Friday, December 06, 2013

Climate change: More windfall profits

Earlier this year, in retaliation for our refusal to participate in a post-Kyoto climate change deal, we were locked out of international carbon markets. And now the government has finally been forced to recognise this, banning the use of foreign credit from the ETS from 2015:

Mr Bridges also announced a complementary decision around the use of existing Kyoto units in the ETS after May 2015.

The decision allows participants to continue to use Kyoto Protocol first commitment period Certified Emission Reduction units (CERs), Emission Reduction Units (ERUs), and Removal Units (RMUs) to account for surrender obligations up until 31 May 2015, after which these units will no longer be eligible for surrender. From then they will need to surrender New Zealand Units (NZUs) to meet their obligations.

Participants holding New Zealand Assigned Amount Units (NZ AAUs) will be able to use them to account for surrender obligations and will automatically have them carried over for surrender beyond 31 May 2015.

So, the ETS will be domestic-only, as it should have been. But spot the scam: those holding current NZ AAU get to keep it and use it in the future. So, you can collect your government pollution subsidy, pay for your emissions with cheap foreign hot air at 20 cents a ton, then collect windfall profits post-2015 when that AAU increases in value. And National's polluter-cronies will be laughing all the way to the bank...

And then they wonder why people think the ETS is just a scam.

If we want to fix this, we need to end carryover and cancel old credits. We also need to bring the scheme back into balance, by eliminating pollution subsidies. Carbon markets only work when there is a shortage of permits. At present, we don't have a market; we have a bad joke.