In her positioning speech in which she sought to define the ground for coalition negotiations following the next election, Green co-leader Jeanette Fitzsimons also asked Helen Clark and John Key two symbolic questions on climate change. The first relates to both parties' policy for an emissions trading scheme, and asks them to put some hard numbers on it by asking where the cap will be set and how permits will be allocated. The second is aimed at the longer term and asks basically what the parties are willing to do about the dairy industry.
The first set of questions are absolutely vital to judging whether the parties' proposed schemes will be effective, equitable, and morally acceptable. As Jeanette points out, the level of the cap ultimately determines the price, as well as how much the New Zealand taxpayer will be forced to pick up. Setting it too high means permits will be cheaper; it also means polluters will not have to reduce their emissions as much, leaving us with a bigger deficit beyond our Kyoto assigned amount which will have to be met by the government buying carbon credits on the international market. In other words, the higher the cap, the less effective the scheme will be. Obviously, I favour a low cap - setting it at the 1990 baseline seems entirely appropriate - but more important is the principle that, whatever initial level the cap is set it, it gradually sinks. This will drive further emissions reductions and push us towards whatever long-term emissions goal we set ourselves.
Permit allocation OTOH makes no difference to the effectiveness of the scheme - but makes a large difference to the bottom line of the participants. Grandparenting permits - giving them away for free to existing polluters - not only rewards bad behaviour, but would also be a massive transfer of wealth from the New Zealand public to private industry. Auctioning OTOH is fair and transparent, and has the added advantage of generating revenue which can in turn be used to fund other emissions reduction projects. It ought to be no surprise which option I favour. Like the Greens I believe that partial grandparenting can be used where there is a serious risk of emissions leakage or danger to competitiveness, but the basic presumption should be that polluters pay, rather than benefiting from a billion-dollar-plus windfall.
The second question is the thorniest. Dairy cows were responsible for 10.5 MTCO2-e in 2004 - one seventh of our total (and this doesn't include their contribution to energy and transport emissions, or fertiliser - this is the cows alone). Fonterra, the dairy industry's largest player, has set itself the goal of growing at 4% per year, indefinitely. This doesn't mean a 4% increase in dairy emissions every year - emissions per tonne of milk solids dropped by about 1.3% per year between 1990 and 2002 due to more efficient cows - but it still poses a massive challenge. If this growth is sustained, emissions from dairy cows will more than triple by 2050, to 35.75 MTCO2-e - more than 80% of our 1990 total. Unless we do something about this, we have no hope of reaching the National Party's stated goal of a 50% reduction by 2050, let alone Labour's one of carbon neutrality.
On this front, National's response -that they will not restrict growth in the dairy industry - is neither surprising nor a hopeful sign. It's all very well to hope for some technological solution to come along to reduce dairy emissions - but as I have said before, hope is not a strategy. Both parties need to confront this issue, and give us some serious answers on what they will do while they are waiting for their miracle. Because it is clear to me that just waiting around and letting the herd grow is not an option - it just makes the problem that much bigger when you have to confront it (something we learned the hard way over electricity sector emissions in the 1990's). We can not, as a society, subsidise the polluting habits of the dairy industry any longer. If we are to have any hope of meeting our climate change targets, they have to pay their own way.