Thursday, August 31, 2006

Climate change: progress on the PFSI

Since the beginning of climate change policy in this country, there has been a recognition that the bulk of the effort in meeting our targets would be met with forestry. Planting tees provided the cheapest and easiest way of absorbing carbon from the atmosphere and thus reducing net emissions. But despite this, policy has consistently failed to encourage tree planting.

In the 90's, the then-National government simply assumed that removing "distortions" in the market around tax policy and losses would make the necessary trees magically appear - despite the absence of any incentive for people to plant them and no plans by the government to do so. But then, they believed that the market would also magically provide us with cheaper electricity, better health care, cheaper accident insurance, and better railways as well - and we know how well that worked out. In any case, reality failed to accord with government projections which assumed net planting rates of 100,000 hectares per year all the way out to 2020. NeoLiberals being the sorts who stubbornly insist that reality must change to match the theory, this fact was of course studiously ignored.

When Labour came to power, it realised it would have to do something to provide an incentive to plant forests, so it eventually proposed a Permanant Forest Sink Initiative: lock up your trees in perpetuity and promise to harvest them only in a sustainable manner, and you would get carbon credits for them. They balanced this carrot with the stick of the deforestation cap - if too many trees were cut down, then the additional liability would be imposed on those responsible. In a time of declining timber prices and rising land prices due to the dairy boom, this created a perverse incentive, and a mad rush to cut down trees and profit before the cap was imposed. Score one for stupidity. In the meantime, the PFSI was quietly forgotten, and the enabling legislation (the Climate Change Response Amendment Bill, which would allow the transfer of credits to private individuals and businesses) left to languish at the bottom of the Order Paper.

Now, it looks like the PFSI is back. There have been some minor changes, including a backdating of credits to 1990 for indigenous forest, and a lifting of the original restriction on harvesting (forests originally could not be harvested even sustainably for 35 years), but the program is essentially the same. The question now is whether forest owners will go for it...


Cheaper electricity under Labour - no, prices has risen more quickly under Labour than when National was in government.

Better health care - Labour is cutting tens of thousands of people from the waiting lists for operations and the actual number of operations is falling, despite large increases in health expenditure.

Cheaper accident insurance - National deregulated ACC and prices did fall. Labour re-nationalised ACC and prices rose.

Railways have sufferred from a lack of patronage over long distance as it's as cheap to fly and quicker.

You state "when Labour came to power, it realised it would have to do something to provide an incentive to plant forests".

What incentives?, they nationalised carbon credits, and the number of areas being planted in trees fell and will now cost the taxpayer over $1bn dollars.

Nice rant but low on actual facts - now Labour has to be seen to do something so they have dusted off an old plan and the public will forget and nothing will be done.

Sounds like the rest of Labour's time in office.

Posted by Anonymous : 9/03/2006 12:16:00 PM

Anon: As I've argued before "nationalising" carbon credits is a misnomer. They are purely an accounting convention between parties to the Kyoto Protocol, and hence never belonged to forest owners in the first place.

Labour's problem with forestry hasn't been a failure to devolve credits - as I've argued before, this is insanity in the absence of guarantees that the trees will never be cut down - but the failure to devolve liabilities. Clearfelling trees to convert into dairy farms now imposes significant costs on society in the form of a carbon liability, and those costs should be paid by the landowners responsible. That's what the deforestation cap was supposed to do - but the government foolishly left a five year window before it applied. It's an enormous policy failure, and one they need to correct ASAP.

Posted by Idiot/Savant : 9/03/2006 12:38:00 PM

It seems to me everyone is missing the point. In a ideal world those creating the sinks should get paid for their contributions and vice versa for those grazing more cows. In a simplistic scenario more farmers would both strive to be carbon neutral and they would utilize trees to clean up river and stream polution. But the Labour Govt can't accept this as any producer paying for their greenhouse gas emmissions effectively introduces a carbon tax to consumers and makes NZ less competitive internationally gainst most our direct food competitors (esp Chile and to a lesser extent Oz) who aren't as knee-capped by Kyoto (Oz haven't signed).

So the Labour Govt have acted as communists and have stollen the credits from the forestry sector (effectively killing it as will be proven in a few years once the infastructure declines further from here as a result of so many stupid regulations/taxes/controls and penalties) while being lobbied by the dairy sector for the status quo - Note through Landcorp the Govt is the second largest shareholder in Fonterra - fact - so they have a hidden agenda in this respec, and through Landcorp they have converted 30,000 Ha of forestry to dairy themselves north of Taupo!

This Govt is a fraud, their Kyoto policy is a patch up job, running from disaster to disaster - it's a house of cards that will collapse by end 2007 revealing them for what they are - a bunch of ideallists that have screwed the public over Kyoto and in so doing destroyed the forestry sector.

Posted by Anonymous : 12/29/2006 07:09:00 PM