June 2008
The Parliamentary Commissioner for the Environment has provided advice to Parliament, as part of the Finance and Expenditure Committee consideration of the Climate Change (Emissions Trading Scheme and Renewable Preference) Bill.
In her May 2008 advice to Parliament, Dr Wright addressed three key points:
- The Emissions Trading Scheme (ETS) should proceed, with no further delays
An economic instrument is an essential tool for addressing climate change and a cap-and-trade scheme is the best economic instrument to use. The ETS is not perfect, but it is important to get started.
- The proposed moratorium on baseload fossil fuel plants will not be effective
There are arguments for and against the value of the moratorium in achieving the target of 90% renewable electricity by 2025. The government has better tools available to it to increase the proportion of electricity generated from renewable sources, including:
- Ensuring that electricity comes into the ETS, on time as proposed in the bill.
- Exposing consumers to the higher carbon price of peak electricity.
- Investing more in demand management.
- Making full use of the tools under the Resource Management Act 1991 to facilitate renewable energy projects.
- Investigating more valuable uses for gas.
- Giving the state-owned generators some specific directions.
- The ETS will have positive and negative environmental effects, beyond those on greenhouse gas emissions
The planting of exotic forest on land with high biodiversity value could be a significant negative environmental effect of the ETS. There is value in ensuring that:
- New Zealand Units (NZUs) that produce significant environmental benefits beyond greenhouse gas reduction can be discriminated from other NZUs; and
- the bill does no incentivise participants in the ETS to obtain carbon credits by carrying out illegal or unauthorized activities that damage the environment.
However, none of the potential negative effects of the ETS on the environment should delay the implementation of the ETS or require major modifications of the proposed legislation.
In June 2008, Dr Wright provided further advice to the Select Committee on the renewable preference part of the bill and on the environmental effects of the ETS.
The advice on the renewable preference part of the bill was focused on tightening the exemptions to the restriction on baseload fossil fuel plants.
The advice on the environmental effects of the ETS included concrete proposals on how NZUs with significant environmental benefits (such those gained via land reversion to indigenous forests) may be promoted, while addressing the potential risk to indigenous biodiversity created by the ETS.
The Finance and Expenditure Committee considered Dr Wright's advice when compiling their June 2008 report on the Bill.
The Commissioner's recommendation about the restriction on fossil fuels plants was included in their proposed amendments.
Another amendment to enable access to sufficient information about the ownership and source of NZUs has also been proposed. This amendment should provide an incentive for appropriate afforestation activities and enable forest owners to promote their NZUs, in an international ethical market where carbon storage in regenerating indigenous forests may well command a premium.
As part of her consideration of the proposed climate change legislation, the Commissioner has also made comments on the draft Climate Change (Forestry Sector) Regulations 2008. The Commissioner's comments are published in the report Seeding the carbon storage opportunity in indigenous forests.
