behalf of 40 nations calling for the removal of inefficient fossil fuel subsidies.

"It makes no sense to be calling for emissions reductions on one hand, while subsidising emissions on the other," Mr Key said.

This prompted an argument back in New Zealand's Parliament about whether the Government had its own house in order.

Green Party co-leader Metiria Turei pointed to evidence from 2012 which appeared to show subsidies and tax breaks for oil and gas amounted to as much as $46 million a year. She cited tax exemptions for offshore oil and gas rigs and prospecting by Government agencies for the industry.

"There is a lot that these fossil fuel companies are getting off the taxpayer," she said.

Official advice showed the tax exemption for oil and gas rig operators was previously worth $5 million a year, but now had no fiscal cost.

A tax expert said Mr Key was on firm ground when he said the fossil fuel industry was not getting special treatment in this country.

PwC tax and private business leader Geof Nightingale said any specific tax breaks or subsidies for the oil and gas industry had been eliminated.

"I'm not aware of any subsidies or concessions for those fuels and the regimes they operate under."

Mr Nightingale said the tax exemption for oil rigs was not designed as a concession, but to eliminate "distortionary" behaviour. It applied only to the operation of rigs, and not to the extraction of oil or gas.

Meanwhile, Mr Key said that a new $200 million investment in climate-related support for other countries was mostly targeted at Pacific nations. It would build on what New Zealand has already spent over the last three years to help Pacific nations secure reliable and clean energy.

Another $20 million, also to be rolled out over four years, would support the Global Research Alliance on Agricultural Greenhouse Gases in ongoing work to reduce emissions from livestock, cropping and rice production.

Agriculture accounts for just under half of New Zealand's emissions - mainly methane belched from ruminant stock like sheep and cattle.

New Zealand's commitments came in for some ridicule in Paris, with lobby group Climate Action Network International awarding New Zealand a "Fossil of the Day" award.