Thursday, March 23, 2006

What does it mean for the portfolio?

One of the things that has been overlooked in the departure of David parker is what it means for his portfolios - and particularly (because I'm interested in it) the climate change portfolio.

For those who haven't been following it, climate change policy is currently undergoing a major review, sparked by a reassessment which saw our projected balance of units during CP1 plummet from a healthy surplus (allowing us to sell carbon credits on the international market) to an estimated 36 MtCO2e deficit. Since then, further worries about deforestation have seen that deficit grow to around 60 MtCO2e. This caused the government to throw out its entire climate change policy (and notably the carbon tax) and effectively start again with a blank sheet of paper.

Officials were supposed to report back to their Ministers on March 3rd with new policy options, and these were supposed to be hashed out into a coherent whole by a Ministerial Reference Group consisting of the Ministers of Finance, Agriculture, Forestry, Energy, Transport, Environment, Economic Development and Climate Change. The core of the resulting policy was supposed to be presented to Cabinet on April 3rd - less than two weeks away. Parker's sudden departure is likely to have thrown this whole process up in the air. And while the portfolio has been reassigned to Pete Hodgson, who has handled it before, his responsibilities as Minister of Health (a very heavy workload portfolio) may prevent him from paying it the attention it deserves. The change in Ministers may also result in a change in policy; previously, Parker had indicated a willingness to explore some new options (notably, using the RMA in the place of a national-level economic instrument, and actually doing something to promote efficiency gains in transport for once). The first of these was rejected during Hodgson's tenure, and the latter never really considered - and they may now fall by the wayside again, leaving us with no effective policy whatsoever to reduce or limit emissions just two years out from the start of CP1.