Wednesday, March 16, 2016

Climate Change: Progress on the ETS?

Climate Change Minister Paula Bennett has announced that the government will scrap the ETS's two-for-one discount:

A special 50 percent reduction on climate change obligations for New Zealand citizens and companies will be scrapped.

This has been hinted at for some time but Climate Change Minster Paula Bennett confirmed it in an address to the energy sector in Wellington this morning.


But Mrs Bennett told the audience this concession would go.

"This isn't really a case of if we remove one-for two, but more when and how," she told her audience.

"It was always a temporary measure.

"It is abundantly clear that if the ETS is going to work, carbon must cost more than it does right now."

Good. The discount is effectively a 50% subsidy on pollution which keeps the cost artificially low. Scrapping it might incentivise companies to start reducing emissions and investing in efficiency rather than just polluting more.

But while Bennett is scrapping pollution subsidies, how about she also scraps the elephants in the room: free allocations and the hundred percent subsidy for agricultural emitters? We won't really be able to make any progress on reducing emissions until both of these are removed permanently.