Wednesday, June 18, 2008

Climate change: doing the numbers

Yesterday, United Future announced that they would not support the ETS as it imposed too high a cost on business and households. Today, for exactly the opposite reason, the Maori Party joined them. The upshot is that now the government has only one option to pass the bill: cobble together an unlikely alliance of the Greens and NZ First.

This is going to be very difficult. While NZ First will support the bill as it stands, provided the government throws in a little something to help people cope with higher power prices, the Greens want serious concessions to improve the environmental credibility of the scheme. The problem will be finding something that NZ First won't veto. As for their two key demands, the government won't want to give them a more progressive introduction of liquid fossil fuels (which is a mistake; gradual introduction will prevent exactly the sort of shocks people are worried about), while I suspect NZ First would veto early introduction for fertilisers. So what do they have to bargain with? While the Greens should be asking for a lowered CP1 cap, or a commitment to a steep downward path for the cap once the scheme is fully implemented, the blunt fact is that Labour is in no position to make such promises, as it cannot keep them. OTOH, locking in the latter in legislation now would at least require a future government to actively change it, which would need time and political support, while resulting in significant adverse publicity and possible threats to trade. And it would be exactly the sort of symbolic victory the Greens would need to justify backing the scheme to their supporters.

And that said, I think the Greens should grit their teeth, play the long game, and support it anyway. Yes, its unfair, rewards polluters, and makes the rest of us subsidise "self-reliant" farmers who still have their heads in the sand, but even in the worst case the long-term environmental benefits outweigh that, while it opens significant possibilities for reductions. And that's what I expect the Greens to vote for - not for short-term rage (as much as I share it), but for the long-term benefit of the planet.