Wednesday, December 06, 2023

Climate Change: Failed again

There was another ETS auction this morning. and like all the other ones this year, it failed to clear - meaning that 23 million tons of carbon (15 million ordinary units plus 8 million in the cost containment reserve) went up in smoke. Or rather, they didn't. Being unsold at the end of the year, the units are scrapped, so no-one will be able to burn that carbon.

This is a great result for the environment, and it has the effect of rebalancing the ETS by accident. In 2021 and 2022 Labour's cheap carbon policy resulted in it dumping 14 million tons of extra carbon into the environment. That's gone now. And all because they destroyed confidence in the market by ignoring the Climate Commission and trying to keep carbon cheap, resulting in low bids and auctions which didn't clear.

It's also a problem for the government, which was relying on the revenue from the auction. But that doesn't really matter now. Under Labour, that revenue would have been spent on further decarbonisation, and its loss would have slowed decarbonisation. But National was just going to use it to fund tax cuts for landlords, so fuck them.

Looking forward, next year has a much lower carbon budget - 14.1 million tons, plus 7.7 million in a high-priced, two-tiered CCR which should never trigger. So we might finally see the system working properly to provide strong incentives for decarbonisation, like it was supposed to. But I'm sure National, ACT and NZ First will find some way of fucking it up. The last thing they want is actually effective climate policy, because then their donors and cronies might have to change what they do or go out of business.