WELLINGTON, July 18 (Xinhua) -- A carbon tax targeting emissions-intensive industries and a revamp of New Zealand's much criticized emissions trading scheme (ETS) could boost economic growth, according to a study out Monday.
A signatory to the Kyoto Protocol, New Zealand is committed to cutting greenhouse gas emissions by 5 percent below 1990 levels by 2020, and by half by mid-century, but the country's emissions were up 21 percent from 1990 levels in 2013.
Currently, the ETS was the main economic tool to lower carbon emissions, with industries buying carbon credits according to their emissions levels, said University of Auckland researcher Sina Mashinchi, who worked on the study with economics researchers from Cambridge University, in the United Kingdom.
But the ETS had been criticized for its "lenient application" and trade in "junk" credits from eastern Europe, while agriculture, which was responsible for half of New Zealand's emissions, was entirely exempt from the scheme.
Even if the price of carbon credits was raised from the current 17 NZ dollars (12 U.S. dollars) per ton to 300 NZ dollars (213 U.S. dollars), the country would still fail to achieve the 2050 target with the ETS alone, Mashinchi said in a statement.
Mashinchi said that if the price of carbon credits rose to 75 NZ dollars (53 U.S. dollars) now and by 20 NZ dollars (14 U.S. dollars) a year thereafter, and a carbon tax for non-ETS sectors was introduced at the same levels, the government could use the extra tax take to lower its general consumption tax from 15 percent to 12.5 percent.
That would stimulate the economy, encouraging investment in new technologies, energy efficiency and public transport, which would create jobs and raise gross domestic product (GDP) by an average 2.2 percent per year, while emissions would fall 14.2 percent from current levels in 2030.
"This still falls short of our Kyoto target, but it's a lot better than emissions going up," said Mashinchi.
"Environmental tax reform" (ETR) had been tried in various forms in places such as the UK, Germany, and Scandinavian countries.
The research was more evidence of the need for much stronger action to reduce climate pollution, "not just because it's the right thing to do, but because it means a stronger, cleaner economy, with better jobs," James Shaw, co-leader of the opposition Green Party, said in a statement.
"The government continues to protect polluting businesses, delaying the shift to a cleaner economy, by capping pollution charges at an artificially low price of 25 NZ dollars (18 U.S. dollars) per ton of emissions."
The New Zealand government has been widely criticized for having no comprehensive plan to reduce the country's greenhouse gas emissions.
