Transport’s inclusion in ETS delayed

Written By: - Date published: 11:04 am, May 6th, 2008 - 19 comments
Categories: climate change, labour - Tags: , , ,

The Government has delayed the inclusion of transport in the Emissions Trading Scheme from 2009 to 2011. On the surface, that seems to be a back down or a reduction in the Government’s commitment to tackling climate change but then you have to ask yourself what is the point of the Emissions Trading Scheme?

As with any carbon pricing system, the point of the ETS is to put up the price of activities that produce greenhouse gases that cause climate change and, thereby, discourage those activities. Transport produces greenhouse gases by burning fossil fuels, hence its inclusion in the ETS. But the price of petrol and diesel has risen so much in the last year that the market, by luck not design, is already doing what the ETS was designed to do.

In fact, the increased cost of petrol (up 34 cents a litre in a year and projected to go higher still) due to peak oil is far in excess of the price increase that the ETS would have created (1 to 8 cents, depending on who you believe). This has caused the demand for petrol and diesel to start falling. So, the objectives of the ETS are starting to be met without the need, at present, for the Government to impose costs on kiwis.

That does not mean the Government should not push ahead with its climate change platform. Creating a price on carbon, via the ETS, is an essential part of bringing climate change impacts into commercial decisions. The government must also look at expanding its programmes to help people switch to lower-carbon lifestyles more public transport and low energy housing.

The fact that peak oil might just provide us with the cost motive to stop worsening climate change is an amazing coincidence, but that doesn’t mean the Government should stop taking proactive action to get us off our oil addiction.

19 comments on “Transport’s inclusion in ETS delayed”

  1. So does this mean that if the price of oil ( and the price of petrol at the pump)drops between now and the election, Labour will be moving the date to add the ETS tax to petrol back to 2009? I don’t think so somehow: clearly another poll driven policy move.

  2. Steve Pierson 2

    mawgxxxiv. They’ve clearly decided that the high price of oil is a long-term phenomenon that is not going to disappear within the next few years. That’s what all the experts say too prices have been high and rising for 3-4 years now and they’re only going up. You don’t make a decision on policy impacts that are 1 or 3 years off based on short-term events.

  3. East Wellington Superhero 3


  4. PL 4

    [Stop trolling]

  5. Steve Pierson 5

    substantive contributions guys. Really makes me confident that National has the people to manage the country well.

  6. Draco TB 6

    With the price of oil going up and not likely to be coming down again the use of fossil fuels et al will decrease. This will decrease the activity in the economy leading to a slow down in growth. Too sharp a decrease in growth could lead to a recession so the government is trying to soften the price increases by delaying the introduction of transport into the ETS.

    It’s a delaying action as Peak Oil hits. We will still see a decline in economic activity as the worlds energy source dries up.

  7. Billy 7

    “Really makes me confident that National has the people to manage the country well.”

    That’s right, Steve, because we all know that PL speaks for the National Party in much the same way that everything Randall says is Labour Party policy.

  8. insider 8

    i thought Irish Bill spoke for labour?

  9. Tane 9

    Steve, I don’t buy this excuse. The Government has backtracked yet again in the face of political pressure from the National Party. It would be nice if they showed some backbone for once.

    I’ll try and write something on this later today if I have time.

  10. Phil 10

    No, I think he speaks for ‘anonymous sources’

  11. Steve Pierson 11

    To be fair, Tane. I had been thinking of this post before the announcement.

    I’m marginal on the wisdom of the move but it is a fact that the market (purely by coincidence) isn’t failing for once. The price of climate-change causing fuels is rising and demand is stalling and falling. That’s precisely the outcome the Govt wants.

    Also, the case for the regional fuel taxes has eased because higher GST takings from petrol (all of which goes into roading) are supplying the money that the regional taxes otherwise would have been needed for.

  12. r0b 12


    EWS – are you John Key?

  13. higherstandard 13

    Wile I sympathise with your position Tane it’s just politics nothing more nothing less it’s the game that both National and Labour must play to be in a position to run the country at the end of the year.

    Only the minor parties left and right can stand resolutely by their ideology.

  14. K1 14

    “Only the minor parties left and right can stand resolutely by their ideology.”

    A sad truth.

    This sort of bullshit does not reflect well on Labour.

    Captcha: or dollar

    It’s all about the money…

  15. Sam Cash 15

    What people forget is that the country is facing the bill for our Kyoto liability – as of Januanry 1 this year – regardless of whether we have an emissions trading scheme. The cost is being borne by us all. Without an ETS, the liability will be shared by all taxpayers. With an ETS, you begin to put in place incentives to reduce emissions, and have a mechanism by which the cost of NZ’s emissions start to fall directly on those responsible, thereby increasing the incentives.
    So, now, Labour has buckled. The phyrric winner is big business emitters – the losers are all of us. But business could well lose too. As the rest of the world intruduces their own variants of the ETS – as they are doing – we’ll face new barriers to entering markets which penalise heavy emitters.

  16. frog 16

    Have you Standard guys seen this test? – thought you might enjoy question 3

  17. Tane 17

    Frog, very cryptic, I’m not sure what you’re getting at.

    [captcha: ‘leftiest Trains’]

  18. erikter 18

    Sam Cash said: “As the rest of the world intruduces (sic) their own variants of the ETS – as they are doing”

    That is breaking news for all the world to hear!

    What are the ETS-like programs introduced by China, India, Russia, the Third World (the biggest polluters) and when are they being enacted/enforced?

    Stop lying through your teeth and give us the facts.

    Don’t be coy: if you want to break New Zealand’s economy, say so openly. Otherwise continue to use the ETS as a Trojan horse.

  19. r0b 19

    Hey frog – I did indeed (enjoy Qn 3). Turns out I’m an ultimate sticker too.

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