NZ ETS missing its target

Cover of the book The Carbon Challenge

… or is it?

The National government is determined to fire up an emissions trading scheme (ETS) on July 1st, but a new study criticises it forcefully.

NZ sceptics, led by ACT’s John Boscawen, have for some months campaigned against the ETS on scientific and economic grounds, inside and outside the Parliament. But this study by two Victoria University academics – believers in anthropogenic global warming (AGW) – could do more to force a government change of mind than any protest action so far.

Since it comes from within the warmist camp, John Key, Nick Smith and their advisers will, or should, pay it close attention. For it expresses arguments made by supporters of government “climate” policy, so they will be more difficult to dismiss than those of mere “deniers” of “climate change” (whoever they are).

The NZ Herald today reviews the book The Carbon Challenge:

New Zealand’s failure to cut greenhouse gas emissions has left taxpayers staring down the barrel of a Kyoto Protocol liability of at least $1 billion and possibly more than $5 billion, according to a book analysing National’s emissions trading system.

The authors of The Carbon Challenge – Victoria University researcher and economist Geoff Bertram and climate-change analyst and researcher Simon Terry – also describe the Government’s current ETS as “technically obsolete” and “beyond rescue” as a sustainable framework for tackling climate change.

They say the scheme will not make any inroads into cutting New Zealand’s gross emissions levels.

On top of that, the ETS was so unfair in the way it distributed benefits to high emitters with political influence, while placing a regressive quasi-tax burden on households, that there was a risk it could undermine the public’s willingness to support a stronger regime in the future.

Such was the scale of subsidies that only one in every five dollars charged under the ETS would become available to the Government to pay off the Kyoto liability. Households already bore half the total costs resulting from the ETS during its first five years while accounting for just a fifth of all emissions.

Households, small to medium industry, commerce and services and transport operators would pay 90 per cent of the costs resulting from the ETS during the first five years while being responsible for only 30 per cent of total emissions.

There’s not much here to like about the ETS. Whatever “technically obsolete” means, if it won’t reduce our emissions, then the defects are significant in terms of both climate science and public policy. On their own, they justify amending the ETS.

But now comes the justification for the ETS to bite harder at ordinary Kiwis and require more destruction and dismantling of our rural and industrial heartland than any policy in our history. It’s a simple physical fact that engines perform work. You cannot remove carbon dioxide emissions without removing the work they represent, because there is no practical, working alternative right now, no matter how many windmills you wave around the room. So, in removing emissions, we will accomplish less than we do now.

TO NIWA, NICK SMITH, WAYNE MAPP AND JOHN KEY: That means we will produce less wealth. Do I need to add that we will become poorer, or can you think that through for yourselves?

The book says New Zealand can expect countries importing its products to become aware of the “hollowness” of the current ETS, thereby upping the pressure for a complete rethink of that policy “from the ground up”.

What evidence is there that any of our major trading partners thinks like this? Have they said so? Have they made threats, veiled or otherwise, to increase that pressure? What exactly is “hollow” about our ETS? Does the government agree with this? I doubt it, since Nick Smith, while acknowledging it won’t affect the climate, asserts in the strongest terms that we are “playing our part” in the “fight” against “climate change”.

Otherwise, New Zealand was likely to face general tariff penalties or targeted imposts on particular goods which had not been fully costed and exposed to emissions charges.

“If New Zealand producers find themselves excluded from key overseas markets through their failure to meet required standards, the ETS will provide no protection.”

The prospect of incurring extra penalties on our exports raises an enormous concern, yet it may be nothing more than outrageous scare-mongering; for what legal avenue exists for countries to impose tariffs for climatic reasons? How would they be justified? Have the rules under the WTO agreements been changed?

If our producers find themselves excluded from any overseas markets through those foreign markets’ judgement that NZ has “failed” in some undisclosed way to meet some undisclosed “standards” there will be such a swift journey to the WTO or even the International Court of Justice that the resulting explosive displacement of air will cause its own climate change.

Which of our overseas customers is considering this unilateral action, and under which international provisions? Note that the language used avoids any definite expression but states only possibilities. I suspect there is really nothing to see here, folks, move along.

The scrofulous suggestion that we “need” a robust ETS in order to “protect” ourselves against the righteous retribution of our trading partners deserves nothing but the deepest contempt. Countries with no ETS will not get away with illegitimate tariffs based on penalising either our weakened ETS or our lack of an ETS.

European countries with the weak excuse of an ETS that has only 5% of the coverage of ours and which completely excludes farming cannot justify penalising us on moral, much less legal, grounds.

There is no sign of retaliation against any country for having an ineffective or no ETS. Why should New Zealand be thus singled out, when major emitters, such as the USA, Canada, the UK, Australia, China, India, Brazil and Indonesia, all lack an ETS? It’s nonsense! For these students to pen these non-scientific assertions is an affront to real scholars.

The authors say the bulk of the financial liabilities of several billion dollars arising from New Zealand exceeding its Kyoto Protocol target will fall on future taxpayers, making it a “massive intergenerational transfer of liability”.

“The ETS completely fails as a mechanism to make today’s polluters meet today’s emissions bill.”

The continued use (I ought to say misuse) of “pollute” and “pollution” to describe carbon dioxide emissions is a shallow propaganda tool. There is no evidence that CO2 is a pollutant of any kind. Indeed, there is evidence that plants, both terrestrial and marine, consume it in prodigious quantities, and that they all, without exception, do better with increased atmospheric levels of CO2.

Is there any need to mention that without exception, carnivores, preying as they do of necessity on herbivores, also benefit from increased levels of CO2?

The book says there is complacency in New Zealand that credits for storing carbon in forestry crops will save the country from having to seriously address reductions in greenhouse gas emissions.

But this year’s Budget had broken with the past by flagging the real cost of New Zealand’s 22 per cent overshoot of its Kyoto target. Depending on the price of carbon, it said the Kyoto liability could be as much as $5.7 billion.

That Budget reference officially scotched the myth that the Government did not face any financial effects under the protocol because it could rely on offsetting credits from plantation forests.

It also scotched the myth the government has been putting about that we can afford the ETS as a mere “symbol” of our opposition to “climate change”.

“The credits must be paid back when the trees are harvested in the 2020s.” The authors say using these credits to pay the Kyoto bill is like putting it “on the plastic” for the next generation to pay.

This is wrong, because the so-called “credits” are assigned to the foresters, who can, do and will sell them. There’s no element of financial credit in that; there’s no bill for a future generation. It’s just a matter of getting the money back from the foresters. If they’ve been sensible husbanders of their resources, they just liquidate some investments; where’s the credit?

But here now is exposed the ridiculous notion that trees vanish when they are cut down, returning their elements whence they came. This is a strange idea, that we retain nothing made of trees, such as timber, wood products or paper, etc. It is of course quite divorced from reality.

The doctrine is born of the necessity, one surmises, to avoid some kind of perpetual claim on the carbon trading system by foresters who harvest their trees only for timber or other permanent uses which would let them keep the credits they earned while the trees were growing.

So remember that: trees vanish when cut down and the resulting emissions of carbon dioxide must be paid for. Of course, those emissions are simply returning to the atmosphere a gas which was only recently removed from it. Where is the deficit? Where is the burden? What is being punished by this tax?

But I forget myself: of course, this is only the thin end of the wedge. The true purpose of this ETS is to build a stronger ETS. This just lays the groundwork, makes us accustomed to unending bureaucratic complexities that in future will bind us up with more and more complex “climate change” regulations and requirements until we spend our days in a new kind of third-world poverty, the only available work whatever we can accomplish with our own muscles, the long, grinding days relieved only by our occasional grateful admiration of those in power over us, that they relented at the last moment when building a world-leading ETS; they cut off only our legs and left us our arms.

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9 Thoughts on “NZ ETS missing its target

  1. Andy on 23/06/2010 at 9:26 pm said:

    I feel vindicated in that I have come to similar conclusions by examining the numbers.
    Most arguments for the ETS seem to be from an emotional viewpoint.

    However, I still feel depressed that we are pressing ahead with this pointless waste of money.

    I wonder if John Key and Nick Smith will have a “McChrystal moment”?

    The analogies with the unwinnable war in Afghanistan seem more apt than Nick Smith’s Gallipoli quote.

  2. Bulaman on 24/06/2010 at 12:54 pm said:

    ETS is SMP’s for trees. The effect is monstrous for forestry. A recent analysis done by an industry manager on one of his forests increased the standing value (using NZIF Valuation methods) from $20,000 to over $400,000 solely due to the cashflow provided by selling carbon. This means pretty much any pastoral land use can be bettered by forestry.
    Unfortunately the forest planted after 1990 will be locked up due to potential liabilities so there will be no harvest available to industry. All the potential real jobs as well as those existing ones in the processing industry go down the drain. Last time I looked this was in the 30,000 ball park.
    So end result Forest after 1990 planted and left
    Forest prior to 1990 harvested and replanted with logs sent to China and timber products imported from overseas to meet our needs.

  3. good article…

    now can we get the NZ public more aware of this? … or will there be a ‘coup’ and kicking out of John Key when the NZ public starts paying 5% more for EVERYTHING in a month or two….

    what, no ‘coup’ could happen? Perhaps talk to Kevin Rudd about that!!!!

  4. Andy on 25/06/2010 at 6:48 pm said:

    Article on ETS in NBR:

    Note that the comments are almost all entirely negative.

  5. Andy on 27/06/2010 at 2:30 pm said:

    From WUWT:

    What Australian Media is saying about Rudd, Gillard, and ETS – which looks dead for now

  6. Andy on 28/06/2010 at 3:00 pm said:

    The Amazongate story seems to be heating up a bit.
    Despite the Sunday Times “apology”, there appears to be no peer reviewed research that supports the 40% reduction claim by the WWF.
    The story is taken up at EURef here

    and Bishop Hill

    Given that WWF look to gain up to $60billion in carbon credits from the REDD deal, this story might drag on a bit longer.

  7. Andy on 01/07/2010 at 6:33 pm said:

    We are famous on WUWT

    The months of flatlining at the Chicago Climate Exchange (CCX) should be a hint to the rest of the world that carbon trading is dead. Time to take it off life support.

  8. G.S. Williams on 04/07/2010 at 6:26 pm said:

    Hi, All,

    It seems to me that the “Emissions Trading Scheme” would be better described as the, “Emissions Taxing Scam”. Wouldn’t it?

  9. Andy on 12/07/2010 at 8:06 pm said:

    Cross-posted to WUWT:

    News from the Land of Stupid – New Zealand. Our all sectors all gasses ETS included landfill waste:

    From Radio NZ

    Local Government New Zealand says landfill costs could rise by more than a third under the Emissions Trading Scheme (ETS), increasing the risk of illegal dumping.

    The Ministry of the Environment is receiving submissions on draft regulations for landfills under the ETS.

    Local Government New Zealand (LGNZ) says people could face steep price increases when landfills are required to offset their methane emissions.

    LGNZ president Lawrence Yule says estimates for the Napier-Hastings landfill show the requirement would probably increase the cost of dumping waste from $68 per tonne to about $93.

    He says that estimate is low because the dump already has methane collection systems, but landfills without them could face even bigger price rises.

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