Govt steps in as carbon credits plummet

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The Emissions Trading Scheme was introduced in July last year, with the promise it would change the behaviour of both consumers and big emitters. But the global recession has seen the price of carbon credits plummet, prompting the Government to step in.

“The idea of a carbon price is to change people’s behaviour and to try and invest in clean technology,” explains carbon trader Ollie Belton. “If the price is so low, people won’t change their behaviour. They won’t buy fuel efficient cars, they won’t go to cleaner technology.”

Mr Belton helps people wanting to invest in carbon forestry, but says an influx of cheap overseas credits into the New Zealand market is stopping them from doing so.

The Government is going some way towards stopping that, announcing it will ban certain international units from the New Zealand Emissions Trading Scheme.

“The problem with these industrial gas units is that they involve incredibly powerful greenhouse gases. These are things like CFC-22, 23, nitrous oxide,” says Environment Minister Nick Smith.

The ban will protect the environmental integrity of New Zealand’s scheme, but Mr Smith won’t guarantee it will make carbon credits more valuable for investors.

“One of the inevitable elements of an ETS is that the prices for carbon will be lower in periods of recession and will be higher in boomtimes. That’s actually quite appropriate.”

Business New Zealand warn that any dramatic increase in the price of carbon could stifle development.

“A price on carbon is certainly a help to that process if it’s done properly, but you also want to make sure that on the way through you don’t destroy New Zealand companies by having too high a price on carbon.”

The banned credits make up less than one percent of those currently held by New Zealand emitters, so our scheme will still be at the mercy of international markets.

Source- 3News.Co.Nz