Editorial: Carbon pragmatism

21:32, Jul 03 2012

The Government's retreat from some elements of its carbon emissions trading scheme - the measures designed to reduce the nation's output of climate-changing greenhouse gases - will dismay environmentalists.

It has come about not because of any doubts about the benefits of the scheme but rather because of Government wariness about economic and political fall-out if it had gone ahead with the scheme as planned.

Those considerations may seem short term but they are valid and demonstrate the difficulty that would be faced by any government that looked like getting ahead of the game while the rest of the world is at best dragging its feet.

The present scheme was introduced by the Government after it won power in 2008 and was already considerably watered down from a scheme devised by the previous Labour-led government. Now after a consultation paper in April and a further review the Government has backed off further.

Measures that were meant to be transitional and were going to be phased out next year have been extended for a further two years and may be extended beyond that.

The Government now intends to continue to subsidise business carbon emitters so that they will have to pay for only half the cost of their emissions. To protect firms from possible rises in the international price of carbon - not likely in the near future but probable eventually if and when the world economy recovers - the carbon prices firms will face will also be capped.


But the most contentious issue is the Government's decision to continue to leave agricultural emissions outside the ambit of the scheme. Agriculture and horticulture are responsible for by far the greatest proportion of New Zealand's greenhouse gas emissions and leaving them out of the scheme plainly lessens its impact considerably.

The Government had proposed to bring agriculture within the scheme next year but has now put it off until 2015, and it is by no means certain that it will include it then.

That is obviously a setback to the integrity of the scheme but is understandable. The decision is driven partly by an economic and political calculation. Introducing new charges, however desirable they may be, into today's fragile economy risks both a slowing in economic activity along with an inevitable political backlash.

In Australia, the Prime Minister, Julia Gillard, is facing just such difficulties over a carbon tax (admittedly an inferior arrangement to the emissions trading scheme) that came into effect on July 1.

Gillard is weathering a political tumult that may end her career, despite the narrowness of the tax (it applies only to the country's 500 worst carbon emitters) and also despite sweeteners to soften its impact on households.

The Government's retreat is also partly driven by a sensible desire not to introduce measures ahead of the rest of the world. While some find merit in the idea of providing some kind of ethical example, there would be nothing to gain by such a stand.

It would place our producers at an economic disadvantage; it would do almost nothing significant on the world scale to reduce greenhouse gases and it would almost certainly be ignored as moral posturing.

That is all the more reason, though, that New Zealand should do all it can diplomatically to try to break the deadlock and get meaningful agreement on greenhouse gases on a global scale.

The Press