Thursday, July 21, 2022

Climate Change: A quarter-billion dollar delay

Back in 2020, the government realised that the industrial allocations in the ETS - supposed to protect large polluters from unfair competition from countries who didn't pay for their carbon - was overallocated. They were giving away too many free credits, resulting in windfall gains to polluters. Having noticed this, the government promised to urgently fix this bleeding sore in public finances, which was costing $60 million a year.

...and then they did nothing. And then did more nothing. Last year, they finally started a review. And now, two and a half years, millions of tons of carbon, and something like $150 milion later, they've finally announced they will fix it. In 2024:

The Government is closing a $60m loophole that allows big polluters to make windfall gains.

Under the Emissions Trading Scheme, some heavy emitters get up to 90 per cent of their pollution credits free.

But outdated maths means some companies can earn up to three times the cost of their actual pollution– a loophole Climate Change Minister James Shaw has now promised to close starting in 2024.

...which means they'll be giving away more carbon, around another hundred millions dollars worth, before they fix it. A quarter of a billion dollars in total. No hurry, eh? And that's without even considering the decade of overallocation before that - another $600 million - or questions about what carbon price they're using (if they're using market prices rather than social costs, then it could easily be double that).

All up this colossal fuckup has cost us the thick end of a billion dollars (or double that), which has gone directly on the profits of these polluting companies. Normally that's the sort of thing that would agitate the current opposition, but because its gone to polluters they'll be whistling tunelessly over in the corner. Overpayments to polluters is also the sort of thing you'd expect to agitate the Greens, but because their Minister is in charge at the moment, they're not interested in accountability either. No-one in our political system is going to stand up for the public over this, and the polluters who benefited from this are going to be allowed to get away with it and laugh all the way to the bank.

They shouldn't be allowed to. When WINZ overpays a beneficiary, they take it back, clawing it out of future payments (or demanding weekly payments from those who have escaped them). We should apply the same approach to rich polluters: these overallocated credits should be reclaimed, either from future allocations, or directly from these companies' ETS accounts. That will not only give justice to the public - it will also restore integrity to the ETS by reducing the massive stockpile of credits.

Finally, it is clear that the government should have acted much faster to fix this. James Shaw owes us an explanation of why something supposedly so urgent took so long. Because while he didn't cause this problem - that's on National, and Nick Smith in particular - he is responsible for fixing it, and the length of time taken is definitely unacceptable.