A climate step too far

a climate step too far climate commission ETS

The Climate Commission draft report to the Government is so extreme that even typically conservative economists are expressing alarm, explains Dr Muriel Newman, New Zealand Centre for Political Research (NZCPR).

Without any exaggeration, if implemented, the commission’s plan would radically transform New Zealand from a country which is still founded on free market principles, to a bureaucratically controlled and centrally planned economy.

Before we look into the detail, let’s remind ourselves of New Zealand’s climate policy journey.

As a good global citizen reliant on international trade, successive governments supported the United Nations’ emerging climate agenda that led to Helen Clark’s Labour Government signing the Kyoto Protocol in 2002. 

The decision was controversial, since the focus of global concern was on man-made greenhouse gases produced by industrialisation, whereas half of New Zealand’s emissions are produced naturally by cows and sheep.

The situation was exacerbated when the Clark Government introduced an Emissions Trading Scheme (ETS), which again was a mechanism used primarily to regulate emissions produced by industrial societies, not rural ones.

John Key’s National Government strengthened the ETS, but left out agriculture since the only way to reduce ruminant emissions is through reducing stock numbers, which would decimate our export sector and economic well-being.

Despite contributing only 0.16 percent of global man-made greenhouse gas emissions, New Zealand signed the Paris Climate Agreement in 2016, setting an international target of reducing emissions by 30 percent below 2005 levels by 2030.

Our geography and low population density, means that since public transport and urban cycle ways cannot be used by many families, cars will need to remain an essential part of the Kiwi way of life.

In 2017, Labour’s new leader, Jacinda Ardern, claimed climate change was her generation’s “nuclear-free moment”. Once elected, the Prime Minister wasted no time in eliminating the oil and gas sector to demonstrate to the global community that she was leading the fight against climate disaster.

In 2019, the ETS was strengthened through the introduction of a cap on emissions. The Zero Carbon Act was passed, setting the harshest domestic targets in the world – reducing emissions of long-lived gases to net zero by 2050 and methane emissions by 24-47 percent by 2050 – and establishing the Climate Commission.

The Commission’s key role is to advise the Government on how to best meet New Zealand’s Paris targets, as well as to review the scientific evidence on methane emissions. Their members are: Chairman Dr Rod Carr, a former University of Canterbury vice-chancellor; Deputy Ngai Tahu’s Lisa Tumahai; Dr Harry Clark, head of New Zealand’s Agricultural Research Centre; Victoria University Professor James Renwick and Dr Judith Lawrence, both former IPCC lead authors; Massey University Professor Nicola Shadbolt, a former Fonterra director; and Motu economist Catherine Leining, who was trained as a climate leader by Al Gore.

It should be remembered, that in spite of claims by climate activists to the contrary, New Zealand is comparatively clean and green. We have relatively little heavy industry, more than 80 percent of our electricity already comes from renewable sources, and half of our emissions are naturally produced by animals.

Our geography and low population density, however, means that since public transport and urban cycle ways cannot be used by many families, cars will need to remain an essential part of the Kiwi way of life.

So, what is the Climate Commission recommending?

Their report, which refers to “Aotearoa” 635 times and the country “New Zealand” only twice, represents central planning on steroids. They propose changing the way New Zealanders live and they urge the Government to do more: “The Government must pick up the pace. Aotearoa will not meet its targets without strong and decisive action now to drive low emissions technologies and behaviour change across all sectors.”

Race-based rights and the Treaty ‘partnership’ fabrication are central to their plan: “Care should be taken to make sure climate related policies do not further compound historic grievances for Maori. To give effect to the Treaty Partnership, central and local government need to acknowledge iwi/Maori rights to exercise rangatiratanga and kaitiakitanga in a joint plan to reduce emissions.”

They promote urban intensification, even though the virus pandemic has clearly shown that lower density living is safer and provides a better quality of life than, “the more compact pedestrian-oriented cities typical of Europe and many parts of Asia” that they favour.

They want to force us into electric cars with “no further internal combustion engine light vehicles imported after 2032”, as well as requiring “more walking, cycling and public transport”.

They would close “aluminium and methanol production” and “switch away from coal, diesel and gas to electricity”. This would mean “No further natural gas connections to the grid, or bottled LPG”, which would force “restaurants, cafes and bars . . . to move away from natural gas”.

In their socialist utopia, not only would there be no backyards for BBQs, there would be no gas to fuel them either.

When it comes to farming, the commission is ruthless; “our path would see dairy and sheep and beef animal numbers each reduced by around 15 percent from 2018 levels by 2030. This compares with an 8-10 percent reduction projected under current policies.”

This dashes the hopes of farmers that the commission would examine the science and recognise that as a short-lived component of a natural cycle that sees greenhouse gases sequestered by farmland forests, grasslands and soil, methane should be excluded from emissions reduction goals.

Instead, the commission recommends harsher targets: “We advise that the reductions in emissions of biogenic methane … could be between 49 percent and 60 percent below 2017 levels by 2100.”

Since this would dramatically force up the cost of all dairy foods and meat, it represents a serious contravention of the UN’s requirement that government policy to reduce emissions must not compromise food production.

“Imagine that: If New Zealand entered a partnership with countries like Brazil and Uganda we would become net carbon neutral tomorrow – not in 2050.”

A NZCPR Guest Commentator, former Science and Technology Minister Barry Brill, the Chairman of the New Zealand Climate Science Coalition, is scathing about the Commission’s plan:

“The Climate Commission’s first report is a huge disappointment. It is little more than a well-polished propaganda vehicle. With its woke-word-smithed style, it could just as easily have been published by Greenpeace…  

“The report leaves almost all the key questions unanswered … is dominated by subjective value judgments, biased assumptions and activist-speak. It is cliched, jargon-ridden and has no novel ideas. It produces no new insights or data and offers no quantified cost-benefit analysis for any one of its many pain inducing recommendations.”

The Climate Commission regards the United Nation’s Intergovernmental Panel on Climate Change (IPCC) as an authority, except, it seems, when it comes to the role of our ETS. The Commission states: “The Emissions Trading Scheme alone won’t get us to where we need to be. Action is needed across all sectors of the economy.”

Yet advice from the IPCC contradicts that claim – once a country has an ETS in place, no other policy interventions are necessary; “if a cap and trade system has a sufficiently stringent cap to affect emission‐related decisions, then other policies have no further impact on reducing emissions”.

Since New Zealand already has a fully functioning ETS in place, it seems other policy recommendations are superfluous!

So how does our ETS work?

The ETS is a cap-and-trade system that requires businesses to purchase emissions units from the Government for every tonne of carbon dioxide they produce. A sinking cap means that over time the price of those units increases, creating an incentive for businesses to reduce emissions.

To see how it works, let’s consider an economy made up of just two companies – a dairy farm and a greenhouse tomato grower, each producing 2000 tonnes of emissions a year and each needing to purchase 2000 emission units under the ETS.

If the Government then reduces the ETS emissions cap from 4000 tonnes to 3000, each company receives 1500 units and will need to reduce their emissions by 500 tonnes.

However, because the dairy farmer doesn’t want to kill any cows he will be 500 units short, while the tomato grower, who is planning to install a more efficient boiler that would halve his emissions to 1000 tonnes, will have 500 units spare.

So, they do a deal. The dairy farmer leaves his emissions unchanged at 2000 tons by buying the 500 spare units from the tomato grower to cover his excess. The money assists the grower to install his new boiler and halve emissions to 1000 tonnes. Between them they achieve the 3000 tonne cap – the dairy farmer still produces 2000 tonnes while the tomato grower produces 1000.

This is how the ETS works – it enables emissions to be reduced at the lowest cost to the economy. If the Government intervenes with taxpayer-funded subsidies, while that would assist individual businesses, it can’t reduce emissions, because that is controlled by the cap.

Over time, if the Government continues to reduce the emissions cap and force prices high enough, then, for example, the ETS levy on the price of petrol, which at the present carbon price of $39 a tonne is around 11 cents a litre, will drive pump prices so high that more Kiwis will consider switching to electric cars.

This can be done without the need for government subsidies or import restrictions.

Furthermore, since greenhouse gas emissions are a global problem, and reducing one tonne of carbon from the atmosphere in New Zealand is the same as reducing it from any other country, the ETS should be opened so Kiwi companies can deal with others around the world to reduce emissions at a lower cost. 

Dr Oliver Hartwich, the executive director of the New Zealand Initiative, points out the benefits; “A recent paper in the American Economic Review reported that a forest conservation project in Uganda managed to sequester carbon for a cost of US$1 per tonne. 

“Previously, we found projects in the Brazilian Amazon rainforest achieving a carbon offset for US$2 a tonne. But even at a conservatively-high $10 a tonne, New Zealand could offset all its net emissions for an annual cost of under $600 million.

“Imagine that: If New Zealand entered a partnership with countries like Brazil and Uganda we would become net carbon neutral tomorrow – not in 2050.”

“Such a deal has a precedent. Switzerland and Peru recently announced a carbon offsets deal. Peru will receive funding for sustainable development, and Switzerland will receive credits for lower emissions. The deal is recognised under the Paris climate agreement, to which New Zealand is a signatory.”

By opening up the ETS so New Zealand can use Paris Agreement rules to meet its international obligations at the lowest possible cost – as Switzerland is clearly doing – the immense economic disruption and suffering the Climate Commission is recommending could be avoided.

Unless inflicting pain and suffering is Jacinda Ardern’s goal, that is exactly what her Government should be doing.

During 2020, the global pandemic essentially forced much of the world’s economy to shut down, dramatically reducing emissions of man-made carbon dioxide. Yet, contrary to climate model expectations, there has been no decrease in CO2 in the atmosphere.

Does this mean the models are wrong – that the human impact on the climate is too insignificant to register and that, contrary to the claims of extremists, it is nature, not mankind, that controls the climate?

Instead of investigating this significant anomaly, the Climate Commission ignored it, claiming, “The climate science is clear, the direction of climate policy is laid out and the time for accelerated climate action is now.”

In 2015, Christiana Figueres, the executive secretary of United Nations Framework Convention on Climate Change, revealed that the objective of environmental activism is not to save the planet from ecological calamity but to destroy the free market economic system; “This is the first time in the history of mankind that we are setting ourselves the task of intentionally, within a defined period of time, to change the economic development model that has been reigning for at least 150 years, since the Industrial Revolution.”

Is that the real agenda of New Zealand’s Climate Commission – and the Government?

Related posts

Procurement and contracts 2021 update

Contrafed Publishing