Climate Change Response Eligible Industrial Activities Amend

Climate Change Response (Eligible Industrial Activities) Amendment Bill

Member's Bill

Explanatory note

Currently "aluminium smelting" is defined as an eligible industrial activity in Climate Change (Eligible Industrial Activities) Regulations 2010. This results in the Tiwai Point receiving a significant annual free allocation of carbon credits: 1,558,268 tons in 2020. This annual allocation significantly exceeds its annual emissions of 637,130 tons. The justification for this difference is "compensation" for higher electricity prices caused by the ETS. But the aluminium smelter does not pay those prices, instead receiving an artificially low rate which is effectively subsidised by other New Zealand electricity consumers to the tune of $200 per household per year.

This artificially high subsidy has resulted in windfall profits to the smelter and significant social costs to Aotearoa New Zealand. The smelter is currently profitable, so profitable that it wishes to remain in New Zealand despite pledging to leave in 2024. If it is so profitable, then clearly it does not need the assistance of a subsidy. This bill therefore removes "aluminium smelting" as an eligible industrial activity from the ETS, ending the subsidy.

Climate Change Response (Eligible Industrial Activities) Amendment Bill

The Parliament of New Zealand enacts as follows:

1. Title
This Act is the Climate Change Response (Eligible Industrial Activities) Amendment Act 2022.

2. Commencement
This Act comes into force on the day after the date on which it receives the Royal assent.

3. Principal act
This Act amends the Climate Change Response Act 2002.

4. Schedule 3 amended

After section 161C(4), insert:

(5) Aluminium smelting is not an eligible industrial activity

5. Consequential amendments to regulations

(1) This section amends the Climate Change (Eligible Industrial Activities) Regulations 2010.
(2) Regulation 7 is repealed.
(3) In Schedule 2, delete the row for "Aluminium smelting".

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