New Zealand's climate change credibility is hanging by a thread. If the government indulges in bad politics on the Emissions Trading Scheme, the thread would snap. We would suffer instant, serious and long-term damage to our economy, environment and reputation.
OPINION: If the government engages in constructive compromise, the thread would hold, just. But we would still be far short of the tools necessary to win big economic and environmental gains as the world seeks its low-carbon future.
This is the final showdown between the enlightened forces for positive change and the dark forces of climate change deniers, self-interest pleaders and business flat-earthers.
The scene was set by the release last week of the select committee review of the ETS legislation enacted last year by the previous government.
At a high level, the committee's report was encouraging. It showed very broad support for five key principles: that the science of climate change is valid; that urgent action is needed globally to tackle climate change; that New Zealand should play its part in doing so; that all sectors and all gases should be included in our response; that we must work on mitigation (by reducing emissions) and adaptation (by adjusting our economy and built-environment to cope with changes in our physical environment).
Thus, the review has so marginalised the climate change deniers that they are now irrelevant in the public debate. Ironically, this applies particularly to Act which had demanded the review as one of its conditions for supporting the National-led government.
But beyond that, the committee's report was deeply discouraging. It failed to make any serious contribution towards improving the working of the ETS. All its recommendations were obvious, indecisive or generic. Some of them undermined the principles it espoused.
The committee failed because it was a farce from the start. It was all about politics a sop to Act and a time-waster for National while it worked out what it wants to do on the ETS.
It was nothing to do with substance. It heard hours of testimony but its members were given no chance to discuss the issues raised or to make any attempt to seek constructive solutions to vexed questions. Only four of 11 committee members had sufficient understanding of the issues. And Rodney Hide rarely bothered to show up.
As a result of the lack of agreement on key issues and the dearth of concrete recommendations, the review sprouted minority reports from Labour, the Greens, the Maori Party and Act. Their views ranged widely from strong engagement on climate change to denial; from an ETS to a carbon tax; and from more help for consumers and special support for Maori to exemption of agriculture to name but three areas.
Out of this morass, National has to find enough votes to support the changes it wants to make to the ETS.
National has yet to spell out what it would like to do. But based on its comments and hints to date, its main goals are: intensity-based allocation of carbon credits to trade-exposed industries; no cap on how much greenhouse gas those companies emit; a temporary cap on the price of carbon; imposition of related international carbon credit trading restrictions; delays in bringing sectors into the ETS; delays in phasing out free credits; and maximum alignment with the Australian greenhouse gas scheme.
Every one of those goals would weaken the ETS. Together, they would significantly undermine incentives to emitters to invest in new technology to reduce emissions, to use energy and other resources more efficiently and to switch to non-carbon fuels. They would also undermine incentives to generate carbon credits for sale, whether through planting trees or investing in clean technology.
Even the ETS as it stands would achieve only small reductions in emissions on its own, as David Parker, Labour's climate change minister at the time, conceded when parliament passed it last year.
But at least it would get carbon trading in place so businesses and consumers could begin to use the price discipline to change their ways for the better. Moreover, the ETS would work with complementary measures such as fuel efficiency standards to achieve real improvements in emissions and energy use.
Yet the National-led government has since ditched, or amended for the worse, most of the complementary measures. For example, 10 days ago it said it had stopped work on fuel efficiency standards for vehicles. Among other reasons, it cited the financial penalty of $1500 such standards would impose on a buyer of a large-engine car.
This leaves us as the only developed country in the world with no fuel efficiency standards. Even most large developing countries such as China and Brazil have them because of the economic, energy and environmental benefits they bring.
Without standards, we will become the dumping ground of fuel-inefficient new cars that manufacturers can't sell easily elsewhere or inefficient second-hand ones from the likes of Japan. As a result, our emissions and fuel bills will stay higher for years to come.
National's determination to weaken the ETS and complementary measures would condemn the New Zealand economy to its current trajectory of high and increasing emissions, high-energy use and reliance on fossil fuels for transport and some electricity generation.
We would become increasingly uncompetitive as other countries invested more than us in their low-carbon futures. And our shoddy performance would increasingly turn off our overseas customers.
Fortunately, National has no support from other parties for exactly that agenda of changes to the ETS. That's an outright "no" from the Greens and Maori Party. But Labour is saying it might support compromises as long as they did not significantly weaken the ETS.
The trouble is, National might instead engage in bad politics. In its determination to ram through its agenda, it might threaten Labour that it would seek support from Act to suspend the ETS altogether.
Labour might fear that if it didn't go along with National, the public would blame it for scuppering a broad consensus on climate change and giving Act its fondest wish of derailing the ETS, at least temporarily.
Would National be so reckless? Logically it wouldn't. It seems inconceivable it could stomach the idea of turning up to the international climate change negotiations in Copenhagen in December without an ETS and only the support of Act, a tiny bunch of climate deniers. National and New Zealand would be a laughing stock.
But almost anything is possible because National has dissembled, prevaricated and otherwise failed to reveal its true beliefs on climate change in opposition and so far in government.
Thus the ETS has become the litmus test of National's political skills, its commitment to the environment and its understanding of where New Zealand's future lies in a low-carbon world.
- Sunday Star Times
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