From July 1 this year, electricity prices will rise by 5%, petrol by 4c a litre and those rises will double again in 2013. These increases will flow through every segment of our economy and affect every New Zealander, with windfall profits going to both private and government owned electricity generators. All because of the New Zealand Emissions Trading Scheme.
Since the ETS was passed into law last year much has changed. It is time to take a step back and to take stock of the scheme. Time to remind ourselves why the legislation was passed in the first place and to ask whether it still makes sense to proceed with it.
The ETS is designed to increase the price of energy, so you will use less of it and to charge farmers for the methane emitted from their cows and gases emitted from their fertilisers.
Under the ETS, some electricity generators are forced to pay for their carbon emissions. Others aren’t. Those that do will pass this cost onto the consumer, by way of higher prices. However, because of the way our electricity market works, all generators will be able to charge that higher price for their power, even if they don’t suffer a carbon charge. Hence hundreds of millions of dollars a year will go to both privately owned generators and into government coffers.
Meat and Wool New Zealand have calculated that the ETS tax cost for the average dairy farmer will be just over $10,000 per annum. You may have heard Prime Minister John Key say that agriculture doesn’t come into the ETS until 2015. Sure, farmers don’t have to pay for the methane given off by their animals when they burp or the nitrous oxide from fertiliser until 2015. But, for the average dairy farmer, three quarters of their ETS cost relates to the higher price of petrol and electricity and the costs incurred by the dairy factory – these hit on July 1.
In fact, of the estimated profit of 65 cents per kg of milk solids, the ETS will cost over 7 cents per kg, or ten percent of the average farmer’s profit by 2015.
For struggling beef farmers, who receive less today for their animals than they did twenty years ago, the situation is even worse.
It is not just farmers who will feel the pinch though. Still struggling to recover from the recession, all businesses will be saddled with higher production and transport costs. They will pass these costs onto consumers, and prices will rise. Our electricity and petrol will go up, but so will our bread, butter and milk. Some businesses will not survive and tragically, jobs will be lost.
The ETS will impose real costs on the economy; it will affect real people.
So why is the National government doing this to us? Well, the ETS is one of the Government’s responses to the hypothesis that human activity contributes to ‘climate change’ or ‘global warming’. It is, to quote Nick Smith about “ensuring that New Zealand does its fair share to combat climate change.” However, we are now the only single country in the world “doing its fair share”.
Australia has just scrapped any plans to introduce an ETS. Prime Minister Kevin Rudd has just buried it. The US is nowhere near passing a scheme. Politicians there have more pressing things to deal with. The Copenhagen Climate talks broke down without deciding on a successor agreement to the Kyoto Protocol. Most commentators no longer expect any agreement that might give rise to an ongoing financial obligation by New Zealand.
President Sarkozy of France had to scrap a planned carbon tax on petrol because the French people rose up against it.
And, ‘climategate’ and other UN IPCC irregularities have increased public scepticism of the human induced global warming theory.
Our three major trading partners are Australia, China and the United States. Not one of them has an ETS, not one of them is ever likely to have an ETS. How could our major trading partners punish us if we put ours on hold (as many claim they will) when they don’t have one, themselves? We are the only country silly enough to disadvantage our farmers and exporters by forcing extra costs onto them, when their competitors don’t have those extra costs.
And don’t believe Nick Smith when he tells you 29 other countries have an ETS because that is misleading. He is referring to the European ETS which is an ETS for an entire trading bloc. 80% of European trade is within Europe. It is far more limited in scope than ours. It doesn’t even cover petrol. New Zealand’s does.
It is time to ask whether it makes sense to continue with the ETS. The answer is “no”. Whether you believe in human induced global warming or not, we are crazy to be leading the world. And even if we shot every cow and sheep in the country and stopped using cars and heating our houses, New Zealand would not affect world climate.
John Key said in his campaign blog in October 2008;
‘...while we must play our part in the fight against climate change, we shouldn't be the world leader, because that will come at the expense of our economy ... I see no sense in New Zealand exporting emissions - and jobs - to another part of the world.'
There is now absolutely nothing to stop John Key putting our ETS on hold. That’s what New Zealanders want and that’s what New Zealand needs. Stop it now, before it’s too late.