Yesterday our PM announced with Australia’s PM that officials would be starting work to align the eventual Emissions Trading Scheme (ETS) across the ditch with our own.
Julia Gillard seems however to have received some misinformation about our ETS:
Gillard said Australia needed to catch up with New Zealand on pricing carbon, saying New Zealand’s ETS was “working successfully”.
I guess it depends on how you define success. We do have an ETS and the Government has managed to avoid the negative political fallout that Labor seems to be facing.
But, our ETS is certainly not going to reduce Greenhouse Gas Emissions much.
It’s unlikely to stimulate much low carbon economic development as the costs will be mostly borne by households and taxpayers, as opposed to polluting businesses.
It does do a bit for forestry, but even foresters have been reluctant to take up the scheme (PDF) because they risk having to pay a much higher carbon price in the future when they harvest their trees.
It may even subsidise the development of lignite coal in Southland, which would significantly increase our emissions.
Fortunately, the Greens hold the balance of power in Australia, and they are working hard to get a real price on carbon from July 2012. What will this mean for New Zealand?
If the Aussie Greens are successful in holding the line and getting a realistic price on carbon next year, it will be New Zealand who will have to play catch up.
By 2015 when the Aussie ETS is meant to be operational and presumably integrated with our own, the economic benefits of a higher carbon price in Australia should be kicking in.
Low carbon business in Oz will reap the benefits, while kiwi polluters will have to pay.
The alternative is that we drag our larger neighbour down to our level, and a trans-Tasman ETS benefits the coal industry while households are left to foot the bill.
One thing is for sure, Australia’s commitment to climate change mitigation is further evidence that the world is moving in this direction. The sooner we act to transition our economy away from fossil fuels, the less it will cost us.