The Finance and Expenditure Select Committee reported back on the Climate Change (Emissions Trading and Other Matters) Amendment Bill 2012 earlier this month. The amendment legislation is necessary because the 'slow down' period for transitioning to the ETS, which was implemented by the new National Government after the 2008 general election, ends on 31 December this year. During this period, ETS participants (except for those in the forestry sector) have only had to submit half the number of required New Zealand Units (NZUs) to cover their greenhouse gas emissions.
As expected, the Committee has recommended that the Bill be passed, proposing few significant amendments.
Not surprisingly, Labour, the Greens, and New Zealand First members of the Committee do not support the Bill's progression. The opposition parties all believe that the Bill weakens the overall ETS and does not go far enough in promoting the climate change objectives the ETS was originally designed for. In particular, there is concern about implications for the forestry sector due to the Government's stance on continuing to allow ETS participants to source all of their emissions units internationally. Due to the currently very depressed carbon market (and consequently the market price for carbon credits) internationally, no one is buying New Zealand units, which impacts on the incentives to plant more trees. The opposition parties (as well as the Parliamentary Commissioner for the Environment) are very concerned about where this approach will lead New Zealand in the foreseeable future.
A more detailed overview of the Select Committee's recommendations can be found in this recent Russell McVeagh Climate Change Issues Alert.