With each change to the ETS, the subsidy regime is expanded and the taxpayer picks up more of the tab, while there is minimal impact on gross emissions.

On top of the tens of billions of dollars that the Treasury estimates subsidies to major emitters and farmers will cost the nation long-term, a new wave of transitional subsidies has been recommended by the ETS Review.

The Eternal Transition, more than 70 years for agriculture and major industrials, is now set to get even more taxpayer assistance. To be extended are both the price cap and arrangements that allow fewer credits than would otherwise be needed to match emission liabilities.

The ETS continues to market the aroma of change without actually delivering gross emission reductions.

Gross emissions will have been reduced by less than 1 per cent during the first five years of the ETS (relative to business as usual).

Nowhere in the review report is there an estimate of what the total effect of proposed changes will be on gross emissions. However, as the regime would be weaker than that assumed by the Ministry for the Environment when filing to the UN last year, it is clear that it too will make a minimal impact on gross emissions over the next decade. The MFE filing showed that gross emissions in 2020 would be higher than in 2010, despite the ETS.

The science dictates that large and rapid reductions in emissions are required to avoid ‘dangerous climate change’. Reductions in the intensity of emissions are not enough as they are often accompanied by rising production and so increased volumes of emissions overall.

The ETS is not delivering the needed gross emission reductions, but it is delivering multi-billion dollar contingent liabilities to taxpayers who must foot the bill for the nation’s international commitments.