Wednesday, May 28, 2014

Climate change: Scamming the ETS

Gutted, ineffective - now it turns out that the ETS is a scam as well:

It has been revealed in Parliament today that taxpayers are paying millions of dollars for companies to pollute under the Government’s failed emissions trading scheme (ETS), the Green Party said today.


Last year, 34 million free units were given away to large polluting companies under the ETS, worth, on average current market value, $165 million. A total of $1.36 billion worth of taxpayer-funded units have been given away between 2010 and June 2014.

The companies then surrender much cheaper international units to meet their emissions obligations under the ETS, either banking the more valuable NZ units or selling them for profit.

This is what happens when you combine pollution subsidies, an open market, and differential international prices: companies arbitrage, and a tool which is supposed to make pollution cost money instead makes it pay. A similar scam by forest-owners was closed in the Budget, but this is much bigger, and likely involves some of our largest companies.

This has to stop. And if the only way to do it is to shut off the flow of cheap international credit and force domestic polluters to offset with domestic reductions, then so be it. The government, and the public will benefit by doing so; the only ones who lose will be scammers and polluters.