The right-wing recipe to cure climate change that is doomed to fail

Breakfast
Climate Change Minister James Shaw is interviewed by TVNZ's Breakfast show, about the release of maps showing the localised effects of climate-change-driven sea-level rises.

Max Rashbrooke is a senior associate at the Institute for Governance and Policy Studies, Victoria University of Wellington-Te Herenga Waka. He is a regular opinion contributor for Stuff.

OPINION: If the price of petrol continues to soar, will you be able to seamlessly shift to taking the bus instead? On such questions hangs the fate of the climate change fight.

Outright deniers having been banished to the fringes, the debate now turns on how best to reach net zero by 2050.

And while most observers believe a wide range of tools will be needed, a rearguard effort is being fought by those who would deploy just one lone policy: putting a price on carbon.

If, the argument runs, everyone has to pay a price for their carbon pollution – $100 a tonne, say – they will automatically cut their emissions. And, knowing their options far better than Beehive bureaucrats, they will find the cheapest method possible.

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Such views are a throwback to 1980s-style market fundamentalism, which held that almost all problems can be solved by individuals buying and selling things. It is a largely discredited dogma.

Yet the old cry of “just get the prices right” still echoes in some corridors.

The New Zealand Initiative think-tank, scion of the 1980s right-wing icon the Business Roundtable, recently published a report accusing the Government of committing “fraud” simply by promoting other climate policies, like enhancing public transport.

A coal-fired power plant belches carbon into the atmosphere. But could the solution be as simple as charging enough money for carbon emissions to convince polluters to change their ways?
123RF
A coal-fired power plant belches carbon into the atmosphere. But could the solution be as simple as charging enough money for carbon emissions to convince polluters to change their ways?

The report’s author, Matt Burgess, now works for National leader Christopher Luxon. Which creates problems for the party.

Last month, its climate change spokesperson, Scott Simpson, had to publicly disavow the Burgess report, saying it “does not reflect the National Party’s view”.

Think-tankers can think all they like; Simpson has to get elected by a public that wants governments to actually do something on climate, not just attach price labels.

The Burgess report, though, is backed by ACT, which could help form the next government. Right-wing lobbyists the Taxpayers’ Union, and some of Simpson’s colleagues, take market-fundamentalist lines. So it matters that these ideas are out there – and wrong.

The price of turning wind into power has come down dramatically thanks to early state investment in the industry.
Kevin Stent/Stuff
The price of turning wind into power has come down dramatically thanks to early state investment in the industry.

There are, for starters, changes that individuals and businesses simply cannot achieve. Only the government can make the investments in the national grid needed to enable more renewable energy.

Many price signals get lost in transmission.

If driving becomes costlier, but there are no decent walking, cycling or public-transport options, people won’t switch.

Ditto if carbon pricing makes an EV cheaper over its lifetime, but families can’t afford the upfront cost. Hence the need for cycleways and clean-car discounts.

The market-fundamentalist view is also short-sighted.

Plenty of people would like an EV, but not so many can afford the upfront cost.
Kelly Hodel/Stuff
Plenty of people would like an EV, but not so many can afford the upfront cost.

Decades ago, solar and wind power were expensive, and shunned by market-fundamentalist politicians. Others, fortunately, understood that if government invests in something, its massive purchasing power can help create a market, allowing firms to rapidly drive down costs through learning-by-doing.

Prices today are not the same as prices tomorrow. Those past state investments lie behind the now-plummeting price of wind and solar.

Another problem: since the carbon price increases gradually, it doesn’t always deter bad decisions now.

Firms invest in polluting technologies while they are still cheap; when the price rises, they must either abandon their stranded assets, or become powerful lobbyists for a high-pollution status quo.

Politically, too, emissions pricing alone is a losing strategy. The public feels the pain in higher prices, but sees no immediate gain. Politicians fare better if they can point to positive investments like improved public transport or job-rich green-energy schemes.

National’s climate change spokesperson, Scott Simpson, has distanced his party from a report which dismissed all other policy options beyond emissions pricing.
ROBERT KITCHIN/Stuff
National’s climate change spokesperson, Scott Simpson, has distanced his party from a report which dismissed all other policy options beyond emissions pricing.

Such emission cuts might diminish the pressure on other parts of the economy to decarbonise – but if so, the government can simply reduce the number of carbon “permits” it issues to industry. It is plain wrong to say that policies beyond carbon pricing will achieve nothing.

Of course, as Burgess points out, one cheap way to meet our climate targets would be to forget about reducing the carbon we emit and simply plant more trees to suck it out of the atmosphere. But the required afforestation of another 1.5 million hectares of farmland would be politically untenable.

There is no guarantee the carbon would stay captured – what if the forests all burnt down, or were harvested with no replacement? Betting the farm on forestry, as it were, would be an unfathomable risk.

And without wider action on issues like transport, New Zealanders risk becoming stranded, left trying to drive petrol cars in a world that no longer exports either petrol or cars.

Max Rashbrooke sees 1980s free-market orthodoxy lurking in the climate debate.
Rosa Woods/Stuff
Max Rashbrooke sees 1980s free-market orthodoxy lurking in the climate debate.

Of course prices can be a useful tool. But there is so much they can’t comprehend.

Encouraging cycling, for instance, cuts emissions – but also makes for happier and healthier people. Only by looking beyond carbon prices will we spy such opportunities.

This isn’t just a crisis: it’s also a chance, as Simpson puts it, to create “behavioural change in the way we live, do business, and exist as a society”.

It requires us to make collective decisions on collective investments – and not just force the choices onto isolated individuals grappling with a crude price instrument.