BUSINESSDESK: The government MPs have, as expected, blocked attempts by Labour and Green Party politicians to limit the number of foreign-sourced carbon credits used to offset New Zealand's greenhouse gas emissions under its Kyoto Protocol obligations.
The Climate Change Response (Emissions Trading and Other Matters) Bill was reported back to parliament by the finance and expenditure select committee with only technical amendments, and a decision that capping the use of foreign credits would compromise the emissions trading scheme principle of "least cost of compliance".
The policy has seen major emitters such as oil and electricity companies snap up some of the lowest cost carbon units available on global markets, where prices have slumped to as little as $2 a tonne.
New Zealand Units, issued by the government, continue to be worth slightly more, at around $3 a tonne, but well below the $25 a tonne maximum price put on carbon when the ETS was introduced in 2009.
All other countries with ETS-style schemes require between 50% and 90% of carbon credits used in their schemes to be locally sourced to spur domestic climate change action.
The Green Party's minority opinion on the select committee's report-back says the proposed amendments will "eviscerate an already weak ETS to the point of irrelevance", while Labour's minority opposing view says the bill "does nothing to protect New Zealand from an impending tsunami of cheap international credits".
New Zealand would become "a dumping ground for tens of millions of cheap international units that will have nowhere else to go due to significant restrictions on their inclusion in other schemes".
"The implications for the forestry sector are catastrophic."
Government MPs say they had considered the call for a cap on foreign-sourced units, but decided regulation-making powers in the existing legislation were "an appropriate and efficient tool for use when circumstances warrant".
The Greens say the decision would initially cost taxpayers $328 million.
"The New Zealand household is paying for subsidising businesses and farms by this amount, either as consumer or primarily as taxpayer."