Tuesday, September 22, 2009

Climate change: An unsustainable pathway

The cost of National's generous subsidies to business through the ETS seems to be becoming a significant issue, with duelling numbers in Question Time in the House today. According to the government (and the Ministry for the Environment), National's revised ETS will in fact cost substantially less than the status quo, by up to $919 million by 2018 [PDF]. And it will, as the current scheme extends support to 2018, while National's one reduces it by 1.3% a year from 2013 (though note the chicken-strapping: carbon costs $25 a ton until 2013, when most of National's costs are, and $50 a ton after, when their savings occur). But that short-term picture is highly misleading - as can be seen below:


(Based off the graph in the Summary of ETS Changes [PDF]; the vertical axis is percentage of emissions, though the difference between capped and production-based subsidies makes that difficult as well)

So, National's scheme costs a little less in the short-term - and massively, massively more in the long-term. Exactly how much depends on our emissions path, and its complicated by the fact that National's subsidies are production-based, a percentage of actual emissions rather than of 2005 emissions - but under any reasonable scenario, we will be paying much, much more under National, and paying it all the way until 2090.

This is both environmentally and fiscally unsustainable. It is neither moral nor affordable to subsidise dirty polluters for the rest of the century. Labour's first move when it returns to government - and they'll return to government someday - should be to eliminate National's subsidies and let polluters pay their own way. And if they can't, and they go out of business, then we will be better off as a result - because they were never really "profitable" anyway.

Update: Clarified graph axis. No, they're not quite comparing apples with apples either, but its the government's graph, and it works well enough for this purpose.