Climate change policies no longer sustainable
A year sure is a long time in politics. Remember "sustainability''? Remember how New Zealand was going to become the world's first "carbon neutral'' country? Remember electric cars, 90% renewable energy, bold plans to slash vehicle emissions by 40%?
The United Nations sure does. It's awarded Prime Minister Helen Clark a gong for her commitment to fighting climate change, despite the fact that not a single of these pledges has yet been formally implemented, let alone had any effect. Our carbon emissions went up last year, not down. They'll probably be up again this year.
And yet funnily enough you don't hear much from the Government these days about sustainability. The plan to allow councils to whack an extra 15c on to every litre of petrol is on the back-burner. The idea to force petrol companies to blend their gas with a minimum 5% biofuel suddenly doesn't seem like such a good idea when respectable environmental lobby groups are warning that most of the world's biofuel production is unsustainable, is being achieved by felling rainforest, and has led to a huge increase in world food prices.
Add to this that the scheme at the heart of the Government's ambitious plans to tackle climate change, the Emissions Trading Scheme (ETS), is under heavy fire, and not just from the usual suspects. A bevy of reports from respected consultancies and research firms like the Cawthron Institute, the Institute of Economic Research, and Infometrics say the ETS will cost the country a fortune, will only result in a marginal reduction in greenhouse gas emissions, and could have severe unintended environmental side-effects.
The NZIER reckons the ETS could impact on GDP growth by as much as 2.5% (that's around $6 billion), cost 22,000 jobs, and cut household spending by some $3000 a year. It says it would actually be cheaper for the Government to simply give up trying to meet its Kyoto Protocol commitments to reduce greenhouse gas emissions to 1990 levels by 2012, and just fork over whatever the penalties are for missing the target.
That might seem cynical and defeatist, given that if every country did that presumably the world's emissions wouldn't change one iota but the UN would end up with a very fat bank balance. But then it's essentially what's already happening with all the nonsense over carbon credits for air travel, which are little more than middle-class guilt aversion therapy.
What's happening here is that countries such as ours are finally waking up to the fact that averting climate change is much tougher and more expensive than was first thought. And simply throwing money at the developing world and asking it to sort out the mess for us isn't the answer.
But wrecking the economy in the process isn't very clever either. What Labour is discovering is that its sustainability policies, just last year seen as a possible election-winner, are no longer politically, er, sustainable. Rocketing fuel, electricity, food, and mortgage costs take precedence for most Kiwi households over worrying about climate change. It will be a brave government indeed that enters this year's election campaign promising to ratchet up these costs still further.
And yet that is precisely what Labour is currently on track to do. Its climate change legislation is before Parliament at the moment, and is due to be passed before the election. But things are heading towards an impasse. Labour is terrified National will decide to oppose it, and open up a new election war front by claiming Labour wants to put up your petrol and electricity costs.
National is wavering, unsure whether to continue with its support. On the one hand, it wants to look clean and green. It doesn't want to be accused of a double flip-flop on climate change. But its focus groups are telling it the ETS and its components are a major election loser with voters and it doesn't want to be associated with it. On top of that, the ETS scheme is highly inflationary, a point that has been made several times by the Reserve Bank. Right at the moment the Government needs inflationary policies like a hole in the head.
Here's my pick. In a few months' time, the Government will suddenly discover that it needs to delay the ETS to sometime, ooooh I don't know, after the election. Like it did in 2005 with the carbon charge, which ironically was a much cleaner, fairer, less complicated, and less costly system to implement.
The argument will run something like this: clearly it's more complicated than we first thought, there are issues still to be worked through, households are already facing many additional costs at the moment, and the market is already bringing pressure to bear on emissions through rising fuel prices. We'll have a full review and look at it all again in 2009.
Of course the mess will all still be there for a future government to pick up. But I reckon Labour is casting around for a carpet big enough to sweep it under until after the election.
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Sorry, I must have missed something. When were they ever sustainable?
Very nice blog Colin. But I am disappointed that my master Cullen won't be able to enjoy the pleasure of imposing additional taxes on the "very low taxed Kiwis". I was looking forward to pay regional petrol taxes, carbon charges, bio fuel levy etc etc to clean up this world. Now that my master will be disappointed that these taxes may be pushed out for a while, I have to tell him to increase the income tax on the high income group i.e. those who earn more than 60K to 42%. Our friend Jim Anderton will be there to say "It is still lower than Australia". p.s. I wonder how many kiwis have paid the Air NZ's so called carbon charge and what is the value of the fund......
The NZIER's $6 billion is the usual miracle of compound interest trick. What it actually means is that GDP in 2025 will be $6 billion lower than it would be without an ETS. What that means in practice is that we'd only be as rich in 2025 as we would have been in 2024 if we hadn't had an ETS. Big fat deal.
More importantly, I think they fall down significantly by approaching the problem as "complying with Kyoto" rather than "reducing emissions". They're not the same problem, and in particular the NZIER's approach (doing nothing) leaves us vulnerable to facing increased costs under a post-Kyoto deal. But I suppose they'd just apply the same logic, and advocate not signing up to it, as that would be "least cost" (which is false both environmentally and politically. The EU is already talking about border taxes on imports from non-Kyoto compliant nations. And it will be amusing to watch the farmers kick and scream over that)
Which points to the underlying problem: they think the environment is free and that pollution is costless. It's not. And thinking it is is exactly what got us into this mess.
<I>That might seem cynical and defeatist, given that if every country did that presumably the world’s emissions wouldn’t change one iota but the UN would end up with a very fat bank balance.</I>
Um... no. We wouldn't be buying emissions reductions from the UN, we'd be buying them from other parties (and possibly from companies which have gained credits under the Clean Development Mechanism). And in order for us to buy, there must be an actual reduction somewhere to sell. Which means that in fact every country <I>can't</I> follow the "increase emissions and pay someone else to do something" path you are advocating, unless there is either a massive upsurge in credible CDM projects (unlikely, particularly given that they're pretyt much out of time), or everyone changes their minds about Russian hot air (something our government is refusing to buy).
This is pretty basic information, and I would have expected a highly-paid political journalist to have at least read the FAQ before mouthing off. That is, after all, what you are paid to do.
The poor old lefties really can't implement the policies and ideas that they would like under the current global free market. Be it minimum wage or carbon taxes, all businesses do when they get these forced on them is pass it onto the consumer. This equals inflation and inevitably the worse affected are the low income who the Socialists are trying to help. It's cruelly ironic. But I guess the greens and Co feel better when they are 'doing' something, even if it has these inevitable unintended consequences that a 3rd form economics student could predict.
Let's see; we have the following situation: 1. Petrol prices high and rising fast 2. Food prices high and rising fast 3. The US. and New Zealand on the brink of recession 4. The U.S. and New Zealand facing elections towards the end of the year 5. The average atmospheric concentration of CO2 high and rising 6. The present average temperature of the atmosphere not significantly different to what it was about 30 years ago (as measured by satellites). It has gone up and down by a couple of degrees during the same period.
Question: Will the dangerous man-made global warming hoax survive Christmas?
Guy says the Government will suddenly discover it needs to delay the ETS and associated price rises. Doesn't he know that the transport and energy sectors don't join until 2009, post election? The decision to postpone price impacts in personal pockets was made many months ago. Tut tut Guy.
Have you also actually taken the trouble to do a numbers count - and checked that National has actually backed off supporting ETS? Bill English or Nick Smith will definitely have a view.
If it does - having already shot down a carbon tax - what is its post election call back policy? President Bush's. It's more likely National will argue at the margins of the scheme for greater industry protection, rather than be saddled with the agony of finding a new answer if it gets to form the next Government.
Good blog, but you've missed the real story here. It is not what happens when all the resources are used up.
The real question is what will happen when all the good catch phrases are used up?
Surely the general public couldn't cope with substance over form.
I they could always try and "close the gap" between the public's perceptions of substance and form.
You say "if every country did that presumably the world’s emissions wouldn’t change one iota but the UN would end up with a very fat bank balance". One would only presume this if one was ignorant about the Kyoto Protocol and hadn't bothered to do any research, Colin.
The UN doesn't sell emission units.
NZIER is not saying that NZ should pay the penalty for failing to meet its obligations. Rather, it is saying that NZ should meet its obligations by purchasing emission units on the international market. These units would come from countries that have signed the KP or from private sector parties that have earned units either from governments (through schemes such as our government's Projects to Reduce Emissions Scheme (closed to new entrants)) or throught the Clean Development Mechanism (developing country projects approved by a UN body).
NZIER should also acknowledge that NZ can get some quite cheap reductions by subsidising new forests on Kyoto land (as provided for under the ETS), and is getting very cheap reductions by placing a liability on those who deforest pre-1990 forest land (as also provided for under the ETS). (There's no net gain for NZ if someone deforests for a profit of $10,000 per hectare but it costs the country $20,000 per hectare in emission units.)
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I'm sure we've all heard that climate change is the number one issue facing the world, etc. The problem with the whole climate change argument (dodgey science aside), and the push for policies to encourage us to reduce our footprint and be environmentally friendly, is that it completely overlooks the real culprit feeding it and crisis facing the world. Overpopulation.
It is conservatively estimated that by 2050 there will be another 3 billion people on this planet! And we are already struggling to just feed the 6 billion we already have! Effectively any environmentally-friendly measures we undertake now and resources we save will simply be used up by the additional people coming along... it's utter madness.
Agent Smith (The Matrix) was on the button when he likened humanity's impact on the world to that of a virus.