Monday, March 27, 2006

Chaotic policy and squandered opportunities

It looks like its not just greens who are upset at the government's about-face on climate change. Kevin Patterson, a senior energy modeller for the Ministry of Economic Development, has publicly criticised "chaotic policy" in the area:

Dr Patterson was distraught at the dropping of the carbon tax, which he said would have solved about 75 per cent of our global warming problems.

The decision meant New Zealand had no realistic hope of meeting its protocol targets, as other policies, like projects to reduce emissions and encourage more efficient use of energy, were "not very effective".

"They're dreaming if they think it's going to make a difference."

Unfortunately, our climate change policy never seems to have been about making a difference - instead, it's always been about collecting windfall profits from the sale of carbon credits. And now that those credits have disappeared, we're left rather exposed. It's immensely frustrating when you consider that effective measures - one way or another of internalising the cost of carbon and making emitters pay for what they are doing - have been developed and then repeatedly delayed over the past decade. We were supposed to have a carbon tax in 1997 as a way of meeting our UNFCCC obligations. It was paradoxically put on hold at the last minute because we'd adopted a binding emissions reduction target under the Kyoto Protocol. We had another chance in 1999 when the National government wanted to introduce one as an interim measure to precede a full emissions-trading regime. It was dumped on the floor by the incoming Labour-Alliance government. Labour's carbon tax, hashed out over 2001-2002, was to be introduced in 2007, only to be dumped before even having a chance to work. The first two times, policymakers could appeal to the mirage of anticipated carbon credits. Labour has no such excuse.

Under the Kyoto Protocol, we are required to either reduce our net greenhouse gas emissions to 1990 levels, or take responsibility for the excess by acquiring credits off other parties. While the government is promising new climate change policies after the review (which finishes up sometime this month), if they're ruling out a broad-based carbon tax, then its hard to see what they can do which will make a real difference. Instead, we now seem to be firmly committed to the latter path of buying credits. Given the opportunities we have squandered, I can understand Patterson's frustration.


Much as Labour has ditched the carbon as a policy, I'll charitably accept that it's because they could never get it passed. It's Parliament that's the bad guy this time round.

Posted by Lyndon : 3/27/2006 01:04:00 PM

It's was a Labour fuck up from start to finish.

They thought if they Nationalised the carbon credits earnt by new planted forests they assummed they would have credits to sale.

That fact they were warned that may not be the case they went ahead and signed up to the scheme with no plan if it wasn't the case.

I don't see how the cancelling of the carbon tax will make any difference to reduce pollution back to 1990 levels.

The price of petrol has risen markedly over the last two year and car usage hasn't reduced dramtically.

All the carbon tax was a tax to pay for the extra polluting we are already doing.

Posted by Anonymous : 3/27/2006 01:22:00 PM

Lyndon: I don't really accept that. The Maori Party have shown significant concerns about climate change; the government simply didn't want to work with them. More importantly, they didn't even want to fight for their policy. Instead - and as usual - they just folded.

Change doesn't happen by itself. If the government wants to do things in this Parliament, it needs to make the arguments and actually fight for its policies.

Posted by Idiot/Savant : 3/27/2006 01:40:00 PM

Anon: It goes a lot deeper than that. Every government since 1994 has reliedon forests for greenhouse gas reductions - while doing absolutely nothing to ensure that sufficient were planted or planted in the right place. One of the reasons all those credits disappeared in 2005 is becuse we actually looked and realised that they were never there in the fist place; many of the "new" forests had been replanted on scrubland, which would have turned into forest anyway absent human intervention, and were thus ineligible for credits. The deforestation cap - which I should point out was National policy as well in 1999 - has simply been the icing on the cake.

A big problem has been different parts of the government working at cross purposes. Labour took some steps to end this by putting the Ministers of Transport, Energy, and Climate Change in the same head. They should have added forestry to that mix as well, and arguably before transport.

The carbon tax would have paid for credits on the international market. More importantly, it would have internalised the cost of carbon and forced the market to pay attention to it. This would have affected business and investment decisions, and helped steer the economy away from further carbon pollution. That's what economic instruments do, in the same way that (e.g.) road user charges are supposed to make people consider alternatives to driving to work.

There are alternatives with climate change, both in the long-term and the short. But the market won't pursue them unless the costs of their activities are fully internalised. And the only way to do that is through an economic instrument.

Posted by Idiot/Savant : 3/27/2006 01:43:00 PM

The most painful point here is that the best solutions are (a) long term and (b) by making the market do the work (because markets are the best way to efficiently work around problems).

The obvious way to do that is to have a carbon tax, signal its existence clearly well in advance, and make sure that industry doesn't end up thinking "Oh, long term we don't need to worry because we'll get that scrapped next election".

Where we are is laughably far from that.

National believes in carbon taxes only when they think seriously about the issue - ie not very often and certainly not in opposition.

Act opposes them because they believe in market-based solutions only if they involve less taxes (so much for their alleged faith in markets). Besides which it's desperately unhip to believe in global warming if you're a conservative.

UF doesn't believe in carbon taxes because Peter Dunne's electorate is a group of long-distance-commuter suburbs.

And lets just not talk about NZ First and carefully-thought-out policy.

Posted by Icehawk : 3/27/2006 02:18:00 PM