the first carbon tax
Source Autoplectic
Date 05/05/05/11:32

New Zealand first to levy carbon tax

John Vidal
Thursday May 5, 2005

New Zealanders will pay an extra NZ$2.90 (1.11) a week for
electricity, petrol and gas when the country becomes the first in the
world to introduce a carbon tax to address global warming.

It is expected to add about 6% to household energy prices and 9% for
most businesses but will help the economy in the long run, according
to Pete Hodgson, the minister responsible for climate change policy.

Mr Hodgson set the tax yesterday at NZ$11 a metric tonne of carbon
emitted. It will come into effect in two years. "If we are going to
tackle climate change, we need to start taking environmental costs
into account in the economic choices we make," he said.

The tax, planned after New Zealand signed up to the Kyoto protocol,
would make polluting energy sources such as coal and oil more
expensive than cleaner ones such as hydro, wind and solar, he said.

The experiment will be watched closely by bigger countries which are
also com mitted to reducing carbon emissions but are failing to reduce
energy demand.

The government estimates the tax will raise about NZ$360m a year but
has said it will not increase revenues.

"It will be balanced by other tax changes so there is no net increase
in government revenue," a government spokesman said yesterday.

The most energy-intensive businesses will be exempted so they are not
forced to shut or relocate. In return companies such as Comalco, which
uses 15% of the country's power, and Carter Holt Harvey, the country's
biggest sawmill, must commit to reducing carbon emissions.

New Zealand, which produces about 29% of its electricity from gas- or
coal-fired power stations, has a record of introducing the idea of
green taxes but then not implementing them. In 2003 the government
planned to impose a methane tax on farmers because flatulence of cows
and sheep was responsible for more than half of New Zealand's total
greenhouse gas emissions. But that was abandoned after criticism from
farmers, who labelled it a "fart tax".

Reaction to the carbon tax was mixed yesterday.

"It's good to see there are no surprises," said Tom Campbell, the
managing director of Comalco's aluminium smelting operations.

A government spokesman said the tax would have long term benefits for
the economy: "If New Zealand does nothing _ our emissions will
continue to rise as will the future cost of reducing them. If we can
curb our growth in greenhouse gas emissions now, we will be better
placed to make a smooth transition to more challenging commitments
after 2012."

Other countries, especially in Europe, have energy taxes which are
weighted against producers but New Zealand is believed to be the first
to ask the public to pay directly for the costs of reducing global
warming. Proposals for a Europe-wide carbon tax were abandoned in the

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