Monday, January 06, 2020

Climate Change: Complementary measures

For the past twenty-five years, climate change policy in New Zealand has been all about emissions pricing. Policy makers thought that all you needed to do was make people pay for their pollution via a carbon tax or emissions trading scheme, and the problem would be solved. This mechanism was supposedly so perfect that no other policies were necessary, and in fact would be worse. Other than giving the public a bit of information on energy efficiency to steer them towards better choices, our emissions path would be left in the hands of the market.

We can blame Roger Douglas for this. His revolution was 35 years ago now, but it shaped a generation of policy makers and set the default ideology of the NZ policy community. Markets were efficient. Regulation wasn't. So, no regulation, except that done by the market.

As in other areas (e.g. leaky homes), the result of that policy has been dismal failure. First, from procrastination. Then, when we finally got an ETS, because it just didn't work. Part of that was because politicians strapped the chicken to keep carbon prices low, actively undermining their policy (something they are still doing, BTW). But partly, it turns out that markets are just a bit thick, a bit slow on the uptake, and (contrary to market dogma) perfectly willing to leave money on the table rather than change what they're doing (because change means risk, and nobody ever got fired for following the status quo).

Other governments understand that. And so they're perfectly willing to pursue a variety of policy measures to reduce emissions. And now, it looks like enough Rogernomes have died or retired to allow New Zealand to do the same. Right before the holidays, the government released a discussion paper on Accelerating renewable energy and energy efficiency. And it contains top-down regulatory proposals to sit alongside the ETS, to make sure the market gets the message. The most significant one is to outright ban the use of coal for process heat in factories except for high-temperature applications. Which is a no-brainer; there are cleaner alternatives (the Climate Change Commission has a whole report on this), and the sooner we push polluters towards them, the sooner emissions will drop. To allow time for existing users to change, the ban won't be immediate; it will initially ban any new builds, while existing users will have to upgrade by 2030. Which does not seem unreasonable. My biggest question is why they're not also including a (later) ban on gas, and why they're not also applying it to electricity generation. Because pretty obviously, there's no gain from electrifying dairy factories if the electricity which powers them comes from burning fossil fuels.

The other question of course is if we're doing it for coal in factories, why aren't we doing it for fossil fuel cars? Its the same argument: there are cleaner alternatives, and the certainty of a ban will force the market to adopt them quickly. And as with coal, we can stagger implementation to allow time to change: ban imports from 2030 (as many other countries are doing), and re-registrations from 2040 (to make sure the damn things get off the road and into museums where they belong). Twenty years to turn over the vehicle fleet doesn't seem too onerous, and with road transport our biggest source of emissions after agriculture, its something we need to tackle.