17 Sep 2009

Pressure mounts on Government over ETS costs

4:17 pm on 17 September 2009

Pressure is mounting on the Government over the true cost to consumers of the revised Emissions Trading Scheme.

National and the Maori Party have cut a deal giving the Government the numbers to get amending legislation to select committee stage.

The Government estimates the deal with the Maori Party means the scheme's cost to businesses and householders will initially be halved.

The changes mean taxpayers will subsidise businesses that would be under threat from the scheme, for about $400 million until 2013.

But the Labour Party says that assumes an optimistic price for emissions credits, and the real cost could be $1.6 billion.

On Wednesday, Labour leader Phil Goff asked the Prime Minister in the House to explain how the more conservative figure was reached. John Key replied that the Treasury relied on the best estimate.

Radio New Zealand political staff report both leaders as saying they are willing to reopen talks on the scheme - but neither appears to be willing to make the first move.

Critics say cost will be higher

Critics of the amended Emissions Trading Scheme believe it will cost far more than has been predicted.

Simon Terry, of the Sustainability Council, has produced provisional figures putting the subsidy to the biggest electricity user at $2 billion - double the figure of the current scheme. Mr Terry says this money would come in cross-subsidies from the rest of New Zealand for big emitters.

Business commentator Rod Oram also predicts steep costs, and says once pricing signals are weakened, anomalies arise. Mr Oram is concerned the revised scheme will consign New Zealand to an energy-inefficient and carbon-intensive future.