Monday, July 27, 2009

Climate change: Another strapped chicken

The government is currently pretending to consult on its international climate change target for the upcoming post-Kyoto negotiations in Copenhagen. And right on time, Nick Smith has released an "independent" report [PDF] from NZIER and Infometrics to show that its all too expensive, and that therefore we shouldn't bother making any real effort.

I've commented on the work of the Minister's chosen economic mercenaries before, and like their last one, its an exercise in dishonesty, what is known in the trade as a "strapped chicken". They assume carbon prices of NZ$100 - NZ$200 per ton - between two and four times the worst estimate used by the US Congressional Budget Office in their modelling. More importantly, they assume that this will not result in any increased tree planting. That's right - our most important means of offsetting emissions, and these clowns assume it out of existence from the outset. And so you get the usual dire predictions of economic catastrophe.

How much of a difference does the exclusion of forestry make? The Business Council for Sustainable Development points out that the report itself notes that MAF predicts that a $20 / ton carbon price would in the long term lead to increased planting of 100,000 hectares per year, sucking 30 MTCO2-e (around 50% of 1990 emissions) out of the atmosphere by 2020. MAF's previous work on forestry has been hideously wrong before, and I think this particular one should be taken with a grain of salt (I'll be using the OIA to try and get to the bottom of it) - but the BCSD is undoubtedly right in saying that the ridiculously high carbon prices used in the report would lead to an enormous land-use change, and likely to the conversion of most existing sheep and wool farms to forestry (compare: $400 - $500 per hectare for sheep farming in Gisborne, vs an average $1700 per hectare from $100/ton carbon assuming pine on a low-fertility site and a 30-year rotation (table here); or you can use LandCare's carbon calculator (designed for natural manuka / kanuka in hill country), and just multiply the revenue at the maximum price ($25) by 4 or 8 to get a rough ballpark figure).

It ought to be clear from the above that NZIER's report simply isn't worth the paper it is written on.

As for the Minister, he obligingly takes the worst case scenario - a 40% target with no international trading, and presents it as the baseline, conveniently neglecting to mention that we expect there to be trading so the price will halve, that the cost excludes our biggest, cheapest and easiest form of response, and indeed that we'll all still be better off under his strapped chicken scenario, and that that "cost" is merely forgone growth rather than money taken out of your pocket now. But he has a very clear agenda of scaring us all into doing nothing, so National's polluting donors and cronies (including the biggest polluters of them all, the farming sector) can continue to get us to subsidise their profits.