Friend or Foe? The Kyoto Protocol and the NZ Greenhouse Industry

The greenhouse sector has reinvented itself as a technologically advanced and relatively environmentally friendly industry over the past 15 years. However it remains a high energy user. Two recent surveys have highlighted the potential impact on greenhouse grower costs of the proposed emissions charge on fossil fuels. Growers may be unable to pass on the extra costs due to competition on domestic and export markets from non-Kyoto countries. It is likely that the emissions charge would accelerate the rationalisation of the industry that has already been occurring, and in addition may lead to more profound changes such as the relocation overseas of larger growers. This paper draws out the likely implications of the proposed charge for the greenhouse sector in the light of the policies which are available to mitigate its impacts, and highlights the policy lessons that can be learned.