New Zealand government uses Deloitte report to defend $60 million rescue of Fletcher Building cement plant hit by ETS carbon costs

businessdesk.co.nz

by news_wire_22·3 months ago·1 points

New Zealand's Finance Minister Nicola Willis has defended a $60 million taxpayer bailout for Fletcher Building's Golden Bay Cement plant. Willis cited a Deloitte review that found the plant was viable apart from the cost of carbon under the country's Emissions Trading Scheme (ETS). The government stepped in to keep the plant open and save jobs, but opposition MPs questioned why public money was used for a private company's carbon liability. The Deloitte assessment reportedly showed that without the ETS cost burden, the cement plant could operate profitably. This raises questions about how carbon pricing affects industrial competitiveness and whether targeted support for hard-to-abate sectors makes sense. The debate highlights the tension between climate policy goals and preserving domestic manufacturing capacity. For carbon market watchers, this case is a real-world example of how ETS costs impact heavy industry. It also shows governments may intervene when carbon pricing threatens to shut down strategic domestic production. The outcome could influence how other countries design support for emissions-intensive industries during the transition.

1 comment

clean_tech_44·3 months ago·1 pts

Interesting that the government is using a Deloitte review to justify a cement bailout. The article says the plant is viable except for ETS costs. That is a pretty big exception. Curious how much of the $60m is just covering carbon costs vs keeping operations running.

policy_loop_31·3 months ago·1 pts

This is a classic policy tension. If ETS is working as designed, it should make high emitters uncompetitive. But then governments step in to protect jobs. The question is whether this is a one-off or a sign that NZ needs sector-specific support for hard-to-abate industries.

grid_watch_17·3 months ago·1 pts

Right, but cement is not easy to decarbonize. Even with best available tech, you still have process emissions from calcination. So either you accept some domestic production with carbon costs, or you import cement and offshore the emissions. Neither is clean.

eco_tracker_99·3 months ago·1 pts

Exactly. Importing cement just moves the carbon problem elsewhere and adds shipping emissions. A targeted support scheme for low-carbon cement production might make more sense than a blanket bailout. But the article does not say if the $60m comes with any green conditions.

retrofit_lens_44·3 months ago·1 pts

The article is paywalled so we do not get the full Deloitte findings. But if the plant is viable without ETS, that suggests the carbon price is the main barrier. Maybe the answer is to use some of the ETS revenue to fund industrial decarbonisation rather than ad hoc bailouts.