Changes to the Emissions Trading Scheme – what do they mean?Reader submitted

The changes the Bill will make to ETS include removing a cap on the number on international carbon units those involved in the ETS can purchase, removing a compulsory inclusion date for the agriculture industry, and extending ‘transitional measures’ such as the ‘two-for-one,’ or two tones of carbon for one emissions unit.

According to Climate Change Issues Minister Tim Groser, the reason for the Bill is so NZ can strike the balance between economic and environmental sustainability.

Dr Jan Wright, the Parliamentary Commissioner to Parliament, responded to the changes by claiming they make the ETS ‘toothless,’ while Dr. Graham Kennedy of the Green Party suggested that the government is committing ‘ecocide.’ So how do the changes to the ETS affect NZ and the sustainability of our enterprises?

According to the Ministry of the Environment, Agriculture makes up 48% of our total greenhouse gas emissions. The Ministry also notes that our ‘biologically-based economy relies on a temperate and stable climate,’ and that climate change action is ‘crucial for our economic, social and environmental well-being.’

By removing the inclusion date for the agricultural industry, the Bill doesn’t affect roughly half of NZ’s greenhouse gas emissions, pending a review in 2015.

Extending the two-for-one scheme means that those involved in the scheme are essentially only involved for half of their output. Which means the bill reduces the impact of the ETS to at best 25% of NZ’s green house gas emissions.

With an economy reliant on agriculture, but an agricultural industry reliant on a stable environment, accounting for the balance of economic and environmental stability is important to keep in mind in the context of the ETS. The question however remains whether these changes set out in the Bill strikes that balance. It would be a dull irony if the Bill that sets out to ease the financial burden of the ETS made the long term financial burdens much greater by continuing down the path to a unstable climate.