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Industry, emissions - Source: ONE News -
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Ordinary taxpayers look like they will be footing the bill for New Zealand's Kyoto protocol obligations. But just where will their money go and how do carbon credits work?
Last week, a report by the Sustainability Council estimated that changes to New Zealand's Emissions Trading Scheme (ETS) will see taxpayers pay 84% of the bill for meeting New Zealand's Kyoto Protocol obligations.
New Zealand, along with 183 other signatories, has ratified the Kyoto Protocol which commits countries to reducing their greenhouse gas emissions, such as carbon dioxide and methane, to 1990 levels.
According to Seeby Woodhouse, managing director of carbon advisor Green Carbon, New Zealand exceeded its 1990 levels of emissions by 22% in 2007 and it could be more than 30% above the allowed levels by 2012.
There are a couple of ways New Zealand can offset the amount which it exceeds its limits: buying carbon credits, or funding an emission reduction project in a developing country, such as planting trees or investing in renewable energy.
Essentially, the money used to purchase carbon credits will go to funding projects that reduce carbon dioxide emissions. This is because as few countries are expected to have emissions below their 1990 levels and therefore will not be able to offer up their surplus to other countries.
Also, the money paid for carbon credits is likely not to be spent in New Zealand.
"Because carbon credits are a form of trade, they tend to create this illusion where the least cost option is the most efficient. Basically, whichever country can reduce their emissions at the least cost will end up attracting the majority of the money," says Woodhouse.
Carbon credits are bought from a carbon registry, which track and record the transactions. This is overseen by the UN Climate Change Secretariat in Germany that keeps a transaction log to make sure that transactions comply with the protocol.
Scare-mongering
Meanwhile, business advocacy group Business NZ has hit back at the Sustainability Council's estimate of costs and liabilities under proposed changes to the Emissions Trading Scheme.
It says the council's assertion that taxpayers will effectively subsidise New Zealand businesses to meet its Kyoto commitments, is flawed.
The council says households would bear half the total costs resulting from the proposed changes to the ETS during its first five years, while accounting for a fifth of all emissions.
But Business NZ CEO Phil O'Reilly says the council's "subsidy myth" is based on the incorrect belief that 'households are good and business is bad' and that business should be punished for any emissions.
"Emotive statements about 'bludging business' have the effect of undermining confidence in emissions trading. They reflect an anti-business attitude that could harm our future prosperity," he says.
"In reality, we are all in this together. Businesses are consumer-driven, and consumers need to see a price signal on carbon in order for carbon emissions to be reduced."
