Monday, August 17, 2009

Climate change: Utter madness

That's the only way to describe the government's secret proposal to cap the price of carbon and ban overseas sales of credits. The government's reason for this is twofold: it would align our scheme with Australia's, and it would give polluters certainty about the costs they face. But New Zealand faces different challenges from Australia, and that "certainty" would come at the cost of a massive subsidy for pollution from the taxpayer, either because we are forced to buy credits on the international market to on-sell at much lower prices, or in the form of forgone sales. Either way, taxpayers will be subsidising the profits of polluters by picking up some of their costs. And that is neither right nor fair.

As Jeanette Fitzsimons points out, it is also unlikely to decrease emissions. Report after report after report has told us that the key to reducing our net emissions lies in planting trees. They've also suggested that that will happen without much need for intervention if forest-owners can expect a high price for their carbon. But getting that high price requires no price cap and access to the international market. The government's proposal is a good way to ensure that those trees are never planted, and that our emissions continue to rise. Its a deliberately counterproductive policy. But National's polluting donors and cronies will do very well out of it - and that is all they care about.