Thursday, December 04, 2008

Treasury on climate change

In addition to trying to restart the Revolution and take us back to the 90's, Treasury's Briefing to the Incoming Minister [PDF] also has a few things to say about climate change. But not just on domestic policy, no - in addition to thinking they should be doing MfE's job, they also think they should be doing MFAT's, and are advising on the position New Zealand should take in the current international negotiations. They don't go so far as to suggest a target, but do say that we should have a "bottom line" of

recognition of our unique emissions profile when setting our target, and agreement to a level of stringency that is appropriate relative to other countries’ targets – in particular the major emitters such as the USA and China, but also the advanced developing countries, such as Singapore, South Korea and regions of the Middle East.
The clear subtext is that we should refuse to ratify any deal if this does not happen.

This of course assumes that we have a choice in the matter. We don't. As MAF pointed out, our largest export markets are also the most environmentally sensitive, and are quite willing to use trade policy to produce environmental compliance. Any failure to sign up to Kyoto II will see the trade barriers (such as border carbon taxes) go up quicker than you can say "filthy cows". Treasury's advice is simply a recipe for disaster.

The same is true of their advice on domestic policy. Here they continue to push market fundamentalism: the ETS is all we need, and other measures, "such as the thermal moratorium, biofuel standards and vehicle-fleet fuel-economy standards", should be repealed as market distortions. In case it needs to be pointed out, we still do not have a market mechanism, and have just abandoned one for the fourth time in fifteen years. The policy of putting all our eggs in the market basket and having no interim measures to control emissions in the meantime is precisely the policy that has failed us for fifteen years and seen emissions rise and rise and rise. Its also worth pointing out that the countries which have most successfully reduced emissions - such as Norway - are precisely those that combine market mechanisms such as carbon taxes and emissions trading with strong backup policies designed to ensure minimum standards and push the market along. This of course is anathema to the market fundamentalists in Treasury, but its hard to argue with the empirical evidence.