Thursday, November 20, 2008

Climate change: Fallow on the ETS backdown

The Herald's Brian Fallow hooks into the government's backdown on the ETS this morning, arguing that it will lead to a rise in uncertainty for business. Indeed, that uncertainty has already cost us, with carbon trader EcoSecurities Group suspending their plans to launch a new Zealand subsidiary in response to the government's decision. That's an extreme case, but there will be similar problems all throughout the energy and forestry sectors, with investment decisions being delayed until the costs of carbon - or whether there will be one at all - is again knowable. Which means we may see that tremendous revolution in our energy infrastructure, which has seen 500 MW of wind built or under construction, and another 2,300 MW in the pipeline, grind to a halt, as investors in clean energy fear being undercut by Gerry Brownlee's (dirty) "sexy coal".

Fallow also has some strong words on the idea of a select committee of politicians pretending to judge the science of climate change:

The committee should hear competing views on the science from internationally respected sources, it says. Apparently the careful processes of the United Nations' Intergovernmental Panel on Climate Change, endorsed by the United States National Academy of Sciences, the Royal Society and all the other guardians of the scientific method, are not good enough.

A few New Zealand MPs are more likely to get to the bottom of it.

That's laughable.

Laughable indeed. But that's the whole reason why ACT wants politicians rather than scientists to judge - because they're more likely to reach the right (or rather, wrong) conclusion.

Finally, he points out what the argument over carbon taxes vs an ETS is really all about: price. While it will fluctuate, the price of carbon in an ETS with international trading will converge on the international market price - currently over $30 a tonne. By contrast, advocates of a carbon tax, such as the Business Round Table, think it should be set at between $5 and $10 per tonne. In other words, the supposed advocates of the free market are simply sticking their hand out for a subsidy for their pollution. I for one see no reason to give them one.