Inquiry will help frame climate-change debate: users group

New Zealand needs to talk about reducing its carbon footprint. Photo / ODT files.

The Productive Commission's inquiry into moving New Zealand to a low-emissions economy will be important in framing the climate-change debate in the next term of government, Major Electricity Users Group executive director Ralph Matthes said yesterday.

The group's submission to the commission concentrated on electricity sector-specific questions, he said.

With the election now over, one issue needing further development and change during the next three years was climate change.

However, election debate on when to bring agriculture into the emissions trading scheme highlighted a key consideration for the commission - how to manage the transition to a lower-carbon economy in a small, globally connected and trade-dependent country, Mr Matthes said.

Electricity users group members, like many businesses, already had a sharp focus on reducing costs since the global financial crisis.

Any increase in production costs, including the cost of carbon, could have significant effects for some companies, as well as across the country.

Under some scenarios, electricity intensive industries could close in New Zealand and reopen in countries with more benign carbon-price regimes.

''This is a well-known risk leading to global carbon emissions increasing, as electricity in New Zealand has one of the lowest carbon footprints anywhere in the world,'' he said.

The policy response to date had been to recognise the risk and target policies for emission-intensive, trade-exposed businesses, he said.

The electricity users group supported the continuation of such targeted policies.

''There is little to be achieved by unilaterally imposing high carbon prices within New Zealand if the net result is a loss of jobs in New Zealand and a net increase in global emissions.''

The impact did not fall on only trade-exposed businesses, Mr Matthes said.

Households and other businesses would be affected by a price shock at the margin in the wholesale electricity market.

Some households would be affected twice, once with higher household power bills and secondly with decreasing working hours or loss of employment as businesses cut production because of higher spot prices, he said.