Bluescope, owner of Glenbrook Steel Mill, is one of the companies that would benefit from getting the majority of their emissions released.
Photo: CC BY 2.0 / Auckland Photo News
The Don’t Subsidize Pollution campaign has sent a 6,000-strong petition to parliament asking the government to scrap free carbon credits for major polluters.
Under the emissions trading system, most carbon dioxide emitters, including gasoline companies and electricity companies that burn coal, pay a price – currently around $50 – for every ton of emissions.
But companies like Rio Tinto, Methanex and Bluescope, owner of the Glenbrook Steel Mill, get most of their emissions released so they don’t move their factories (and emissions) abroad.
Alex Johnston, one of the campaign leaders, said the top five recipients of free carbon credits together produced the same emissions as more than two million petrol cars.
The campaign wants the free credits to end and for companies to help reduce their emissions instead.
He said it is unfair that households have to pay carbon costs in addition to their petrol and electricity bills, while large multinationals in some sectors do not. Many of the largest recipients are foreign-owned.
“It’s a pretty expensive policy to support and preserve these jobs… is there a better way we can support these companies to decarbonize?”
Campaigners say the plan is a dinosaur, dating back to the birth of the Emissions Trading Scheme, when few other countries were taking action on carbon emissions.
This comes at a cost to the government: if it didn’t give away the carbon credits for free, the government could sell them to polluters for hundreds of millions of dollars a year at current carbon prices.
Opposition MPs hammered home this point when they challenged Climate Change Minister Simon Watts at an Environment Committee meeting.
Green co-leader Chlöe Swarbrick called the plan “corporate welfare.”
Labor climate spokeswoman Megan Woods suggested it would be cheaper and more beneficial to spend the money helping the same companies reduce emissions, rather than continuing with so-called industrial allocation.
“Forty-nine percent of the industrial allocation comes from aluminum, iron and steel. We know that all three of these industries are decarbonizable industries… so turn it around and actually pay to decarbonize pollution instead of subsidizing it. “
During his last term in government, Labor subsidized companies such as Bluescope to reduce their emissions. It also maintained free carbon credits, for emissions that could not be reduced.
ACT’s Simon Court defended the plan against any moves to phase it out, saying foreign competitors may not have to pay an emissions price.
The subsidies will be phased out by 1 percentage point per year.
At that rate, companies will still release a third of their emissions by 2050, while the entire country would have to be climate neutral.
Watts told the Environment Committee he supported this gradual phase-out.
If nothing changes, the free allocations will make up an increasing share of the total emissions New Zealand can produce each year.
New Zealand has binding limits on the amount of greenhouse gases it can emit annually, and the limit is falling much faster than the phasing out of free carbon credit allocation.
That means that within two years, the government could hand out more free carbon credits to these big manufacturing companies each year than it is allowed to sell at auctions to all other carbon emitters.
According to the latest estimate, the government will give away twice as many tonnes of emissions as it is allowed to auction by 2030, leaving only 2 million tonnes to sell to all other emitters. That’s one-seventh of what’s for sale this year by other issuers.