Thursday, April 07, 2011

Climate change: The PCE on the ETS

Back in 2009, National "reformed" the ETS, adding enormous ongoing subsidies for polluters and giving farmers - our worst greenhouse gas emitters - a free ride until 2015. They're now engaged in the first review of the scheme. And the Parliamentary Commissioner for the Environment, our independent environmental watchdog, has a few things to say about those changes [PDF].

The PCE's submission highlights the yawning gap between our policies and our commitments. We've publicly committed to a 10 - 20% reduction on 1990 levels by 2020. But current projections show our emissions will be 30% above 1990 levels by that date:


Some of this is attributable to bloc deforestation, as trees planted in the early 90's come up for harvest. Some of it is also due to the relentless rise in dairy emissions. And some of it is due to our continued use of old, dirty technology. But regardless, one thing is clear: we are not going to close that gap with an ETS which exempts half our emissions and hands out unlimited amounts of free credits to polluters for the next hundred years.

The PCE makes four key recommendations: end the price cap and 2-for-1 deal, which currently subsidise pollution until 2012. Cap free allocation and phase it out faster, so polluters face an actual incentive to reduce emissions. Prohibit lignite projects from receiving free credits, and legislate to make the criteria for granting credits to new industries clear. And bring agriculture in in 2015, as currently required by law.

Unfortunately the government's review team of farmers and foresters seems to have been specifically chosen to do exactly the opposite, and extend both subsidies and agriculture's free ride. And if that happens, we'll all pay for it, to the tune of a billion dollars a year. Given our current financial situation, that is money we can ill-afford to spend.