PM puts ETS case to farmers

Prime Minister John Key made the ultimate climate change sales pitch to what should have been a hostile audience of farmers in Invercargill yesterday.

The full inclusion in 2015 of agriculture in the emissions trading scheme has been a wedge between the Government and its core rural constituency, but an address by Mr Key to about 200 people at Federated Farmers annual conference was greeted politely and raised barely a ripple of anger.

He was farewelled from the meeting with a standing ovation.

Earlier in the day, the federation's president, Don Nicolson, fired up members with a rousing speech, saying the National Party had stood alongside the federation in 2003, 2005 and 2008 in opposing the then Labour government's emissions trading scheme (ETS), but had done a 180-degree turn in policy when it became the Government.

"Come 2009, suddenly the ETS is the solution," he said.

Mr Nicolson described the ETS as a tax on production and productivity, and suggested replacing it with a low-level carbon charge to fund research into alternatives to fossil fuels.

But Mr Key said taxing carbon was a blunt financial instrument and he preferred a modest ETS to price carbon, so those polluters who generated emissions paid for it.

He told the farming audience that they and future generations of farmers had the most to lose from climate change induced weather patterns, something he believed was possible.

"If the world weather is altered that much that we get catastrophic events, it's not the urban dweller in Parnell, it's farmers who will be most affected."

It was too late to withdraw from the ETS as the Government had already paid forest owners $1.7 billion for their carbon credits, which could be traded with polluters to offset their emissions.

That cost would have to be funded somehow. As it was, he said the ETS would run at an $800 million loss for the first five years.

European countries, South Africa, China and 11 states in the United States were addressing their carbon emissions, and Mr Key warned export markets would disappear if we were to renege on our commitment to address climate change.

The National Party had modified its ETS so it was half the cost of that proposed by the Labour government and he stressed the result was a balance between the need to address climate change and not harming the economy.

"We're not mad, we're not zealots and we're not leading the world," he said.

On Thursday, Agriculture Minister David Carter also addressed the conference on the ETS, among other issues, and while the atmosphere was tense, he too, left relatively unscathed.