The Government could reap an $80 billion tax windfall from a proposed emissions trading scheme to tackle climate change, the head of state-owned coalminer Solid Energy has claimed.
Chief executive Don Elder told MPs considering Labour's flagship climate change bill that the windfall would come if the international price of carbon credits - traded to offset emissions by petrol companies, power stations and other polluters - reached levels predicted by some.
But Climate Change Minister David Parker rejected the $80 billion claim, saying it was based on a "fantastical scenario" that assumed people would not generate fewer greenhouse gases if the price increased.
He did not dispute that the Government could end up with some extra revenue from the scheme - which in effect taxes emissions and will be phased in from 2010 - but it would never allow it to reach the levels suggested by Mr Elder.
"It is not credible. The price of carbon Don Elder uses is extreme ... if such a fantastical scenario looked like occurring, changes would be made in the five-yearly reviews that are already provided for in the legislation," Mr Parker said.
Mr Elder told Parliament's finance and expenditure committee yesterday that the Government's projections for the scheme included a $500 million windfall in 2013, when it applied to all sectors, rising to about $2 billion in 2025 - a total surplus of $20 billion.
But that projection was based on emission costs being influenced by an international carbon credit price of $30 a tonne. A more realistic price was $100 to $200 a tonne, which would create a $2 billion windfall in 2013, $10 billion in 2025 and a total take of $80 billion.
This was the difference between the amount the Government received from polluters and the amount paid to offset emissions above 1990 levels.
The windfall still applied when emissions fell to 1990 levels or below, as the charges would continue. "An enormous revenue take is going to occur for the Government that is not envisaged ...you don't bury a tax restructure of that size inside an emissions trading system."
Solid Energy was one of several major industry players to speak against the bill, which faces a big change after the Government announced this week it would delay applying it to petrol for two years.
- © Fairfax NZ News
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