Thursday, November 20, 2014

Climate change: The cost of past inaction

For the past 20 years, New Zealand's climate change policy has been one of inaction and delay. While we've seen no less than four failed attempts at putting a price on carbon (including the current ETS), we've never really tried to cut our emissions. Instead, we've treated our legally binding targets as a "responsibility target" and relied on forest sinks and the international carbon market to meet them.

Writing in the Herald, Simon Terry points out how this is about to go disastrously wrong:

It is the third period from 2021 to 2030 that is the critical one. This is the period world leaders are focusing on for global climate action to make a genuine showing and commitments for it are to be set next year.

It is also the decade during which the trees New Zealand relied on to claim forestry credits are scheduled to be cut down.

Including payback for forest credits, New Zealand's emissions for the third period are officially projected to be 55 per cent above even the current target level - an overshoot of 350 million tonnes of carbon dioxide equivalent.

The Treasury warns that carbon prices will be considerably higher during this period, and expects them to be between $10 and $165 a tonne. At the midpoint of that range, even a 350 million tonne excess would represent a $30 billion cost if settled with carbon credits. Result: Visa card payment comes due with major penalty interest - and underlying emissions growth on top of it.

And even if its at the low end, we're looking at billions of dollars, the sort of cost which is beyond even a major policy initiative.

This is where short-term thinking and a refusal to take action gets us: it hasn't made costs disappear, just put them off. Now that bill is about to come due. But the current government isn't thinking about it because they will have all retired on their fat Ministerial pensions by then, leaving others to clean up their mess.