Thursday, October 24, 2019

Climate Change: Ending ETS fraud

The government released its changes to the ETS today, in the form of the Climate Change Response (Emissions Trading Reform) Amendment Bill. Apart from the agriculture sellout, most of the changes had been previously announced, and are largely technical. But there's one big surprise hidden in it: the cancellation of all fraudulent climate "credits".

For those unaware of the issue: the Kyoto Protocol's international trading regime allowed the issue of fraudulent credits by Russian and Ukrainian criminals, where "credit" was claimed for doing nothing, or for burning coal. New Zealand polluters bought tens of millions of these units, flooding the market and driving the price down to almost nothing. They then used them to "pay" their ETS obligations, usually while receiving good New Zealand units as pollution subsidies. That fraud ended in 2015, when the government stopped accepting Kyoto units for ETS obligations - but there's an unknown amount lurking around in the ETS, undermining the system. The bill will end that, by immediately ending the ability to transfer Kyoto units into New Zealand units, and ending the ability to transfer New Zealand units overseas. Then, in 2020, it will cancel all historic approved units, with no compensation. The net effect: anyone holding fraud units when the bill passes will lose the pittance they paid for them.

There are two obvious problems with this: the bill will take six months to a year to pass, so fraud-holders have that much time to try and flick their bullshit "credits" on to a new sucker - it really needed to be done in all-stages urgency, like an excise tax increase, to prevent polluters gaming the system. And it doesn't address the position of the biggest fraudster of them all: the New Zealand government, which used over a hundred million tons of fraud to "meet" its Kyoto obligations, while claiming a similarly-sized "surplus" (in good Kyoto AAU, of course), which it plans to use to "meet" its 2020 target. Still, its a welcome step forward. Now, we just need to make everyone who used one of these bullshit units hand over a good one to make up for their fraud...