Monday, February 26, 2007

Climate change: no policy

What is the reason for the dismal increase in New Zealand's greenhouse gas emissions over the past seven or seventeen years? The answer, as the Herald on Sunday so succinctly put it, is "no policy". While successive governments have talked a great deal about policy to combat emissions over the past seventeen years, very little of it has been implemented. And the two most successful implemented measures - the use of the government's call-in powers under the RMA for large emitters, which saw Contact Energy's Taranaki Combined Cycle gas turbine required to offset its emissions, and the current government's Projects Mechanism, which jumpstarted the wind industry in New Zealand - were both killed in short order, the first for ideological reasons and the second because Treasury used too-short a planning horizon.

So why have we had no real policy over the past seventeen years? Why have we seen the government promise and then back away from a carbon tax or equivalent economic instrument not once, but three times? There are three broad components to the answer:

  • Opposition from business: The business community has opposed any action on climate change since 1990, and has fought hard to protect their ability to increase their profits by dumping their costs on the rest of us. This has raised the political cost of government action (while the political benefit has remained low), and ensured that the government has backed away from any serious policy.
  • A radical policy-culture: The Revolution left us with a radical and doctrinaire policy culture, with a strong ideological preference for market-based solutions, no matter what the policy question was. In the case of climate change, this led to a fixation on the Holy Grail of a broad-based economic instrument which imposed a uniform price for emissions across the entire economy. This took years to develop, and has proven politically impossible to implement. In the meantime, more pragmatic policies have been ignored, or in some cases (e.g. use of the RMA) abandoned. Our policymakers have clearly felt that it is better to have no policy at all than one which fails to meet their rigorous standards of free-market ideological purity.
  • We thought we had plenty of time: Until 2005, projections consistently showed that New Zealand would have a large surplus of emissions credits to sell even if emissions followed a high growth scenario. In 1999 we thought forest sinks would give us 65 million tons of CO2 net to sell; in 2002 we thought it would be 55. This meant there was no real pressure to implement policy - after all, we already had the problem more than covered. The problem was that the forests weren't there - planting rates had been systematically overestimated since 1994, and while they were continually revised downwards, those revisions still overestimated. So, the forests we were depending on weren't being planted (and there was no government policy to ensure that they would be).

To a certain extent, the Bolger / Shipley National government also hid behind uncertainty, though rather less convincingly in the case of Shipley.

Fortunately, these three barriers are all much weaker now. Most of the business community has accepted the reality of the problem, and is now asking for a clear price on emissions to provide certainty. Neo-liberalism has eased, and the government is now pursuing more pragmatic solutions (some of which even involve regulation rather than market instruments). And we've woken up to the danger of relying on forests that aren't really there (though our projections still systematically overestimate planting rates), and have realised that if we want sinks we need to make sure that the trees are a) planted; and b) not cut down. So things are actually looking quite good to see serious policy implemented. Unfortunately, it's taken us seventeen years to get to this stage, and meanwhile those countries which acted early (like Norway) have seen their emissions reduce and are laughing all the way to the bank. So if we really want to lead the world on this issue, we have a hell of a lot of catching up to do...


2 high level, ex-Ministry for the Environment staff that I discussed climate change with pointed squarely at the Government, saying virtually every major (and many minor) policy suggestions that they'd made had been shut down by Cabinet, frequently before they were even officially announced.

No surprises there...

Posted by Asher : 2/26/2007 08:41:00 AM

the Government's axing of the Geothermal Institute at Auckland Uni seemed a bit short sighted.

Posted by Anonymous : 2/26/2007 09:09:00 AM

Asher: Nope, none at all - governments have been consistently bad at dealing with this, and have remained firmly fixated on economic instruments and not pissing off the business sector. And while I'm hopeful, I'm not sure yet that this government is really any different.

Neil: as policy failures go, that's a tiddler. What I'm talking about here is the failure to implement any economic instrument, the failure to enact policy to ensure that trees were planted, and the shortsighted removal of working policies because they were imperfect and did not match policy advisor's ideological assumptions.

Posted by Idiot/Savant : 2/26/2007 11:12:00 AM

I/S - Your post has the tenor of exonerating the current government, and blaming it on actions 20 years ago.

There's your problem, right there. I think you are letting ideology get in the way of reason.

Posted by Anonymous : 2/26/2007 11:49:00 AM

Your post has the tenor of exonerating the current government, and blaming it on actions 20 years ago.

Hardly. The present government was (until last year) just as blinded by ideology as the 1990 - 99 National government, just as lax about relying on phantom trees, and just as cowardly in the face of opposition from the business and farming lobbies. It was Labour who finally removed climate change from the RMA (though the policy was long dead, the Environment Court having treated press conferances as legislation in violation of Fitzgerald v Muldoon for a good seven years beforehand), and it was Labour who killed the most recent effort towards putting a price on carbon.

What I'm trying to say is that these are just an example of a much deeper problem, a long-term policy failure that has persisted regardless of who has been in power. And what I'm trying to say in the latter section is that I think the ground has shifted, and that that failure may not be repeated. But we'll just have to wait and see on that front.

Posted by Idiot/Savant : 2/26/2007 12:18:00 PM

"Helengrad PC communists are evil die die Ian Wishart global warming conspiracy tax cuts for working dogs"

Posted by Anonymous : 2/26/2007 01:35:00 PM

Just a reminder to everyone: please do not feed the trolls.

Posted by Idiot/Savant : 2/26/2007 01:46:00 PM


I'm a tad curious, who do you think has better environmental policies, Labour or National?

What are your vews on bio-fuels? I'm unsure I note that they have been pushing food prices up in a lot of the world and that rain-forests are being cleared to plant for bio-fuels. At the moment I'm leaning heavily towards hybrids and hydrogen as the better policy to pursue. What's your take.

Posted by Anonymous : 2/27/2007 01:08:00 PM

Oliver: Labour. On general environmental policy, they at least support the RMA and the protection of conservation land - unlike National who want to gut it and never saw a national park they didn't want to dig up for private profit. On energy, they are pursuing a renewable path - unlike National whose policy going into the last election was to burn more coal so as to provide environmentally subsidised electricity to Aucklanders (though this may have changed - they might have had another "road to Damascus" conversion, just like they did on Kyoto. But they don't talk much about energy policy, because its not as sexy or headline grabbing as tax, or welfare and immigrant-bashing). On climate change policy, Labour failed to implement their 2002 policy - but unlike National, they at least tried, and have remained committed to Kyoto. And from what has emerged so far, their current policy looks very good indeed. Now we just have to make sure it happens.

I support the use of biofuels, but its tinged with caution about other environmental impacts. But its worth noting that in New Zealand, we will be making them from waste, not by clearing forests. As for other technologies, it's not a matter of "alternatives" - one message that is quite clear from the global discussion of responses to climate change is that we need to do it all.

(I will also note that Hydrogen is not a fuel; it is an energy storage technology, and that it is realistically a long way off, and that we cannot afford to wait for it. So, lust after it all you want, but its not a credible solution to our present problems).

Posted by Idiot/Savant : 2/27/2007 01:35:00 PM


NZ biofuels materials aren't waste. They are all currently being sold abroad. The average price for tallow has almost doubled in the last two years so we may well end up importing in order to meet the targets.

National has proposed two new National Parks, one in the Waitaks and one in the far-north.

As for energy they have promised to make sure that geothermal and hydro are more attractive than coal or gas.

I'm not sure where you got the immigrant bashing thing from. I note that of the two biggest immigrant bashers in Parliament one is in a coalition with Labour and the other used to be a Labour MP.

Also it's worth noting that although Labour claims to be opposed to deforestation their current policies are actually ensuring that it's being accelerated.

Posted by Anonymous : 2/28/2007 02:21:00 PM

I/S -I think you are spot on with the point that the message from global discussions of responses to climate change is that we need to do it all. There will be no one way to both mitigate and adapt to climate change and countries that can respond flexibly and quickly in a variety of ways will position themselves the best to take on the enormous buisiness opportunities in cc and at the same time be a leader to others to show it can be done. Of course, it won't be easy but if we can get over our conservative policy approaches and think a little beyond policy as usual I think (and hope) we can do it. The thing is, the older policy hacks in Wellington making decisions about work programmes need to realise that you need to actually do something to help address climate change - that means action not just talk. It'll be interesting to see if the present Govt. can get through the current consultation without backing off the very worthy but timid accelerator. I notice the forest industry and national party leading the charge at the moment, even resorting to rather dirty tactics. But its important to keep the work going and do what we couldn't do in 2002 and implement some robust policy.

Posted by Anonymous : 2/28/2007 09:22:00 PM

I wish my name was David Farrar said...
"Helengrad PC communists are evil die die Ian Wishart global warming conspiracy tax cuts for working dogs"

That's a classic!

Posted by Rich : 4/22/2007 12:25:00 PM