Emissions trading scheme to result in corporate subsidies, think tank claims

Seven of New Zealand’s biggest companies will receive corporate welfare of US$1.2 billion over the next decade, including subsidies on greenhouse gas emissions and their increased energy bills, according to an environmental think-tank. And an eighth company, Fonterra, will receive a further US$200 million, in addition to separate subsidies of US$1.3 million being given to the nation’s farmers, Sustainability Council Executive Director Simon Terry said. The Emissions Trading Scheme (ETS) legislation before Parliament provides for subsidies to be paid partly on the basis of emissions from fossil fuels the companies burn, and also for expected increases in their electricity bills. The payments until 2018 will provide, on average, a 90% subsidy on 2005 levels of emissions and a 90% subsidy for increases in the cost of power due to emissions charges. Payments benefiting the Tiwai Point smelter near Bluff, which is 80% owned by Australia’s Rio Tinto Alcan are likely to total around US$600 million, Terry said. The aluminum smelter uses about 15% of the nation’s electricity, most of it from a long-term electricity supply contract with Meridian Energy, and it pays market prices for about 10% of its power requirements. (June 24, 2008)