Australia and NZ ETS

July 10th, 2008 at 7:42 am by David Farrar

Brian Fallow makes some very sensible points on the move by both countries towards an :

Australian professor Ross Garnaut has some good advice for our Government as well as his own.

“The review suggests that prior to the indelible conclusion of [emissions trading] scheme design in either country, the Australian and New Zealand Governments meet at ministerial level to discuss linking and to identify any impediments to linking that may warrant adjustment to one or both scheme designs.”

This is sensible, and it is in fact quite vital that the NZ and Australian schemes are as compatible as possible as Australia is our largest trading partner. This is one reason I think we should be slightly less hasty with pushing our ETS into law. Having trans-Tasman harmony is more important than artifical dates such as the election.

Its draft report was released last Friday and a government green paper is due soon. Climate Change Minister Penny Wong is standing by a timetable that has legislation introduced by the end of this year and an emissions trading scheme up and running in 2010.

Which is compatible with NZ – esp that Clark has delayed all sectors but forestry until 2011.

If Australia’s scheme is along the lines recommended by the Garnaut review there will be a family resemblance with the New Zealand scheme, but there are notable differences.

They need not constitute a barrier to linkage between the schemes – a common carbon market, if you will. The environmental integrity of both schemes should be the determining factor there.

But it would be prudent to be sure the differences do not pre-empt linking before anything is set in concrete.


24 Responses to “Australia and NZ ETS”

  1. OECD rank 22 kiwi (2,952 comments) says:

    Another one bites the dust. The G8 couldn’t even be assed with the whole AGW thing. Maybe New Zealand should take a hint.

    China and India say thanks but no thanks. Greenpeace is living on another planet as usual.

    What New Zealand needs to do is realise that AGW is BS. Then it can progress with a growth first policy. I’d rather make money than empty gestures.

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  2. expat (4,097 comments) says:

    It will be interesting to see how serious labour are at setting up a ‘world class’ carbon trading framework.. reason i say this is because unless you have markets involved its dead in the water and the nzx have tried to setup markets and to all news its fucked. kyoto is now fucked thanks to 75% food inflation courtesy of biofuels wanking.

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  3. Fletch (9,138 comments) says:

    I wouldn’t expect this government to do anything sensible: that isn’t the criteria they use to judge whether to do something or not, neither is it the criteria of whether something is good for the country/world. The criteria they use is how to leverage the issue the most in their favour with regard to the coming election. One of their ploys seems to be to implement as much rubbish and spend as much money out of the public kitty as they can to disadvantage what is looking like becoming the next government. I think that is why they want the bill through at any cost – they don’t actually care much about the details. It’s the Electoral Finance Act all over again.

    Helen will use any issue as a weapon now and this is a prime example; rather than trying to implement measures that will help world climate (which I’m still not convinced we can do anything about anyway), it will become another pawn on the chessboard leading up to the election.

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  4. OECD rank 22 kiwi (2,952 comments) says:

    The ETS has absolutely nothing to do with the environment. It’s Hels great big idea of a marketing opportunity to appear to be “doing something”, to still have a vision for New Zealand, to tap into the great “clean and green” myth. Hels isn’t going to be around after November so there is not much point from her perspective of waiting around until Australia comes up with their own lame scheme which conveniently allows Australia to keep on trucking. Uranium will still be mined, coal will still be sent to China by the bulk carrier full.

    We still wait to see whether Clark is still prepared to conduct one last act of desperation and string together the numbers to cripple New Zealand with the pushing through of the ETS legislation. Labour might then just sink below twenty percent on election day. An interesting side effect of MMP is that it is a force multiplier for disaffection. A main party would never receive less than twenty percent in a FPP election.

    Hels powers are fading with age.

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  5. Murray (8,822 comments) says:

    It was a load for feel good wank when it was first thought of and its a load of feel good wank now.

    The function of our government is for the well being of us, not the rest of planet earth and what the current witch doctors are using to scare the neo-cavemen into giving them stuff for doing bugger all.

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  6. stephen (4,022 comments) says:

    Garnaut recommended that 50% of ETS revenue goes to low-income households as compensation for higher energy bills, 30% to help trade-exposed and disadvantaged industries adapt, and 20% on research. (
    How bout THAT NZ Labour?! Some of the 50% should go into efficiency measures though I think.

    Interesting that Garnaut said “agriculture should be excluded because it is too difficult to incorporate.” when Fonterra is currently doing their own analysis of emissions (results out in August or something).

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  7. davidp (3,870 comments) says:

    An ETS would be the biggest bubble the NZ economy has ever seen. Sooner or later, it’d burst and the results would be a massive loss of money and possible recession.

    Some bubbles sort of happen naturally and there isn’t much you can do to stop them. But this one is entirely avoidable because it would be caused by government policy. An ETS is like the government legislating to create an Enron, with the only question being how much it’ll cost the economy when it goes bust.

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  8. stephen (4,022 comments) says:

    I’m not huge on economics davidp, but the situation will be either you buy permits for your excess GHGs, or you have the choice of taking measures to reduce your emissions – whichever is cheaper for you. I don’t think there *could* be a bubble ever as there are simply two unavoidable options – am I wrong?

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  9. davidp (3,870 comments) says:

    The bubble aspect is caused by the assumption that carbon trading has a long term future. But once people realise that reducing our carbon output means tens of thousands of jobs being exported to China and India, and enormous increases in electricity and petrol prices, then the scheme will be ended. Quickly. I don’t see it lasting much past the end of this Kyoto round in 2012… even if the unemployment and the increased prices didn’t convince people that Kyoto-driven policy was a bad idea, sending billions of dollars to Russia in return for nebulous carbon credits will be seen as a bad idea.

    And when the scheme ends there will be two losers: People who have spent money buying carbon, and the whole carbon trading industry we’ll have created.

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  10. stephen (4,022 comments) says:

    I understand what you mean now. However I think the analysis for “tens of thousands of jobs” etc. is sparse, flawed, as well as contested by groups like the NZBCSD recently who outline the benefits of action, as well as the costs of in-action (perhaps with its own flaws). The next Kyoto round (Copenhagen) has no choice but to address what is happening in developing nations, and China and India seem to accept the CC as a problem, but will not take any action without *more* action from developed countries, esp the US (which seems certain to happen, whether with Obama or McCain). Somewhat-vaguely promising on that front…

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  11. Redbaiter (12,022 comments) says:

    Emissions Trading schemes should not in any way be viewed as they are presented by the GW industry and their dipshit mainstream media propagandist buddies- ie some kind of ultimately beneficial-to-all altruistic solution to a coming disaster that threatens the very existence of mankind.

    Its not that. Its an imaginary solution to a problem that doesn’t exist. Its an imaginary solution because it really is no solution. Nothing in these schemes will effect climate one iota. Its an imaginary problem because the reality is that climate change is merely an unproven theory that has so far failed every objective test to make it a reality.

    All these schemes will do, in conjunction with all of the other hysterical measures professed to deal with this lunatic idea, is impact in a completely negative way on production and incomes, and lead to a drop in living standards, serious unemployment and economic melt down. These schemes will have no effect on climate. They are just fraudulent posturing and political maneuvering by control freaks, looters, reckless obsessive power seekers on one hand and a bunch of gormless gullible and gape jawed dupes on the other.

    Here’s an excellent article by Andrew Bolt writing in Melbourne’s Herald Sun newspaper today. Its entitled “Doomed to a fatal delusion over climate change” and that is a very apt title, for that is indeed the case. If we allow power seeking politicians to follow through on this madness, we are voting ourselves into economic recession and poverty.

    Want that?? No? well, its time to send these bastards the message that no longer can they score votes on the basis of pandering to environmental hysteria. Its a democratic country (still) and the solution is simple. Just do not vote for anyone who buys into or promotes this lunacy. If you instead go along with this crap, you’re giving these bastards free access to your wallet, and condemning yourself to a future of economic hardship. Your choice and one I reckon is pretty simple.

    Excerpt from the Andrew Bolt article referenced above. If you don’t have the time to read it all, at least look at the final paragraph. If you do have time , search the article down and read it completely. Its a view you’ll struggle to find among the brainless narrow minded state worshiping lapdogs that call themselves the NZ media. (If they were doing their jobs half right, this whole damn idiocy would have been nipped in the bud one or two decades ago.)


    PSYCHIATRISTS have detected the first case of “climate change delusion” – and they haven’t even yet got to Kevin Rudd and his global warming guru.

    Writing in the Australian and New Zealand Journal of Psychiatry, Joshua Wolf and Robert Salo of our Royal Children’s Hospital say this delusion was a “previously unreported phenomenon”.

    “A 17-year-old man was referred to the inpatient psychiatric unit at Royal Children’s Hospital Melbourne with an eight-month history of depressed mood . . . He also . . . had visions of apocalyptic events.”

    (So have Alarmist of the Year Tim Flannery, Profit of Doom Al Gore and Sir Richard Brazen, but I digress.)

    “The patient had also developed the belief that, due to climate change, his own water consumption could lead within days to the deaths of millions of people through exhaustion of water supplies.”

    But never mind the poor boy, who became too terrified even to drink. What’s scarier is that people in charge of our Government seem to suffer from this “climate change delusion”, too.

    Here is Prime Minister Kevin Rudd yesterday, with his own apocalyptic vision: “If we do not begin reducing the nation’s levels of carbon pollution, Australia’s economy will face more frequent and severe droughts, less water, reduced food production and devastation of areas such as the Great Barrier Reef and Kakadu wetlands.”

    And here is a senior Sydney Morning Herald journalist aghast at the horrors described in the report on global warming released on Friday by Rudd’s guru, Professor Ross Garnaut: “Australians must pay more for petrol, food and energy or ultimately face a rising death toll . . .”

    Wow. Pay more for food or die. Is that Rudd’s next campaign slogan?

    Of course, we can laugh at this — and must — but the price for such folly may soon be your job, or at least your cash.

    Rudd and Garnaut want to scare you into backing their plan to force people who produce everything from petrol to coal-fired electricity, from steel to soft drinks, to pay for licences to emit carbon dioxide — the gas they think is heating the world to hell.

    The cost of those licences, totalling in the billions, will then be passed on to you through higher bills for petrol, power, food, housing, air travel and anything else that uses lots of gassy power. In some countries they’re even planning to tax farting cows, so there’s no end to the ways you can be stung.

    Rudd hopes this pain will make you switch to expensive but less gassy alternatives, and — hey presto — the world’s temperature will then fall, just like it’s actually done since the day Al Gore released An Inconvenient Truth.

    But you’ll have spotted already the big flaw in Rudd’s mad plan — one that confirms he and Garnaut really do have delusions.

    The truth is Australia on its own emits less than 1.5 per cent of the world’s carbon dioxide. Any savings we make will make no real difference, given that China (now the biggest emitter) and India (the fourth) are booming so fast that they alone will pump out 42 per cent of the world’s greenhouse gases by 2030.

    Indeed, so fast are the world’s emissions growing — by 3.1 per cent a year thanks mostly to these two giants — that the 20 per cent cuts Rudd demands of Australians by 2020 would be swallowed up in just 28 days. That’s how little our multi-billions of dollars in sacrifices will matter.

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  12. stephen (4,022 comments) says:

    The Economist is also sceptical. They did an article on this subject – the gist of which was the idea of carbon tariff protectionism is bad and uncessary, but also that those industries most at risk would not be much affected.

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  13. davidp (3,870 comments) says:

    Stephen >I think the analysis for “tens of thousands of jobs” etc. is sparse, flawed, as well as contested by groups like the NZBCSD recently who outline the benefits of action, as well as the costs of in-action (perhaps with its own flaws).

    The easiest way to reduce NZ’s carbon output would be to shut down the big creators of carbon. Close down Comalco and let the Chinese smelt their own aluminium. And close down Marsden Point and buy refined petrol from Singapore. Neither of these actions will decrease the total quantity of carbon being generated… it just moves the generation to countries that are exempt. But it’ll help meet our Kyoto obligations at the cost of a few thousand NZ jobs.

    And these large industries WILL move. They’re not going to be economical with increased electricity prices, even if they weren’t forced to buy hundreds of millions of bucks of carbon credits.

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  14. Mr Dennis (348 comments) says:

    Before even thinking of supporting a joint Aussie-NZ ETS, the government should first be supporting a joint Royal Commission of Inquiry into Global Warming, to work out whether we should be having an ETS in the first place.

    Then, if the Commission determines AGW is real, they would have a firm reason to actually have policies that were designed to combat it (although arguably not an ETS as it would probably have little benefit) and could get wider acceptance of these measures from the public. If the Commission determined it was not an issue they could forget about it, without looking like a bunch of “deniers”.

    At present the only party offering a Royal Commission of Inquiry is the Family Party. It probably wouldn’t be too hard to get Act alongside if both were in parliament. But everyone else will give you an ETS sooner (Labour) or later (National), without considering whether AGW is real at all. At least this makes it easy to decide who to vote for.

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  15. PhilBest (5,004 comments) says:

    stephen (845) Add karma Subtract karma +0 Says:
    July 10th, 2008 at 9:08 am

    “Garnaut recommended that 50% of ETS revenue goes to low-income households as compensation for higher energy bills, 30% to help trade-exposed and disadvantaged industries adapt, and 20% on research.”

    Ho HUM. 50% of ETS revenue to low-income households as compensation.

    The ETS is good old-fashioned socialist “income redistribution” in drag, surprise, SURPRISE.

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  16. PhilBest (5,004 comments) says:

    By the way, one of the best articles you will find RIGHT ON THIS TOPIC, is the Australian “Quadrant” Magazine article,

    “The Chilling Costs of Climate Catastrophism” by Ray Evans.

    It is far too long and in-depth for me to dare to try a copy-and-paste here, but take it from me, please, everyone, it is a “MUST-READ”.

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  17. stephen (4,022 comments) says:

    Well PhilBest, hypothetically, I would be very interested to know what a ‘small government’ would do if a future problem was foreseen, and both the public and the government agreed that a solution was needed, or else the future generations of the nation-state, as a collective would suffer far more than current generations? The decision in this hypothetical case was made by the government to use the dis-incentive of taxing an externality (at the source) that was the cause of the problem, but this measure would disproportionately affect the poor, due to the passing on of costs. Are the poor – who would suffer disproportionately due to having lower incomes – worth cushioning a little with other people’s money, or should society be comfortable with having the poor and their families suffer disproportionately?

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  18. stephen (4,022 comments) says:

    Hope I phrased that right – basically what if collective action was needed to avoid a future problem, but the poor would be unable to insulate themselves from the financial consequences of the action?

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  19. Murray (8,822 comments) says:

    Anyone worked out how to tax volcanos yet?

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  20. Mr Dennis (348 comments) says:

    Murray: Latest Green party policy announcement: 33% of all lava and ash to be surrendered to the government for mineral extraction. Lava and ash to be shipped to China for processing in biofuel-powered ships as no mineral industry will exist in NZ.

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  21. stephen (4,022 comments) says:

    Mr Dennis, re: your 10:51 am comment – The NZ Royal Society’s position not enough for you? (

    Also, would be interested in your thoughts on this: you agricultural-scientist-type you (if you have tiiiiime… cheers

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  22. stephen (4,022 comments) says:

    On the first point, see the genesis of the New Zealand Climate Committee here:

    Why have a Royal Commission? It can be argued that we needed one for GE and Auckland governance because there were no pre-existing official-type bodies that dealt with those issues as a matter of routine, but I don’t think that is so in this case.

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  23. side show bob (3,480 comments) says:

    Whats the point of Aussie and NZ having their own rules when the rest of the world ( or those that sign up to this shit ) plays by there own rules. Why should we put our heads on the chopping block when other countrys have no fucking intention of playing by the rules. If the fucking idiot socialists are so keen to get screwed over by all and sundry let them use their own wealth. Oh thats right they don’t do the earning money thing just taking others peoples money thing and this is what all this shit is about, make no mistake.

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  24. Mr Dennis (348 comments) says:

    On your first point, the Royal Society is just another group of scientists, the signatories to the statement you refer to are both from the same organisation (NIWA). Yes, their view is completely valid, I wouldn’t want to put it down. But we have other groups of scientists saying the opposite, and thousands of signatures being gathered of scientists who oppose AGW. We can’t rely on the statement of any one organisation in this issue, as most seem to be either hard one way or hard the other. A Royal Commission set up specifically to look at this issue could be made up of scientists either specifically chosen to be neutral (ie as-yet undecided themselves) or failing that to represent both sides of the debate. They could accept scientific submissions from either side and directly weigh the evidence in a transparent fashion. The Royal Society is not set up specifically as an unbiased commentator on this issue, and is therefore quite different from a Royal Commission.

    On your second point, that is an interesting article. The environmental efficiencies being proposed by PGG Wrightson and Fonterra are all good things to do. You will note that they are all things that will be done regardless of whether or not there is an ETS, because “It makes economic sense to find ways to conserve energy and reduce production costs”. They are designed primarily to improve efficiency and profits, and as a side-effect would also reduce CO2 emissions.

    I don’t think that the Business NZ quotes are actually in direct opposition to the strategies of PGG and Fonterra, I get the feeling that is a spin put on the issue by the author. Business NZ points out that the ETS would impose extra costs on producers in NZ. This is entirely true, and doesn’t contradict PGG and Fonterra at all. The discussion about pulp prices per tonne vs lamb prices per tonne makes no sense – I could just as easily argue that gold was far higher value per tonne than lamb so we should forget about farming and just mine gold. Pulp wood can be produced in far higher quantities on more marginal land than lamb, the per tonne price is irrelevant.

    I must draw particular attention to this quote:
    “Of course, one of the most promising ways to increase consumer value and animal productivity is to solve the challenge of methane emissions from ruminant animals. It is believed that if ruminant animals digest their feed better, they will turn more of their feed into energy (and thus, more milk and meat) and less methane.”

    Sure, if you could improve the amazingly efficient (compared to human-built systems) natural ruminant system for converting low quality forage to energy and make it even more efficient, there would be benefits. However although millions of dollars have been poured into doing just that, such talk is still wishful thinking – hence the wording “It is believed”. No-one has managed to do it yet. And if you can’t, according to the ETS rules agriculture will have a massive bill to pay. PGG is trying to improve returns on sheep farms not to pay the cost of the ETS, but because sheep farmers don’t have enough money to pay the bills at the moment. They certainly can’t afford an ETS, and such a scheme would rapidly soak up any additional returns PGG could obtain through their proposed reforms.

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