Summarised by Centrist

The government will give Fletcher Building up to $60 million to keep Golden Bay Cement operating after carbon costs threatened to make domestic production uneconomic.

A financial assessment prepared during Cabinet’s deliberations found “binding constraints on the financial viability of domestic cement production, primarily due to emissions costs”.

Fletcher chief executive Andrew Reding said rising expenses, “including carbon emission costs that our competitors importing cement from overseas do not currently incur at the same level”, would probably have forced the Whangārei plant to close and the company to adopt an import-only model from 2030.

Cabinet concluded the business was viable without those emissions costs and that retaining domestic cement and clinker production was strategically important if international supplies were disrupted.

The government considered changing the Emissions Trading Scheme but rejected that option. Nicola Willis said ministers wanted a solution that would not undermine the ETS or create “a conga line of others asking for exceptions”.

Infrastructure Minister Chris Bishop was unusually direct about the cause of the problem.

“The challenge is the emissions costs, which are coming as a result from the ETS from 2030 onwards,” he said. Those costs would render the plant “unviable, or at least arguably uneconomic,” he said.

Editor’s note: The payment effectively shields one producer from the ETS disadvantage because the government considers domestic cement production essential, while leaving the wider scheme unchanged.

Which trade-exposed industries competing against imports that do not face equivalent carbon costs will the government protect, and which will be allowed to become uncompetitive or close?

Read more over at interest.co.nz

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