Climate Change: Fixed

Last December, Climate Change Minister James Shaw introduced a bill to the House which would have massively increased pollution subsidies in the ETS. As introduced, the Climate Change Response (Late Payment Penalties and Industrial Allocation) Amendment Bill would have scaled subsidy eligibility to pre-2020 carbon prices - meaning that every industry currently classified as "moderately emissions intensive" would be reclassified as "highly emissions-intensive", getting them a 50% increase in free pollution permits. In a perfect example of regulatory capture, the proposal was developed by MBIE, primarily to protect a handful of large, status quo polluters, and had been done without any consultation or real analysis. It was, unsurprisingly, not popular with people who wanted the government to actually cut emissions - and plenty of us told them so when the bill went to select committee.

The select committee has no reported back, and the good news is that they've made the changes people wanted, removing the scaling of eligibility, and so the potential for increased allocation. They also introduce a tweak saying the Minister can't reconsider the eligibility of existing activities - which stops them from being reclassified upwards. Unfortunately, it also stops them from being reclassified downwards if their emissions drop - something the Minister should be aggressively looking for opportunities to do - but the committee recommends addressing this through the phase-out rate (which can be set on an industry-by-industry level). The committee also recommends seriously attacking industrial allocation as part of the second emissions reduction plan (which will be developed next year).

All of which is a nice improvement. And fortunately, James Shaw isn't a petulant little baby like Andrew Little, so he'll probably accept the changes, rather than trying to reverse them.