If New Zealand’s Emissions Trading Scheme (ETS) goes ahead in its current form, Rio Tinto Alcan warns it may have to close its aluminium smelter. But the New Zealand Business Council for Sustainable Development (NZBCSD) said the likely economic impact of the ETS will be low and most businesses support the scheme.

The New Zealand Government s is providing free allocation petrol and diesel into the ETS until January 2011 and defer the beginning of the phase out of free allocations by five years to 2018 to lessen the burden on businesses and households which have been facing steeply rising fuel costs. There will be 90% of free allocation for agriculture and trade-exposed industry until 2018 and would then be phased out until 2030.

Rio Tinto Alcan Asia Pacific president Xiaoling Liu told MPs hearing submissions on the emissions trading bill in parliament on Monday that New Zealand would not remain a cost-competitive place to manufacture aluminium if the ETS went ahead in its current form, the New Zealand Herald reported. The company would be forced to close its Tiwai Pt aluminium smelter in southern New Zealand as it could not compete with producers in countries that do not have a price on carbon. The closure would result in a loss of $1 billion a year in exports, Rio Tinto said.

But Climate Change Minister David Parker said the government had already addressed concerns raised by trade-exposed industries such as aluminium production by delaying the phase out of free permit allocation.

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