Wednesday, October 10, 2007

Climate change: why we should use the RMA as well

Tomorrow, the government will release its long-awaited Energy Strategy and Energy Efficiency and Conservation Strategy, both of which will play a vital role in our response to climate change. But there's another important climate change-related bill currently working its way through the process: Jeanette Fitzsimons' Resource Management (Climate Protection) Amendment Bill. This bill is currently before select committee, and due to report back by the end of the month (unless of course it is extended again). If passed, it would repeal the amendments made by the 2004 Resource Management (Energy and Climate Change) Amendment Act, allowing local authorities to once again consider the effects of climate change when considering resource consents.

While the government supported the bill at its first reading, there's no guarantee that they will support it any further. However, I think it would be a good idea to do so, for two reasons. Firstly, there is the need for an interim policy to limit emissions growth until their emissions trading scheme is fully implemented, and ensure that we do not commit ourselves to higher baseline emissions as we did in the 90's. While expectations of a future carbon price should theoretically affect investment decisions and limit emissions growth (and seems to be doing just that in the electricity sector), there's the worry that large emitters will seek to change policy through the electoral system rather than change their behaviour. Using the RMA as an interim policy will provide some backup against that - and some insurance in case in case this effort to impose a price on carbon goes the same way as the last three attempts and ends up being dumped at the last minute.

Secondly, RMA controls would be a useful complement to emissions trading, for example by allowing local bodies to require emitters to make technological improvements or be ready to use carbon capture and sequestration technology as it is developed. This approach has been successfully used in Norway to complement a carbon tax.

For too long, New Zealand policymakers have approached the question of market instruments vs regulatory controls as if it was an "either / or" proposition. It's not. Using both sorts of tools in a complementary way can give us a far more robust and effective policy than if we rely solely on markets. The government finally seems to be showing some understanding of this, e.g. with its biofuels and vehicle emissions policies. Hopefully it will continue that approach, and support the use of the RMA as well.