Climate change: even failure is better than nothing

There's an interesting - and pointed - question scheduled in today's Question Time:

Hon Dr NICK SMITH to the Minister responsible for Climate Change Issues: Which elements of the Government's climate change policies covering new taxes, restrictions on deforestation and energy efficiency would he describe as a success?

There's only one policy that I'd call an unmitigated success: the waste strategy. This has seen emissions from waste fall by 30% since 1990. Unfortunately, waste makes up only a small part of our emissions profile, so it hasn't had a large effect.

According to his answers to Jeanette Fitzsimons in Question Time yesterday, Hodgson thinks the Projects Mechanism has been a success, albeit a small one. Last year's Review of Climate Change Policies disagreed, finding that it was unclear whether there was actually any net reduction in emissions. The Projects Mechanism has helped "kick-start wind energy in this country", though only in a minor way; arguably the real push for wind has been from worries about future gas supplies and the cost of carbon tax, coupled with difficulties in getting other projects through the RMA process. The electricity sector is very much heading in the right direction in terms of what new generation it is building (with the notable exception of Marsden B), but the government has been lucky more than anything else. And with the demise of the carbon tax, we may see that progress disappear.

While the government has made some moves to push for energy efficiency, they have generally been hamstrung by their reluctance to intervene in the market. The building code has been tightened, but not enough, and steps to improve insulation in existing houses and fit solar water heaters have been limited by funding. Obvious steps - such as fuel efficiency standards or differential registration fees for cars to gradually improve the overall fuel efficiency of our transport fleet - have not been taken.

Negotiated Greenhouse Agreements (the "voluntary approach" favoured by big business and National) haven't resulted in any real savings. which is what you'd expect; business will never agree to voluntarily reduce its profits. They need to have their arms twisted.

The carbon tax didn't even get a chance to get off the ground. Still, according to the review, it would have resulted in emissions reductions of 13.45 MtCO₂e over CP1. The subsequent cabinet paper undersold this as "approximately 3 percent of New Zealand ’s total greenhouse gas emissions projected over CP1" - but it was fully a third of our then estimated deficit. It would have made a real difference, but has now been canned. And OTOH, the policy was flawed from the outset by having its introduction delayed until 2007. This sort of economic instrument takes time to have an effect, particularly on large-scale emitters (where the investment cycle tends to be about twenty years), and the longer the lead-time, the better. If we'd introduced the carbon tax back in 2004, the market would have had more time to adapt, and we'd be looking at lower industrial and energy emissions than we are now. And if we'd introduced it back in 1997, when National first planned to, we'd be a hell of a lot better off.

(It's ironic that the tax has been canned largely because of concerns about the popularity of sticking less than 4c/L on the price of petrol. Meanwhile, thanks to George Bush's Middle Eastern madness, we've seen a rise in petrol prices of around ten times that, which is shifting behaviour quite nicely. Again, the government has been lucky - though its a perverse kind of "luck" bought with a lot of dead Iraqis).

The enormous area of failure has of course been forestry policy. Since the beginning, our climate change policy has centred on offsetting almost all of our emissions with forest sinks. Unfortunately, we didn't take any real steps to ensure the necessary trees were planted; in the 90's, the government myopically believed that the market would provide, largely as a result of basing future projections on the last two points on the graph, and more recently policy has created a perverse incentive for deforestation (though low timber and high dairy prices coupled with pure spite on behalf of forest owners hasn't helped). we've also been bitten twice by reassessments of the figures; once in 1996 when we discovered we'd wrongly estimated our 1990 baseline, and then again last year when a further error and a rules clarification meant that a large amount of our post-1990 forest plantings didn't count as they'd been planted on scrubland. As a result, we've seen our projected carbon balance decline from a surplus of 34 MtCO₂e (1999) to a deficit of 36 (2005) and now 60 MtCO₂e (2006). And given the growing time of trees, its now probably too late to do much about it.

This is a fairly bleak assessment - a lot of failure, with most of the successes really down to luck. But its important to consider what the alternative is: nothing. National would withdraw from Kyoto, and make no real efforts to reduce emissions. Worse, their policy of gutting the RMA and their support for building coal-fired power stations to ensure cheap electricity (effectively an environmental subsidy) would ensure a large rise. Labour's policies have generally been a failure - but even that failure is better than nothing.