Tuesday, February 11, 2020

Climate Change: Calling bullshit on free allocation

In theory, the emissions trading scheme should reduce emissions. Making polluters pay for permits to pollute lets them save money by reducing pollution, giving them a financial incentive to do the right thing. But right from the start the ETS was broken with a system of free allocation, so polluters didn't need to pay as much (and then National made this worse by making those subsidies proportional to current production, so polluters in fact had an incentive to pollute more). Its a scam, and now the Parliamentary Commissioner for the Environment has called bullshit on it, in a submission on the Climate Change Response (Emissions Trading Reform) Amendment Bill:

Upton said the free allocation was an overused subsidy with a “particularly lax” regime, which provides subsidies to activities that have no demonstrable risk of emissions leakage.

It both failed to incentivise the adoption of less emissions intensive production methods and potentially awards windfall gains to those who did reduce emissions.

“Unfortunately, the proposals in this Bill do not adequately address these defects and would not ensure that EITE activities undertake their fair share of the burden of meeting the 2050 target and NZ’s obligations under the Paris Agreement,” the submission said.


He said there was no analysis to establish there is a risk of emissions leakage, let alone that the leakage could result in an increase in global emissions.

“A cynic might well conclude that the regime is partly driven by unacknowledged considerations, such as the employment opportunities EITE activities create.

...or the support establishment political parties get from polluters (and the implied threat that they'll run an anti-government advertising campaign in an election year if made to pay their way).

The full submission is here, and its worth reading. Will it make a difference? I don't know. Tightening free allocation (let alone ending it) would be a pretty major policy change, and NZ First (which despite all their anti-establishment rhetoric, supports the economic status quo) is unlikely to support it. And since any changes to the bill will have to be approved by the coalition partners, that suggests we're going to be stuck with the same old ineffective bullshit, the same old pretence of action while really doing nothing useful. Just as we have for the past 30 years.