Monday, May 09, 2022

Climate Change: The new emissions budget

The government today released its first three emissions budgets, covering the periods 2022-25, 2026-30, and 2031-35. The good news? They've reversed their ridiculous proposal to increase the first period budget because we were planting too many trees and soaking up too much carbon (no, it doesn't make sense, and MPI lied to them to justify it). And they've ground down later budgets by a few more megatonnes, setting a more ambitious long-term pathway. The bad news? They've baked in the Climate Commission's baseline scamming, effectively rewarding past failure by allowing more pollution. And as a result, it's going to take until the second period to get back below 1990 emissions levels (which we committed to do by 2012 at Kyoto).

It gets worse when we look at how the budgets interact with current policy. The government's commitment to shielding farmers from any responsibility for their pollution means that by the third period, they're going to be eating ~80% of the budget, meaning we will need to eliminate or offset ~75% of carbon dioxide emissions so farmers can enjoy subsidised pollution. We might actually be able to do this, but it isn't remotely like a proper sharing of the burden between urban and rural Aotearoa. Worse, the government's existing free allocation commitments are going to eat most of the amount left available for carbon dioxide, and by the fourth period, free allocations for agriculture and industry will likely exceed the total available budget. So the government is going to need to significantly reduce those on a quicker pathway if it doesn't want to create a long-term problem for itself. The good news is that they are currently reviewing industrial allocation, so hopefully we'll see some progress there.

Still, this at least gets the budgets in place. And once that's done, the challenge shifts firmly to meeting it. Except it doesn't. Because Shaw has framed the latter two budgets as "in principle", and says explicitly in his speech that they will be revised the year before coming into force seems contrary to the law and to undermine the certainty the Zero Carbon Act was meant to provide. The law requires that the government always be looking three budgets ahead, and while budgets can be revised, this is for exceptional circumstances, not a routine process. It does this so people can see the reduction pathway long in advance, and plan accordingly. And it does it precisely to avoid the uncertainty of every decision being made for political convenience at the last minute. Shaw is undermining his own core policy here, in a way which calls the entire Zero Carbon Act framework into question, and it will be fascinating to see whether this language is in the original briefing papers, or whether it was forced on him by Labour.