Estimates Debate — Vote Climate Change

I am delighted to take this opportunity to speak in the estimates debate on Vote Climate Change. It is well understood that climate change is one of the most difficult issues for Governments today, so it is to the enormous credit of the Minister for Climate Change Issues, the Hon Dr Nick Smith, that New Zealand’s modified emissions trading scheme has been introduced so smoothly, and that in a relatively short time it has so effectively changed investment patterns in our economy. New Zealand introduced its emissions trading scheme because it is the lowest-cost way to reduce our emissions on greenhouse gases. As an environmentally aware country with a “clean, green” brand, we need to be serious about reducing greenhouse gas emissions. Putting a price on carbon is the most credible and least costly way to reduce emissions. That is because the emissions trading scheme passes on the costs of reducing emissions to emitters, as they are best placed to find the most cost-effective way of doing this.

How well has our emissions trading scheme done? Well, forestry entered into the scheme in 2008, and since then there has been a sharp switch from deforestation to afforestation. Deforestation hit a record of 4,000 hectares between 2005 and 2008, but since forestry entered the scheme, new forest plantings have grown each year, with 8,000 hectares expected in 2011. This change reflects both the significant cost of permanently removing forests and the valuable income stream from new forests in the emissions trading scheme.

The increase in afforestation has had a dramatic impact on New Zealand’s net emissions, and it is essential to meeting our Kyoto obligations over the period 2008-12. On 1 July 2010 energy, transport, and industry entered the scheme. Emissions from electricity have grown 130 percent since 1990, which is the largest increase in any sector, but the emissions trading scheme has changed that. In 2010 the industry achieved a 12-year high in renewable generation, of 79 percent.

💬 Hon Steve Chadwick: I raise a point of order, Mr Chairperson. I have been listening very carefully to the speech, but I have not heard estimates mentioned yet. We have had a wonderful history about the emissions trading scheme, which Labour introduced, but we have not heard yet about estimates. This is a Budget debate on Vote Climate Change.

The CHAIRPERSON (Eric Roy): I think the member has been talking about current things that are in the estimates. She should perhaps make the comparative illustration, but she has not been too far from the mark. This is a caution to all members: this is the estimates debate.

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Chairperson. Again, with respect, as you would quite rightly concur, the estimates are forward-looking documents as to how the Government proposes to spend public funds. Although I am sure the emissions trading scheme forms part of that, the member has given us a history lesson in respect of the emissions trading scheme and talked about industry and how many forests have been felled and what have you. The estimates are about how the Government proposes to spend money. The member has not been around long enough—New Zealand Bill of Rights Act aside—to work that through.

The CHAIRPERSON (Eric Roy): I have cautioned the member. Current policy is relevant, but the whole speech should not dwell on that. It is really the estimates that we are referring to.

I think it is particularly relevant that the costs of afforestation will make sure we meet the Kyoto Protocol. If we do not meet that protocol, it will be very expensive for our Government when we look at the 2008-12 period.

I will focus on renewable generation. I think it is important that we understand that increased renewables will help us in the future in managing our carbon footprint. The growth of renewables has increased. I think we have already mentioned in the Chamber that 1,340 megawatts of renewable generating capacity has been consented in the past year, with no fossil fuel plants. That is a fivefold increase in renewables compared with the last decade, and that will help us manage the cost of carbon.

During the last 12 months the emissions trading scheme has performed well, and we expect it to continue to do so. Actual emissions have proven to be significantly less than those estimated, and it was expected that over the first reporting period the combined industrial, electricity, and transport sectors would have emitted approximately 18.8 million tonnes, but emissions were only 16.3 million tonnes. That means that our liability is absolutely decreased.

We can clearly see that a price on carbon has now been factored into New Zealand’s economy, and that this price is helping us to achieve the Government’s goal of reducing emissions and managing the costs of New Zealand’s international climate change obligations.

I would like to reflect on the fact that New Zealanders do enjoy our beautiful country, they do appreciate its great outdoors, and they are very keen to do their bit towards managing climate change, even if it is costing them. I think the emissions trading scheme is helpful in this.

I am delighted to talk in this estimates debate on climate change. Does it not speak volumes about the level of confidence there is in the Government’s policy around climate change that neither the Green Party nor the Labour Party want to take a single call? I think that says the policy is actually in really robust shape, that there is a high level of confidence about the Government’s policies, and, ultimately, that they are working. Let me go through a number of ways in which they are working, including in terms of how that will flow through to 2011.

One of the key objectives for the Government is to reverse the awful deforestation that occurred during the term of the previous Government. In this year we are dealing with, officials estimate there will be 5,700 additional hectares of forest. Let us compare how that works. In the previous decade there was a huge increase in deforestation; the worst period of deforestation since records began in the 1930s was under the previous Government. So when we introduced our policies around climate change, we wanted to reverse that, and we have achieved just that, with an increase in afforestation for every single year we have been the Government, and that is continuing on into this year.

A second key objective for the Government and our climate change policies is that we think we should be producing more of our energy from renewables. New Zealand is actually more privileged than most countries in that regard. What actually happened was that during the term of the previous Government we saw a constant decline in the proportion of electricity that was renewable. Most of the power stations that were built under Labour were thermal fossil-fuelled power stations. In the last year we have seen a huge improvement in that regard. It is as impressive as this: a fivefold increase—

💬 Hon Member: How many?

—a fivefold increase—that is a 500 percent increase—in the amount of consenting for renewables.

💬 Brendon Burns: Isn’t that unbelievable?

It is very unbelievable. Mr Burns says it is unbelievable. It is unbelievably good, and that is what we get under a National Government. The interesting thing is this: in terms of this future year, we are expecting to see, and the Government is budgeting for, an ongoing improvement in the proportion of renewables, and that is to be celebrated.

The third element is, of course—and this is absolutely pivotal to estimates—what the cost to taxpayers will be of meeting our Kyoto obligations. Again, let me show members how it works. Under the Labour Government, emissions increased by 23 percent. This was the Government that campaigned on being carbon neutral, that said when it came to Government it would reduce emissions by 20 percent—

💬 Hon Steve Chadwick: I raise a point of order, Mr Chairperson. I again repeat that this debate is about the estimates in the Budget. I have not heard one word about Budget investments since this year of 2011.

The CHAIRPERSON (Eric Roy): I will overrule that. I think the member is making comparisons and projecting—looking forward. I think he is in the zone.

They are so sensitive because their record is just so ugly. Let me tell members the advice I received when I became Minister for the Environment. It was that if that emissions track continued, the cost to the New Zealand taxpayer of meeting our Kyoto obligations—

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Chairperson. I simply ask for your clarification. In responding to my colleagues and giving your ruling to my colleague’s question about relevance to estimates, you made a comment in respect of that that I assume means the Minister was adhering to the Standing Orders by talking about forward-looking estimates. But you used what we could probably call new parliamentary language and said he was “in the zone”. I just want you to interpret that—

The CHAIRPERSON (Eric Roy): Please sit down. That is rather trivial. The member has surmised correctly.

The key issue in the estimates is how much the New Zealand taxpayer will have to pay for New Zealand to meet its Kyoto obligations. And the answer is absolutely not a penny. Do members know why? Under the first 2 years of the emissions trading scheme our emissions have stopped going up; they have gone down. And they have gone down so well that New Zealand will comfortably meet its Kyoto targets, and that is absolutely good news for the taxpayer. Rather than having to write out a cheque for $485 million to countries around the world—

💬 Dr Cam Calder: How much?

The cost to New Zealand without the emissions trading scheme would have been $485 million. But, as a consequence of having the scheme in place, emissions are down, we are meeting our targets, and that is extra good news—extra good news! While the Māori Party is in the House I will acknowledge that the only way this Government has been able to get that scheme up and running, get emissions down, get the investment in forestry, and get the investment in renewable energy is that the Māori Party had the wisdom to back a sensible, pragmatic emissions trading scheme that is working for New Zealand, that is working for Māori, and that is ensuring we meet our environmental obligations. I simply say how proud this Government is of the sensible progress it has made, and over the course of dealing with the emissions trading scheme review and working forward, our objective will be to maintain that balance of minimising costs and maximising progress on this important issue.

Vote agreed to.

Vote Environment