Email the Climate Minister to review Methanex’s free carbon credits
As followers of Jesus, we know we have to take responsibility for our impact on the earth and on our neighbours. Putting a price on carbon helps us to collectively do that. But successive governments give out millions of free credits to just a few large companies together representing 10% of the country's emissions so they don’t have an incentive to reduce their emissions.
We’ve released a hard-hitting report on one of Aotearoa’s biggest polluters receiving free carbon credits, “Methanexit - Should NZ be subsidising our largest gas user?” The report is a collaboration between 350 Aotearoa, CICTAR and Common Grace Aotearoa.
The report focuses on Methanex, a Canadian-owned methanol producer with a plant in Taranaki who control 30-45% of the country’s gas supply. The report highlights the risk that Methanex could push up gas and electricity prices, and the actions the government needs to take to ensure the company isn’t profiteering from another dry winter, causing further closures and redundancies across the manufacturing sectors. The report also found that Methanex is using loop holes in our tax system, moving their profits offshore to minimise the amount of tax they are paying in New Zealand.
The combination of Methanex’s profit shifting practices and the approximately $60m worth of free carbon credits the government gave them last year means the people of Aotearoa are shouldering the true cost of Methanex’s operation here, with none of the benefits.
Here are some key findings of the report:
The report highlights that Methanex’s Taranaki plant is 34% more polluting than the company’s global production, and yet our government is propping up their pollution with free carbon credits.
Last year Methanex received $60 million worth of free carbon credits from the government to subsidise their pollution, which they can sell to cover their profit margin. We estimate Methanex's free carbon credits over the last decade add up to about $300 million.
As the profitability of producing methanol has declined, the subsidies it receives and its massive gas contracts enables it to speculate on gas prices. This year when the dams were running low and power prices were high, the company was able to on-sell their gas for an estimated 400% markup to electricity retailers.
And when it comes time to pay tax, conveniently a lot of their profit is shifted on to their Hong Kong based owner. Our report reveals they have engaged in activities that could have had the effect of reducing income tax expense by more than $46 million over the last decade.
We think these are really strong reasons to get the Minister of Climate Change to remove Methanex’s free carbon credits. The outdated free carbon credits system is enabling profit-shifting and unfair corporate power rather than benefiting the climate or working people.
We’re calling on Minister Simon Watts to review Methanex’s free carbon credits in light of this report. We have created an email template so you can send an email to the Climate Minister asking the same direct from your email account. Please feel free to personalise this before you send.