Is New Zealand’s revised emissions trading scheme (ETS) the lower-cost, lower-risk, business-friendly proposition it has been presented as? Is it the right strategic option for New Zealand?

A lot depends on how the international community moves on this issue at Copenhagen and beyond. But if, as appears to be the case, our trading partners become steadily more ambitious, then New Zealand may not be the ‘fast follower’ it desires to be, but rather quickly become a laggard, as Gary Taylor and others have noted.

Linking to Australia’s ETS and an intensity-based approach is questionable, not just because US policy may exclude partners that take this approach, but because Australia’s mining-based, and fossil-fueled economy has very different drivers to the interests of New Zealand’s primary sector and tourism-led economy. As the ‘transTasman’ newsletter has reported, a recent comparison of G20 countries performance by the Climate Institute and European environmental group E3G says Australia is in the weakest position of any industrialised nation to compete in a clean-energy world.

So while the government may feel it’s the right thing to protect major emitters, including farmers, from global price signals on carbon – and have the taxpayer pick up the bill – it is doubtful that this is going to make the New Zealand economy more competitive. Effectively, the scheme reduces incentives to adapt more quickly to a carbon-constrained economy, undercutting brand New Zealand’s 100% pure investment. The scheme may quickly be regarded by US, European and even Asian trading partners as implicit protectionism, creating another ocean for our far-flung exporters to cross.

Above all it seems to reflect a philosophy all-too-prominent in New Zealand business that policies which promote a more sustainable economy represent a cost, rather than an opportunity. Instead of considering how we can capitalise on our strong platform in this area (for example, high levels of renewable electricity generation) to improve our competitiveness the ETS seeks to delay change and shield producers and emitters from global price signals.

Given the current international environment, this seems more likely to contribute to a continued worsening of our international competitiveness rather than improving it.