MPs told to ignore polluters’ pleading

The Government should ignore ‘‘special pleading’’ from polluters receiving taxpayer subsidies or risk missing its climate targets, the Parliamentary Commissioner for the Environment says.

In comments on a planned overhaul of climate change legislation, Simon Upton – a former National Party cabinet minister – essentially said the changes did not go far enough and were too corporate-friendly.

A Government bill making significant changes to the Emissions Trading Scheme (ETS) is winding its way through Parliament.

The scheme is a major tool to lower greenhouse gas emissions and will be vital in meeting climate change commitments.

While an overhaul of the scheme has been broadly welcomed, some proposed changes have been contentious, including the fate of long-standing subsidies given to a handful of polluters.

When the scheme began in 2008, exporters with high-intensity emissions – primarily steel, aluminium and methanol manufacturers,

Simon Upton

Parliamentary Commissioner for the Environment

known as Emissions Intensive, Trade Exposed (EITE) firms – were deemed vulnerable to overseas competitors, and were thus given free carbon credits covering most of their pollution.

The intention was for the subsidies to quickly wind down and disappear by 2025. The phase-out stalled in 2012.

The new bill proposes phasing the subsidies out, but slowly – reducing from 90 per cent now to 80 per cent by 2030, 60 per cent by 2040, and 30 per cent by 2050.

Yesterday, Stuff reported that some companies were likely making ‘‘windfall gains’’ from these subsidies, due to outdated methodology that is overcompensating some recipients.

In comments to MPs considering the bill late last week, Upton spoke out against the subsidies and the slow rate of phase-out.

‘‘In all likelihood, we have been giving units to businesses that did not need them, or are less efficient than their overseas competitors,’’ he said. ‘‘Free allocation . . . should be about protecting the environment. This is not what New Zealand’s current free allocation system does.’’

The primary issue was the lack of criteria on which companies were entitled to subsidies, he said.

To receive a subsidy, a company merely needs to show it is emissions-intensive and is – or could be – internationally trading its products. ‘‘It does not need to show that meeting its obligations under the ETS would put it out of business, or that if the activity was relocated overseas, that would increase global emissions,’’ Upton said. He raised the possibility of industries setting up in New Zealand to take advantage of the subsidies, which would make it difficult to meet climate targets.

‘‘Frankly, it is up to the Government, and not the EITE businesses, to decide who should receive subsidies for emission reduction technologies,’’ he said.

‘‘You should ignore this special pleading.’’

‘‘Free allocation . Should be about protecting the environment.’’

.

.