Tuesday, September 29, 2009

Climate change: The bill

I spent some time reviewing the Climate Change Response (Moderated Emissions Trading) Amendment Bill today in preparation to submit on it. The first interesting bit is the regulatory impact statement, which the Herald points out is harshly critical of the level of analysis applied to the scheme. According to Treasury,

the level and quality of analysis presented is not commensurate with the significance of the proposals... the RIS does not provide an adequate basis for informed decision-making.
Reading the statement, its not surprising. For example, there's the list of policy options in response to the "problem" of an ETS which might limit emissions:
  • Option 1—Change implementation dates in existing legislation - essentially, do nothing, other than tweak the law to allow for National's pissing around. Ruled out because imposing real costs on polluters is seen by National as a problem, rather than a solution;
  • Option 2—Abolish the NZ ETS - would cost $1.5 billion and destroy our international reputation, making it a non-starter;
  • Option 3—Replace the NZ ETS with a carbon tax - more delay, and thanks to the international community's preference for emissions trading, not least-cost. Another non-starter;
  • Option 4—Delay the entry dates of all sectors other than forestry until 1 January 2013 - would cost $1.275 billion; see Option 2 above.
  • As you can see, its salmonella all round there; with those 4 options as "alternatives" you can present anything you like and have it look good by comparison. Which is the point of the exercise: present a number of extreme false alternatives so the preferred one (no matter what it is) can look like the safe, middle-of-the-road path. Even if it costs $2 billion a year by 2030...

    As for the bill itself, it does what it says on the label - guts "moderates" the ETS to be more favourable to polluters, by handing out massive and unsustainable production-based subsidies to polluters, while capping the price they will immediately pay for it - a move which will destroy the incentive for forestry, our biggest source of potential reductions. That's all worth opposing, but there's some sneaky stuff in there as well. For example, under the existing law, allocation decisions must be made openly and are subject to extensive consultation - meaning that we get to see how much the government wants to give away and to whom (and object if necessary). Now, allocation decisions are made in secret; there is still a duty to "consult", but that means the usual business of talking with industry insiders rather than an open, transparent public process. The upshot: more room for corruption in allocation decisions. And with billions of dollars at stake, that is not something we can afford.

    I urge everyone to submit on the bill. Even if all you have to say is "this is a dog of a scheme and I object to subsidising polluters out of taxation", it is worth doing. National needs to be put on notice that we will not stand for their polluter welfare. And a tide of submissions against the bill is the way to do it.