Now they have come up with another niggle. Newsroom reported yesterday that – according to a new legal opinion – two of the Government’s key energy policies are fossil fuel subsidies which breach New Zealand’s international trade obligations.
Authored by Lawyers for Climate Action and vetted by Nura Taefi KC and Catherine Fu of Shortland Chambers, the report goes further than past examinations of Government policies in looking at plans to build a gas import terminal as well as the $200 million fund for new offshore oil and gas exploration.
The scheme to implement a levy on electricity to fund a $1 billion liquefied natural gas import terminal “is likely a prohibited fossil fuel subsidy” under the Agreement on Climate Change, Trade and Sustainability (ACCTS) with Costa Rica, Iceland and Switzerland and “is a ‘harmful’ fossil fuel subsidy” under the free trade agreement with the UK, the report found.
In addition, the lawyers warned, the move is likely to conflict with New Zealand’s commitment to reduce fossil fuel subsidies in its free trade deal with the European Union and undermines the country’s promises to the World Trade Organisation’s fossil fuel subsidy reform programme.
This is because the liquefied natural gas facility will be funded not by the gas sector, but by electricity users through a mandatory levy implemented by the Government.
And:
The report also concluded the Government’s $200m fund to co-invest in new offshore oil and gas exploration, announced at the last Budget, met the three definitions of a subsidy.
A spokesperson for Mfat said the department was satisfied New Zealand was meetings its obligations.
“The Government considers that the $200 million Gas Security Fund (GSF) and the procurement of an LNG import facility are consistent with international trade obligations on fossil fuel subsidies,” the spokesperson said.
But this was disputed by Laura MacKay, acting executive director of Lawyers for Climate Action.
“This analysis makes clear that New Zealand is planning on introducing new fossil fuel subsidies that likely breach multiple international commitments. This creates risks for New Zealand’s exporters and our reputation with some of our most important trade partners,” she said.
The scheme to implement a levy on electricity to fund a $1 billion liquefied natural gas import terminal “is likely a prohibited fossil fuel subsidy” under the Agreement on Climate Change, Trade and Sustainability (ACCTS) with Costa Rica, Iceland and Switzerland and “is a ‘harmful’ fossil fuel subsidy” under the free trade agreement with the UK, the report found.
In addition, the lawyers warned, the move is likely to conflict with New Zealand’s commitment to reduce fossil fuel subsidies in its free trade deal with the European Union and undermines the country’s promises to the World Trade Organisation’s fossil fuel subsidy reform programme.
This is because the liquefied natural gas facility will be funded not by the gas sector, but by electricity users through a mandatory levy implemented by the Government.
And:
The report also concluded the Government’s $200m fund to co-invest in new offshore oil and gas exploration, announced at the last Budget, met the three definitions of a subsidy.
A spokesperson for Mfat said the department was satisfied New Zealand was meetings its obligations.
“The Government considers that the $200 million Gas Security Fund (GSF) and the procurement of an LNG import facility are consistent with international trade obligations on fossil fuel subsidies,” the spokesperson said.
But this was disputed by Laura MacKay, acting executive director of Lawyers for Climate Action.
“This analysis makes clear that New Zealand is planning on introducing new fossil fuel subsidies that likely breach multiple international commitments. This creates risks for New Zealand’s exporters and our reputation with some of our most important trade partners,” she said.
And:
“For years, New Zealand has been a leading advocate for the reduction and elimination of fossil fuel subsidies, including by convening the WTO Fossil Fuel Subsidy Reform Initiative, championing the ACCTS, and including novel provisions in our FTAs with the UK and EU on fossil fuel subsidies. It is concerning that New Zealand is now doing precisely the opposite of what it has been preaching internationally. This poses serious risks to New Zealand’s international credibility, including as a reliable trading partner.”
Hmm.
What does the PM make of this?
It took a bit longer than it should have to find out by listening to him address the matter in the House of Representatives.
During Question Time yesterday, this exchange was recorded –
Chlöe Swarbrick: Has he requested any advice or assurances that his Government’s $200 million subsidy for new oil and gas exploration is or is not in breach of our free-trade agreements?
Rt Hon CHRISTOPHER LUXON: In answer to the first leg of the question, I reject the characterisation of that part.
PoO was puzzled by this exercise in – dare we suggest it? – duck-shoving.
How many legs did the question have?
Swarbrick persisted and was rewarded.
Chlöe Swarbrick: Seriously? Will the Prime Minister seek any assurances whatsoever, from independent advice or from his own officials, that his Government’s policies are or are not in breach of our free-trade agreements?
Rt Hon CHRISTOPHER LUXON: I’m confident we’re meeting our obligations.
That’s good to know.
Mind you, the PM’s confidence might be misplaced. Here’s hoping he’s right.
Bob Edlin is a veteran journalist and editor for the Point of Order blog HERE. - where this article was sourced.
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