Wednesday, May 15, 2019

Climate Change: The Zero Carbon Bill and the ETS

One of the criticisms of the government's Zero Carbon Bill is that it is toothless: the independent Climate Change Commission can set budgets and advise on plans, but has no power to implement anything. Greenpeace for example wanted the Commission to have reserve bank-style powers over the ETS, allowing it to effectively set carbon prices and drive emissions reductions independently of the government-of-the-day. The Bill does not include such powers. But I've been reading the Bill's Regulatory Impact Statement, and interestingly, as late as January it did:

Every five years, the Commission will recommend emissions budgets (with a mandated government response) and advise on macro-level policy to meet the budgets set by the government, including an outlook for the NZ ETS unit supply settings.

Decision-making on the NZ ETS settings will remain with the elected government. However, the Commission would have an ‘Advisory-plus’ role, in which it will be required to recommend the technical NZ ETS settings annually (within the constraints of the set 2050 target and emissions budgets) and on the presumption that its recommendations will be given effect unless government provides otherwise and gives reasons for that decision.

The "advisory-plus" procedure is used elsewhere in the Bill in the setting of emissions budgets, and in our constitutional framework, it basicly means the advice will be followed, so its a fairly strong role. So what happened?

One obvious answer is "Winston". But this may in fact be a technical problem. The government is currently in the middle of tweaking the ETS - it has made some decisions around auctioning and removing the price cap, but not yet introduced legislation, while it is yet to make decisions on the removal of pollution subsidies. The RIS also points out "sequencing issues" with the establishment of the Commission and the setting of its first budget, which could require Parliament to set 2019 and 2020 ETS supplies in legislation. Given this, they may have decided to delay that bit, until they've worked out what they actually want to do. The problem is that with the planet burning, delay isn't something we have a lot of time for any more.