Kyoto Costs

November 12th, 2009 at 11:00 am by David Farrar

An article by Brian Fallow covers issues around the proposed :

Taxpayers will be stuck with 84 per cent of the bill for meeting New Zealand’s obligation under the Protocol, while farmers and large industrial emitters get hefty subsidies, according to a report out today.

The report on the Government’s planned changes to the emissions trading scheme by the Sustainability Council’s executive director Simon Terry and economist Geoff Bertram says farmers will be subsidised to the tune of $1.1 billion by the end of 2012, while large emitters get nearly $500 million.

Sounds awful doesn’t it. Certain bloggers rant on about how people are getting paid to pollute etc, But the situation is far more complex than slogans.

Kyoto requires New Zealand to take financial responsibility for any increase in its emissions over 1990 levels during the five years from 2008 to 2012 inclusive. Current estimates are that we will exceed that target by 76 million tonnes, which would cost $2.3 billion (at the carbon price of $30 a tonne the report assumes).

At present we actually (as at 2009) have net emissions that are 10 million less than our 1990 levels – thanks to forestry plantings.  Also the current price of carbon is $20.35 a tonne, not $30. So the projections for 2008 to 2012 are some way from the current situation.

Changes to the ETS being considered by a parliamentary select committee lighten the burden on “trade-exposed” sectors, including farming, which account for around two-thirds of the country’s emissions, to protect their competitiveness when most of the world has yet to impose a price on .

Climate Change Minister Nick Smith said the Government was providing allocations of free emissions units more generously for those emitters because they were trade-exposed.

“It has nothing to do with favouring big over small,” he said.

And this is key. Making trade exposed industries pay straight away the full cost of carbon will merely see them lose production to other countries. And those other countries will often be more carbon intensive. So the net effect is bad for the environment and bad for our economy.

When No Right Turn thunders on about subsidising polluters, he is actually calling for something that will lead to increased carbon emissions.

Dr Smith said it was misleading to talk about subsidies to farmers on the basis that they are not paying for their emissions during Kyoto’s first commitment period (2008 to 2012).

“No country … is imposing a cost on their agriculture industry in the first commitment period. We are likely to be the first in 2015.”

Again this is where the purists just have no idea. They want us to tax (through the ETS) our farmers, in advance of any inclusion of agriculture by any other country. Again if we do what they want, then it is a lose-lose – bad for our economy and bad for the environment.

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98 Responses to “Kyoto Costs”

  1. Grant Michael McKenna (1,160 comments) says:

    No! These are facts! The time for analysis is past! Slogans NOW! Worse than Hitler! etc, etc.

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  2. robcarr (84 comments) says:

    Not if we recycle that tax to fund research in those fields and to subsidise the changes over to more carbon efficient methods. That way the money does not leave those respective fields and over time they will in fact become more productive than they were originally.

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  3. toad (3,674 comments) says:

    Looks like Cactus Kate is (at least partly) with the Greens on this one DPF.

    Some disunity in the right’s response, methinks.

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  4. Ed Snack (1,927 comments) says:

    The real problem is more with Kyoto, farming is rated only on its outputs, with no credit for inputs. Add to this that the “opportunity cost” of emissions of methane is unknown (and by that I mean that animals don’t produce methane, bacteria do, and they do so inside or outside an animal by decomposing vegetation), and you have a purely accounting system with almost no relevance to the real world. It is indeed quite possible that rigid adherence to Kyoto style measurements could actually increase real emissions. Kyoto is a major crock, a political solution born out of the “we must do something, anything” school of woolly thinking.

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  5. david (2,564 comments) says:

    Oooh DPF, you still think that CO2 is bad for the environment?

    Put yourself down as a lost cause.

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  6. Pete George (23,687 comments) says:

    And disunity too! The right must be disintegrating. Divide and conquer?

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  7. andrei (2,668 comments) says:

    What a load of horse shit – everyone with half a brain knows all this crap is just about growing government and utterly meaningless double talk about emissions and carbon credits from National and its supporters just goes to show they are really a left wing party involved in advancing the cause of Global Socialism.

    Shameful!!!

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  8. RightNow (7,012 comments) says:

    What incentives are there for me to reduce my carbon footprint? Will I get some money or tax credits?

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  9. Komata (1,202 comments) says:

    The last sentence says it all really – this is exactly what the socialists want – a lose-lose situation which will only enhance their ultimate aim – world domination and control via their stooge the UN. No surprises there – nor is the fact that NZ is always the first to be targeted; if it works on Kiwi’s (aka a ‘small country’) it will work anywhere, and if the Guinea Pigs don’t know that they are, then so much the better. . .

    We live in interesting times.

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  10. Murray (8,847 comments) says:

    As I observed toad, Kate is more of an indoor girl. Not really the gumboots type. and on the right we let people have their own ideas and express them. Toeing the party line is a commie trait.

    You want to talk sustainability lets talk about sustaining a 1,9 BILLION dollar bill during a recession. Kyoto would have the single most irresponsible act for the persistently irresponsible previous Labour government.

    Time to tell the gorebull warming religion to get the hell off the porch, we don’t want any today. Freaken new version of YW’s, “Hi we’re here with a message from Gaia!”.

    Bugger off loonies.

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  11. Manolo (14,070 comments) says:

    ” utterly meaningless double talk about emissions and carbon credits from National and its supporters just goes to show they are really a left wing party”

    I’d say quasi-socialist like the Labour Party. Otherwise, how do you explain National has given ministerial responsibilities on crucial area to the hopelessly greenie and incompetent Nick Smith?

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  12. Pete George (23,687 comments) says:

    Ed must have a whole brain then, I think he is closer to the mark with “we must do something, anything”, but it’s a huge experiment, there are as likely to be unintended consequences,

    Linking a capitalist market based approach with some sort of socialism is symptomatic of no more than half of the brain being engaged.

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  13. Right of way is Way of Right (1,122 comments) says:

    My late step-father used to say that if the government could find a way to tax the air we breathe, then they would do it. How on earth did he know!

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  14. philu (13,393 comments) says:

    i wonder when dpf will crack..?

    and tell these denial-loonies just what they are..?

    (you must be hovering around your ‘oh shit!’-moment..

    ..eh dpf..?

    have it soon..eh..?

    and then swing into action..

    eh..?..)

    phil(whoar.co.nz)

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  15. Lance (2,715 comments) says:

    You can rant all you like.
    Like it or not this is what is going down internationally. We export to and take tourists from these countries so one can either stand on ones principles and lose a shit load of money when they place embargoes/tariffs etc (way more than Carbon Taxes cost) or play the game as best we can and mitigate the costs where possible.
    Unfortunately we live in the real world where politics has to be the art of the possible.
    I am all ears on how to give the two fingered salute to the rest of the world and not suffer for it?

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  16. Murray (8,847 comments) says:

    I wonder if phool is on crack..?

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  17. Murray (8,847 comments) says:

    So you’ve got China on board then Lance?

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  18. philu (13,393 comments) says:

    nah..!..muzza..haven’t used crack since the 80’s..

    (and that was cocaine crack..not this local foul/low-rent speed muck..)

    just a boring old pot-head these days..

    what’s your excuse..?

    especially for someone of your age..

    ..still playing ‘dress-ups’..?

    eh..?

    phil(whoar.co.nz)

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  19. Lance (2,715 comments) says:

    Me-thinks China may demand one thing and do another itself.
    I know they are moving with environmental measures around RoHS, vehicle emissions standards etc. If you bank on them not playing this game then you may lose.
    Also the pollution is biting them on the bum with fresh water supplies etc. So it might be good business not to shit in their own nest?

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  20. garethw (205 comments) says:

    You can rail against Kyoto all you like kids, we have it no matter how much you think it’s socialist taxing of air for lesbian UN programs.

    And rather than allowing those costs to fall at the source, where decisions to reduce those costs will be made, we put it on the general tax take, where no such calls will be made. It’s en masse taxpayer subsidisation of cost for business – and you guys moaned about TARP money and GM bailouts! I thought businesses were meant to stand on their own in the economic environment they face? Well a costed-carbon world is very real now…

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  21. PaulL (6,048 comments) says:

    The underlying problem here is attempting to reduce carbon emissions through a scheme that creates impacts on trade exposed industries. This is then immediately followed by rent seeking behaviour from lobby groups, as they attempt to mitigate that impact.

    An alternative (yes, I’m a broken record) would be a carbon tax. It can be demonstrated to give the exact same level of carbon emission reduction, but:
    – it only applies to domestic production. So local farm produce would incorporate the carbon tax, any exports would have that tax refunded
    – it applies blanket to everyone, no need to provide carve outs for large emitters
    – it involves no trading, and therefore no speculation on carbon prices
    – it provides certainty for those who must invest. Carbon prices in an ETS vary up and down, so investments must include an element of uncertainty. A carbon tax provides certainty on the price of carbon
    – it has similar implementation costs to an ETS (still high, and still lots of bureaucracy, but no worse than an ETS)
    – all the tax accrues to the govt – whereas in a trading scheme some of the benefit accrues to the traders/large emitters
    – therefore, can have compensating income tax cuts.

    A carbon tax still remains by far the best policy, and more and more economists are pointing this out. A trading scheme works well in a defined area where everyone must participate. It doesn’t work on a global scale, particularly where different countries have different regimes. A carbon tax has none of those disadvantages.

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  22. Murray (8,847 comments) says:

    Still got your snout in the public trough phool?

    You Rodney, Carter and Hone. What a team.

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  23. Inventory2 (10,436 comments) says:

    Phillip Ure said “just a boring old pot-head these days..”

    Many a true word is spoken in jest Phil. I agree wholeheartedly with your self-analysis; the “boring” bit is right on the money ;-)

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  24. Cadmus (26 comments) says:

    DPF wrote….Taxpayers will be stuck with 84 per cent of the bill for meeting New Zealand’s obligation under the Kyoto Protrol

    I have couple of questions that I would like to know the answer to.

    1) The money collected in, where does it go? Does it stay here in NZ or go overseas?

    2) The money that is collected from this tax. What is it spent on?

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  25. Manolo (14,070 comments) says:

    “1) The money collected in, where does it go? Does it stay here in NZ or go overseas? 2) The money that is collected from this tax. What is it spent on?”

    Absolutely irrelevant questions. Akin to asking a bank robber and criminal where and when he spent the money of his last heist. It doesn’t matter.

    Theft by taxation will always be theft!

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  26. unaha-closp (1,180 comments) says:

    What PaulL says is almost correct.

    - it only applies to domestic [consumption]. So local farm produce would incorporate the carbon tax, any exports would have that tax refunded.

    It is only the barely reformed communists of the Greens, raving loony (we must regulate all industry) euro-socialists and apparently their fellow travelling Nats who would believe strongly in an ability of government to centrally control production. The net effect of the first 10 Year Plan (otherwise known as Kyoto) has been to increase the carbon footprint of participating states – production control effectiveness at its finest.

    – therefore, can have compensating income tax cuts.

    If a carbon consumption tax is implemented as the preferred mechanism to save the planet, it becomes more effective as a mechanism if the size of the market economy is maximised. This means that when a carbon taxation is indeed used to save the planet then reducing the size of government and minimising all non-planet saving taxation is the best possible thing we can do for the planet.

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  27. Murray (8,847 comments) says:

    We send it to Russia Cadmus.

    We send one of the worlds worst poluters our tax dollars because they have lots of empty space with trees. Makes perfect sense really. To people like phool and toad.

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  28. Cadmus (26 comments) says:

    I have another question,

    I read a flyer from the National Party that had a group of their MP’s on the front of the flyer calling themselves the Blue/Greens?

    Haven’t the National Party worked out that all this emision trading, carbon footprint, etc, is just a load of CR@P !

    I know for a fact NZ will tackle the problem with a sledge hammer a nut approach stalking business who aren’t complying or taxing them out of existance, or close them down. So then the Blue/Greens will run overseas on a junket and say Kyoto. “Look what a great job we are doing!!!!

    I also know that the opposite will work in India, China, Eastern Europe. They will do all they can to duck and dive their way out of any obligations , because they know it will increase their productivity, at the loss of the West!

    DPF also states…”.while farmers and large industrial emitters get hefty subsidies”

    So I am correct in saying National doesn’t believe in small business!

    Well it looks like it’s time to get NEW ZEALAND FIRST and the Rt Hon Winston Peters back into Parliament!

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  29. getstaffed (9,186 comments) says:

    This is all complete and utter nonsense.

    CO2 emmissions do not change the climate. Quite the reverse acutally, changes to the climate alter CO2 levels.

    The whole climate change discussion is a trogan horse designed to usher is a global wealth transfer scheme, which as we all know from socialism’s failed efforts to-date, creates dependence on the source of the welfare rather than freedom and independence.

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  30. getstaffed (9,186 comments) says:

    Cadmus, you are Winston Peters- a blight on the already woeful integrity of our elected representatives.

    Long may you stay away from the levers of power.

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  31. Cadmus (26 comments) says:

    Look Guys, many really want to know what happens to the money collected under this scam or scheme or what ever you call it.

    What is the path of the money?

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  32. Murray (8,847 comments) says:

    It
    Goes
    To
    Russia!

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  33. Nigel Kearney (1,049 comments) says:

    In a nutshell:

    If we stay in Kyoto but don’t impose costs on polluters, there is no effect on emissions
    If we stay in Kyoto and do impose costs on polluters, there is no effect on emissions (for the reasons David gave)

    So all that Kyoto does is send our hard earned money to Russia. The fact the government is doing this should be a huge scandal.

    There are only two reasonable options:

    1. Get out of Kyoto altogether
    2. Don’t do anything unless/until other countries agree not to subsidise their carbon emitters

    [DPF: I believe the ETS will lead to a reduction in emissions – but relatively slowly. NZ’s position at Copenhagen is that the target proposed is dependent on a widespread agreement from countries]

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  34. garethw (205 comments) says:

    “What is the path of the money?”
    As a company, I need to prove that I’ve only used (on net) my appropriate levels of carbon emission – there is no tax at all (Christ, how can someone who claims it’s a tax have any kind of credibility?).

    If I’m not going to emit more than my target then sweet, I’m within the rules and can (within the appropriate rules) sell the extra emission units I didn’t use to someone else on a normal trading market.
    If I AM going to emit more than my target, then I need to go to the market and purchase units from some other company/scheme that has extra to spare.
    Hence the emission reductions will always happen at the lowest cost source.
    The Govt doesn’t get involved – they just set the rules. There is no “money” going anywhere near the Govt.

    Where it may get weird is if everyone keeps emitting too much and there isn’t enough spare units to cover it. As I understand it that is currently unlikely to happen.

    And please, bring on the negative karma for a factual explanation…

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  35. Cadmus (26 comments) says:

    Murray… Wow, and you being a National Party supporter ! It must be a “BIG” let down for you?

    Well you could have voted NZ First at least the money would be spent on NZers here in NZ , but I suppose you were suckered in! When you look at it you and others only have yourselves to Blame!

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  36. Cadmus (26 comments) says:

    Garethw and Nigel Kearney thanks for your help many are interested I asure you……You both give an answer… So one is saying the money stays in NZ via buying credits off other NZ companies, One says or 2 I should say including Murray it goes to Russia?

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  37. big bruv (14,160 comments) says:

    Cadmus

    “The money collected in, where does it go? Does it stay here in NZ or go overseas?”

    It goes to “developing” countries.

    The entire climate change con is being pushed by the hard left for one simple reason, it (climate change) is the trojan horse they have been praying for, it enables them to introduce global wealth redistribution.

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  38. Simon (763 comments) says:

    It is too late the UN fella and prince wotsit said so as well as all the green slime.

    NZ needs to rearm. Say 500 anti ship missiles ought to do it. Just in case.

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  39. garethw (205 comments) says:

    Why doesn’t the money come here? Why aren’t we investing in keeping emissions under our binding Kyoto targets such that people buy off us?
    OK, pipedream, so to answer Cadmus’ question (which is effectively “where can overtarget firms purchase emission units from?”) we can buy those units from most Kyoto countries as our system allows for redemption of Kyoto-defined emission units (CERs etc). I’m not sure what location the largest number of CERs are currently coming from.

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  40. MikeNZ (3,234 comments) says:

    Getstaffed
    Thanks for the links, I have wondered why she got that job and why John Key supported her.
    If we can read this stuff, why can’t John Key and the National Party caucus?

    Some would say we are nuts or gullible to be thinking up ways to give others our money for a problem that doesn’t exist.
    http://orssengo.com/GlobalWarming/IpccProjectionAndObservation.jpg
    http://orssengo.com/GlobalWarming/NormalProbabilityPlot.gif

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  41. unaha-closp (1,180 comments) says:

    Well it looks like it’s time to get NEW ZEALAND FIRST and the Rt Hon Winston Peters back into Parliament!

    Or as an Association of Consumers and Taxpayers we could get together and elect some sort of right wing party to ensure that we get offered serious solutions to climate change that don’t send our taxes through the roof and into the pockets of big business. Or did we already do that only to have them be more interested in playing with Auckland’s trainsets, trips to Disneyworld with the gf and teeth whitening products.

    As far as I can work out the ACT party position on nearly everything is: less tax, smaller government and shifting what tax burden there is to consumption. The only single exception is climate change where their policy reads – “Its not happening, everything is fine, we do not need to make any changes, stick head up orifice/invert.” This is ironic, because the Cato Institute amoung others have been pointing out for 15 or so years that the preferred solution to climate change is: less tax, smaller government and shifting what tax burden there is to consumption.

    ACT buy a freakin clue.

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  42. lilman (967 comments) says:

    Freaking hell kids, is all about money!!!!!!!!!!!!!!!!

    You pontificating homos, there was 4 degree temp rise recorded when Ceasar was in power, get a grip.

    Taxing populations wont help save the world,its only a tax!!!!!!!!!!

    Homos the lot of them>

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  43. PaulL (6,048 comments) says:

    garthw: close I think.

    1. Yes, everyone gets permits, and then as you say, if you need more permits you buy some on the open market, if you need fewer permits you can sell some.

    2. Buying permits, and buying from the lowest cost “reducer” probably means buying from Russia. The Russians got over allocated as a bribe to get them to sign Kyoto (and put pressure on the US). Since then the Russian economy has further collapsed, so they have lots of spare permits to sell cheaply.

    3. The original allocation of permits is where some of the money goes. There are a lot of ways to put the permit allocation together. Some people seem to be assuming we’d allocate to, say, Comalco x gigatons of permit, in perpetuity. But I think the preferred approach (if there is one) is that a permit is a permit for a single year. Each year we allocate some directly to industry (hence the allegations of subsidy), and auction some of them on the open market. For those that are auctioned, the money flows directly to the government, and they presumably use it for whatever purpose they wish. In this case, I suspect at least some of it would be used to offset the emissions from the permits they gave away.

    4. This whole thing can create massive market distortions, depending on how it is implemented. If implemented in a pure way, with all permits auctioned, then it actually behaves similarly to a carbon tax – except for the downside that it hurts trade exposed industries, and the upside that it allows foreign reductions to be bought and therefore a potential reduction in cost. If implemented the way most countries seem to be heading, with permits given away to existing emitters, it creates technology lock-in, incumbency advantages, and general rent seeking behaviour from large corporates to the detriment of consumers, taxpayers, new companies and small companies.

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  44. garethw (205 comments) says:

    “If implemented the way most countries seem to be heading, with permits given away to existing emitters, it creates technology lock-in, incumbency advantages, and general rent seeking behaviour from large corporates to the detriment of consumers, taxpayers, new companies and small companies.”

    Well put, PaulL. This is National’s approach.

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  45. PaulL (6,048 comments) says:

    unaha-closp: ACT used to have a policy of carbon tax – almost exactly what you describe. For a long time that was still their official policy on their web site, can’t be bothered going to look and see if that’s still the case.

    Rodney Hide knows better – he has degrees in related areas, and he has an economics degree that allows him to see why the market solution won’t work. ACT made a tactical decision to go with the “no climate change happening here” crowd rather than the “what’s the most efficient way to deal with this potential problem” crowd.

    To be fair, in the last election they really needed it – they were in trouble. But I lose some respect for ACT each time they sell out to some tactical populist group – the same with putting that clown on the law and justice portfolio – what’s his name? They are supposed to be better than that, but I guess all politics pollutes principles.

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  46. Murray (8,847 comments) says:

    Who the fuck told you I was a National party supporter Cadmus?

    I’ve spent more time kicking Key than Goff. The concept of non-partisan honest opservation too much for a bear of very little brain is it?

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  47. Jeff83 (745 comments) says:

    What is the point of a carbon tax if the creaters of the carbon dont pay it, defeats the whole purpose of the bloody thing, takes away the incentives its meant to introduce and really is just crazy. Doing nothing would be preferable as at least the tax payer would not be broke doing nothing rather than this ridicolous half way house.

    [blockquote] At present we actually (as at 2009) have net emissions that are 10 million less than our 1990 levels – thanks to forestry plantings. Also the current price of carbon is $20.35 a tonne, not $30. So the projections for 2008 to 2012 are some way from the current situation. [/blockquote]

    You truly are a spin doctor. When it came to defending National’s position on there emmisions target you distorted it through using gross emissions, now you need to go the other way you suddenly switch to net.

    DPF get some spine and just admit it, you support it because you see it as the best compromise for business being we get to be seen doing something but yet we dont, and the net result is the little man gets screwed an unfair amount and to top the lot off no change will result so the whole exercise is null and void, meaning if the majority of scientists are right we are screwed and if the minority (and KB supported branch) are then individuals are screwed.

    [DPF: Under the ETS the creators will pay for their emissions – but slowly. Our ETS is in fact more comprehensive that any other in the world (I believe) being all gases and all sectors. The allocation of free permits does decrease slowly, but it does decrease.

    I’ve always made clear the difference between gross and net emissions. This post was on our 2008 – 2012 liability – so net emissions is what we pay on. In setting a target for 2020, I have referred to both gross and net emissions – making the point that due to tree felling, our net emissions in 2020 under a bau scenario is projected to be worse than our gross emissions

    Being the only developed country in the world to refuse to lower emissions is not an option either unless we like the idea of double digit unemployment as our export sector finds us trade blocked]

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  48. unaha-closp (1,180 comments) says:

    PaulL: too true, ACT have gone away from lower tax, less government, neo-liberalism and picked up Winston’s old mantle.

    Oh well, back to haurranging the only slightly right of centre party remaining in this country. National might at least do us the service of delaying implementation untill after Copenhagen, where if early indications are true the developing world is going to reject an ETS. Then after listening to the concerns of 3.0 billion Chinese, Indians, Brazillians etc, the world might have an opportunity to realise that 0.5 billion Euros can be wrong.

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  49. big bruv (14,160 comments) says:

    Well said Jeff83.

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  50. Murray (8,847 comments) says:

    Only a moron would believe they can change the weather with a tax.

    A moron or a socialist.

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  51. unaha-closp (1,180 comments) says:

    What is the point of a carbon tax if the creaters of the carbon dont pay it, defeats the whole purpose of the bloody thing, takes away the incentives its meant to introduce and really is just crazy.

    Jeff83, say cheese:

    Farmer Joe in Hawera makes brie to be transported (by truck), packaged, marketed and sold in Foodtown New Plymouth. Farmer Jose just north of Rocha, Uruguay makes brie to be transported (by truck, train and then 747), packaged, marketed and sold in Foodtown New Plymouth.

    Carbon Taxation: every ounce of carbon emitted in the process of making each cheese is added to the bill the Taranaki consumer pays for the cheese. Urugauyan cheese costs more, because 747s burn a lot of fuel.

    Kyoto approach: every ounce of carbon emitted in NZ is added to the cost of each cheese. The NZ cheese costs more, because Kyoto has deemed Uruguay to not be a polluting country and 747s are exempt.

    Can you work out which one of these scenarios makes less enviromental sense?

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  52. unaha-closp (1,180 comments) says:

    Only a moron would believe they can change the weather with a tax.

    Technically I believe we can change the weather with a tax cut. What does that make me?

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  53. Murray (8,847 comments) says:

    I do not beleive I was unclear.

    In your case a bloody wishful thinker though.

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  54. PaulL (6,048 comments) says:

    Jeff83, strictly speaking in economic terms, it isn’t necessary for someone to pay a carbon tax / ETS to benefit from reducing carbon emissions.

    Let me give you an example. Say I decide to introduce a tax that will reduce usage of fossil fuels. I create a tax that applies to you personally (and, of course, everyone else. But we’re focusing on you). It adds $5 to every litre of petrol. I calculate that you currently use 1000 litres of petrol a year, so I give you $5,000 a year.

    We’re now similar to the situation that National propose for the ETS. I’ve created a cost (the petrol tax, or the ETS), and then I’ve given you something that covers that cost (in your case, $5,000, in the ETS case, lots of emission permits that have a dollar value on the open market).

    So, in my example, are you going to drive your car less? You have no reason to drive less – I gave you enough money to cover the new tax. But, assuming you use 1 litre of petrol to drive to work, you used to save about $1 when you rode the bus. Now you save $5. You might be more likely to ride the bus.

    Doesn’t mean I like an ETS, but it is possible to reduce emissions without actually costing anyone anything. My main concern is that if I impose the carbon tax as we described, and give everyone who drives a car today $5,000 a year for ever, that sounds OK. Problem is, next year your son gets to 16, and you buy him a car. In my hypothetical policy, he doesn’t get $5,000 per year, we’ve set things up so that only existing drivers are compensated. That’s what we’re doing to industry – existing companies get a free kick, any new company created will have to pay full cost.

    To follow the money a bit further, the companies in existence today get that free kick. They’re publicly listed commercial entities, so what actually happens is that their share price immediately goes up. The current shareholders on the day the policy comes into force capture the full value of the carbon permits issued, and the company’s cost of capital now goes up. They are actually competing on even terms with any newcomers, since the permits (or at least the value of them) has effectively been immediately transferred to shareholders. So what actually happens is that the NZ govt gives away a windfall gain to the shareholders (often foreign) of those companies blessed by the govt giving them permits. All feels a bit dirty doesn’t it? What do you reckon that those shareholders are pretty much in favour of the costs to future consumers being grossed up and given to them in a lump sum on the day the policy is agreed?

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  55. LiberalismIsASin (290 comments) says:

    Carbon Footprint my ass. This is a total scam. Its going to be so corrupt that it will make the UN food for oil scandal look like a drop in the ocean.

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  56. unaha-closp (1,180 comments) says:

    PaulL, that scenario paints a way too rosy picture of an ETS, an ETS does not reduce emissions:

    So, in my example, are you going to drive your car less? You have no reason to drive less – I gave you enough money to cover the new tax. But, assuming you use 1 litre of petrol to drive to work, you used to save about $1 when you rode the bus. Now you save $5. You might be more likely to ride the bus.

    $5 bucks is nice I guess, how abouts $5,000?

    Suppose a Mr Wong recent immigrant from China decides to stop driving his taxi, we pay him $5000 because he has “reduced emissions”. But now his cousin back home wants some investment to start up a fleet of taxis, does Mr Wong want to invest $5000…

    Suppose Mr Rio Tinto decides to stop a small smelting operation at Bluff, we pay him $x millions. But now his joint venture partner in Southern Bangalore, has commisioned a 5 GW coal fired power plant and wants a secure contractual buyer for some of the power an Aluminium smelter seems ideal…

    China, India are not covered, not gonna be covered because like PaulL says:

    To follow the money a bit further, the companies in existence today get that free kick. They’re publicly listed commercial entities, so what actually happens is that their share price immediately goes up. The current shareholders on the day the policy comes into force capture the full value of the carbon permits issued, and the company’s cost of capital now goes up. They are actually competing on even terms with any newcomers, since the permits (or at least the value of them) has effectively been immediately transferred to shareholders. So what actually happens is that the NZ govt gives away a windfall gain to the shareholders (often foreign) of those companies blessed by the govt giving them permits.

    Follow the money even further. The world situation is that rich countires (Europe, USA, Australia, some would say NZ) are shareholding nations (the rich world owns the capital). The developing nations (China, India, Brazil, Malaysia) are growth economies home to newly expanding companies. Under a global ETS the world (like PaulL says) gets to make a payment for the cost of combating climate change to the worlds shareholders, which really means the worlds poor would have to cough up several $trillion to the worlds rich – notgonnahappen.

    Copenhagen is the latest great push for a global ETS. The rich world (Europe, USA, Australia, Japan) are trying to force the developing nations* to get on board, the developing nations are not consenting to do so.

    * some 3rd world countries that are non-developing will probably sign up (Zimbabwe, Equatorial Guinea, Libya, Syria, Cuba, the like) where their leadership have no qualms about exploiting their people as long as they get a cut (which they will).

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  57. kisekiman (219 comments) says:

    The fertiliser company did an analysis of our farm and said we would have to plant 93 hectares in trees out of a total of 166ha to be carbon neutral. That is a substantial area to take out of production but if that is the least cost option under the regulations imposed then we’ll have to do it. Watch the townies squeal then when the economy implodes and a family block of cheese costs $30+

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  58. PaulL (6,048 comments) says:

    Unaha-closp: yes and no. For some things, like agriculture, you’re exactly right. I’m growing cows for dairy here, I can take my permits and close down. Windfall gain to me. I then open up a dairy operation in Paraguay, and export back to NZ with no carbon emission permits required. So yes, that results in no change to carbon emissions, substantial impacts to NZ economy, and windfall gains to the permit holder at the expense of taxpayers and consumers.

    But, consider the example I gave on car driving. I give you $5,000, and put the price of petrol up to $5 per litre. You probably will drive your car less, and you (the taxpayer/consumer) are pocketing the windfall. You then spend that windfall on whatever you want – which might be something else that embodies carbon emissions, or might be 100 different movies, delivered via the internet (i.e. a product that has little embodied carbon). This would, on average, reduce carbon emissions, and wouldn’t have an overly negative impact on consumers and taxpayers.

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  59. MikeNZ (3,234 comments) says:

    Can someone get this to John Key so that when we sack him he can’t say he wasn’t told!
    The first is the draft doc for Copenhagen, which so far has no clawback or exit clause.

    http://wattsupwiththat.files.wordpress.com/2009/10/un-fccc-copenhagen-2009.pdf
    http://2gb.com.au/index2.php?option=com_newsmanager&task=view&id=4998

    http://www.heartland.org/publications/NIPCC%20report/PDFs/NIPCC%20Final.pdf

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  60. unaha-closp (1,180 comments) says:

    PaulL,

    Yes sort of, but our consumption choices allow us such great scope and most of our discretionary spend is going to be a carbon leak under any NZ only ETS.

    Save $1 of carbon and get the $4 of tax break enough times and you can afford a holiday to Fiji. Instead of playing a new video game.

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  61. jackp (668 comments) says:

    If cars are suppose to be the main polluters why not build or enlarge the transit districts to get people out of cars. Why spend billions on roads in Aukland?? Looks like those politicians are up to get more money. What a heist. Nick Smith said this whole carbon scheme was a farce 4 years ago. What happened???? I see the same thing happen in Los Angeles. Contractors are sleeping with the politicians and the politicians are wanting more money. I don’t trust National anymore. You just have to follow the money trail.

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  62. Pete George (23,687 comments) says:

    Scientists are predicting seas will rise higher than the levels the Environment Ministry advises local councils to plan for.

    The director of the Antarctic Research Centre, Tim Naish, said the international community now believed sea levels could rise by 1.9 metres.

    The new data was presented at a media briefing held by the Science Media Centre and NZ Climate Change Centre in Wellington yesterday. Dr Naish said he believed that the new figures would impress the urgency of the problem upon policy makers.

    http://www.stuff.co.nz/national/3054129/Seas-may-rise-even-higher

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  63. Antoine (1 comment) says:

    Guys

    What do the Russians spend the money on?

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  64. andrei (2,668 comments) says:

    Pete George

    Through better education and science we are evolving away from needing to rely on the prop of religion, and we are waking up to those that try and exploit others through religion.

    And boy are you ever exploited if you believe that garbage you have just posted.

    That ‘aint science its the 21st centuries version hell fire preaching to scare the gullible such as yourself into surrendering to the new world order.

    I weep for you

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  65. Pete George (23,687 comments) says:

    I didn’t say I believed it, I was just posting a news report. But I do note that quite a few scientists who know a lot more about it than I ever will have some major concerns.

    Can you refute anything specific about what they are saying?

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  66. Redbaiter (13,197 comments) says:

    “The director of the Antarctic Research Centre, Tim Naish, said the international community now believed sea levels could rise by 1.9 metres.”

    Ian Wishart* chewed these lame self serving frauds up and spat them out.

    *One of the only real journalists in NZ.

    http://briefingroom.typepad.com/the_briefing_room/

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  67. Kris K (3,570 comments) says:

    When Big Al Gore sells his sea-side mansion and moves inland, then we’ll all know that the oceans are rising. It’s such a shame that Gore doesn’t practice what he preaches – just another highly paid bullshit artist if you ask me.

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  68. philu (13,393 comments) says:

    “..# Cadmus (26) Vote: Add rating 2 Subtract rating 2 Says:
    November 12th, 2009 at 1:02 pm

    Look Guys, many really want to know what happens to the money collected under this scam or scheme or what ever you call it.

    What is the path of the money?..”

    usually it passes through the ‘racing industry’..?

    dosen’t it..?

    phil(whoar.co.nz)

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  69. PaulL (6,048 comments) says:

    Antione: I think the money is usually embezzled in Russia, then stashed in foreign bank accounts, then used to buy the assets that we had to sell to get the money to give to Russia in the first place. But maybe I’m a cynic.

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  70. MikeNZ (3,234 comments) says:

    I don’t weep for you Pete George I am so sad for you as it’s clear you have a brain.

    When this is all said and done, I hope we can sue or prosecute those who are riding roughshod over the so called deniers.
    It only take one country with leaders who have fortitude to say Whoa this doesn’t gel.
    We aren’t stepping forward unless these issues are addressed.

    If the science were settled I would be first in the queue to help make a plan or back the people doing so.
    It isn’t and that is clear by the growing number and level of expertise of those who are saying Whoa!
    many of them are under great pressure in the countries they are in from their established authorities/organisations and employers.
    I’ve been reading on the web for at least a year now of academics being put under pressure because they don’t hold the IPCC line.

    I’m not a scientist but some of these people are even national and world class.

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  71. unaha-closp (1,180 comments) says:

    Dear Climate Change Deniers,

    Only a moron would believe they can change the weather with a tax.

    A moron or a socialist.

    As long as that is true, the only solution offered to climate change will be socialism and socialism we will get. We are being bent over and asked to say “green” as a smegging great tax increase is rammed into law. We are getting socialised till it hurts. And I don’t like it.

    All climate change deniers of the Right pay attention, you are fast becoming the “dilettante intelligensia” of our time, the useless twats who let the Commies takeover Russia. You are basically all bright, intelligent people who are able to engage in a scientific debate about climate change. You might even be right (obviously not on this planet, but in some alternate universe), but even if you are it doesn’t matter as scientific argument always takes place outside of the public sphere. Scientific debate is too esoteric and complicated to sway the electorate. The electorate has already taken flight from climate change, judging by the $millions more in tax we are about to be charged the electorate is freakin airborne. Its too late, give it up.

    The time has come to fight the socialist model of greenery, in the way such policy is always fought. We offer low taxes, small government approach and they propose a world holding hands, bureaucratic montrosity that relies on everyone singing in harmony to work. All we have to do is put in a carbon consumption tax that is 5x higher than any ETS costed surcharge and we are by 5x the most enviromentally friendly nation on the face of the planet. Obviously to pay for this ambition to be incredibly green (and maximise its effectiveness) we will have to eliminate income and company taxes, slash&burn social spending, sell all our schools & hospitals and institute a new era of small government.*

    If we do not confront this effectively we risk losing out to a dawning era of global socialist government.

    When this is all said and done, I hope we can sue or prosecute those who are riding roughshod over the so called deniers.

    Where? In the International Supreme Court of Justice with your UN appointed lawyer, best of luck with that.

    * 5 sec = expected time lag between NZ government adopting such a right-wing approach to climate change and philu presenting the first “irrefutable” proof that climate change is a myth, probably Redbaiter retreaded with a few “..?” for flavour.

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  72. Pete George (23,687 comments) says:

    Ian Wishart*

    *One of the only real journalists in NZ.

    Hmmm…

    Ian Wishart – agenda driven “journalist” and conspiracy theorist who is against evolution being taught in schools

    Redbaiter – anonymous agenda driven blog poster and conspiracy theorist, specialising in abuse, good for a bit of entertainment

    Versus

    Dr Howard Larsen – has extensive experience in atmospheric physics, particularly cloud physics and precipitation, and has worked in a range of countries as a scientist and lecturer at universities.

    Dr David Wratt – Chief climate scientist at NIWA.

    Dr Tim Naish – glaciologist, chief scientist on the international ANDRILL drilling project and a Principal Scientist at GNS Science. He is an expert on the integration of geological and ice core research with ice sheet and global climate models.

    Dr Andy Reisinger – a climate scientist with a background in measurement and modelling of ozone depletion, urban air pollution and agricultural greenhouse gas emissions.

    Dr Harry Clark – current research involves quantifying CH4 emissions from grazing ruminants and the development of more accurate methods for estimating CH4 emissions from ruminant livestock at the national scale.

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  73. jackp (668 comments) says:

    Pete George, very impressive credentials. So, what does New Zealand do?? Charge a tax when none is there for their own purpose and greed. New Zealand won’t stop the global warming if it is producing only .3 percent of the world’s pollution. But, there is an easy approach if this government was serious about slowing down pollution. Why aren’t there green demonstrators protesting the new tunnel in aukland for more polluting cars to use??? Why not a rail or monorail system (the cheapest and best way to travel)???? Because government wants to tax us and control us. It is a win loose situation for the government and taxpayers. It is a scam, mate. General Motors created a terrific electric car but they also destroyed it by offering the politicians great incentives. This carbon tax is strictly revenue based and I wish John Key and Nick Smith would stop their charade.

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  74. andrei (2,668 comments) says:

    Oh you poor naive fool Pete;

    Each one of those scientists you cite is employed and funded by the Government – are, in fact, dependent upon it for their livelihood.

    Example

    Dr Harry Clark – current research involves quantifying CH4 emissions from grazing ruminants and the development of more accurate methods for estimating CH4 emissions from ruminant livestock at the national scale.

    Now why is this research useful and worthy of Government support? Its obvious really and no secret the government wants to soak those who raise livestock – charge them a levy for their animals emitting methane. This research tells us nothing whatsoever about “climate change” – not a thing.

    Now if methane really were a driver for climate change why not quantify the methane emitted by New Zealand’s wetlands, which, I am almost certain, would exceed that emitted by our grazing ruminants by many orders of magnitude . If methane is a real problem we probably could mitigate atmospheric sources from agriculture by draining a few wetlands.

    But methane isn’t a problem and this “science” is all about screwing farmers and reveals little to nothing about the real world we inhabit let alone resolving any future problems with the climate.

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  75. Pete George (23,687 comments) says:

    Yep Jack, how to deal with it is where the focus of attention should be. There is substantial weight of evidence supporting some level of climate change problem. There is no evidence supporting the effectiveness of tax or trading schemes.

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  76. side show bob (3,660 comments) says:

    Pete and who owns the souls of the good doctors?

    Dr Howard Larsen, MAF, government lackey and arse licker.

    Dr David Wratt, Works for Niwa for fucks sake, see above comment.

    Dr Tim Naish, again very dependent on indulgences or grants from government (politicians) to come up with a PC answer.

    Dr Andy Reisinger, another lackey who believes a 2 degree drop in temperature is possible but we must act at once (of course) he’s probably worried the funds are going to dry up.

    Dr Harry Clark, A further member of the Victorian university cheer squad.

    Go away Pete your panel of experts have more to lose then RB and Mr Wishart, find someone whose income does not depend on finding the “right answer”.

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  77. Pete George (23,687 comments) says:

    Andrei, ssb, do you dismiss the research of every government funded scientist because they are dependent on the funding for their livelihood? Do you think all scientific research is tainted by financial considerations of the scientists?

    Or is it just the scientists that don’t support your beliefs that are tainted?

    I’m sure you can find someone independent who will support your idea that there is a plot to screw farmers – so they stop producing food?? That will really control the population, won’t it.

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  78. Pete George (23,687 comments) says:

    ssb, do you think your income could depend on pushing a particular (unscientific) view? Or are you a completely independent observer with no finanicial interest in what comes of this?

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  79. getstaffed (9,186 comments) says:

    Whoops – Smart customers – the ones we want for trade – know the difference between emissions and pollution. We were, are and will be a clean green country, as anyone who’s lived in a European city will tell you.

    A little progression:-

    –Does CO2 drive atmospheric temperature levels, or vice versa? The latter.

    –Is the atmosphere warming? No.

    –When this was discovered, did we drop ‘global warming’ in favour of ‘climate change’? Yes.

    –When this was discovered, did the focus shift to ocean temperatures? Yes.

    –When this was discovered, did climate ‘scientists’ switch their accusations towards Methane? Yes.

    –Are the seas warming? No.

    –Does the IPCC falsify, misrepresent or cherry pick climate related datasets? Yes.

    –Is Al Gore set to become the world’s first carbon-trading billionaire? Yes.

    –Does the Copenhagen treaty propose to create a global wealth transfer system? Yes.

    .. and importantly..

    –Should NZ just go along with all this (ie wreck or economy) because we’re worried that no doing so might wreck our economy? Absolutely not!.

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  80. Pete George (23,687 comments) says:

    Whoops is right. If every one of our customers believed what you are saying getstaffed (and the odds are the majority won’t) then we might get away with doing nothing. That’s a huge risk.

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  81. Whoops (136 comments) says:

    @ getstaffed – sorry, you’re dreaming. As much as I’d like to hope rationality will triumph (nb: that’s not to say I agree with you’re ‘progression’), it simply is not how the world works.

    Spend some time wandering around the web – your views are in the minority. Right or wrong, you lose.

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  82. getstaffed (9,186 comments) says:

    So pete, what you’re saying is that risk of sinking is so great we might as well skuttle the ship now?

    Nonsense of course.

    If counties won’t trade with us for ideological reasons (ie we don’t appear to be jumping through their ‘green’ hoops) then we work hard develop other markets. And strongly differentiated idological frameworks haven’t stopped the USA and other western democracies falling over themselves to trade with China.

    If we produce more of what the word’s consumers want, and at a price they are prepared to pay then trade won’t be a problem.

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  83. side show bob (3,660 comments) says:

    Cool Whoops, the Guardian, the dribbling mouth piece of the the left. Fuck the Europeans!!, they are bunch of socialist suckholes that live for this climate change bullshit. The only time those bastards have really wanted trade from NZ was when the pricks were at each others throats, since then they have done everything possible to limit imports form NZ. The useless pricks can’t even run their own agricultural systems without huge subsides, they would welcome or do anything that gives them a way to move the coal posts.

    Get off the grass Pete, this shit has nothing to do with science but more to do with the advancement of socialism and big government. “A plot to screw farmers”?? , I’m sure you are included in this plot to Pete, do you think you left leaning twits will escape the Kyoto taxman?. Wake up and smell the con Pete.

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  84. Pete George (23,687 comments) says:

    more to do with the advancement of socialism and big government.

    Funny thing, Ian Wishart seems to believe “that climate change is being used primarily as a revenue-generating exercise by the climate-industrial complex.”

    It can’t be both them and the socialists.

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  85. Redbaiter (13,197 comments) says:

    “It can’t be both them and the socialists.”

    Gee you say some dumb things. Funny thing is they’re always couched in terms that suggest you think they’re really clever.

    I take it then you’ve never heard of cronyism? One of the most destructive outcomes of socialism is the government picking “winners’, and making friends of business on the basis of their political stance.

    Its corrupt and crooked, but you in another example of your intent to always be as grossly deceitful as you can, seem to want to deny it exists.

    Maybe you don’t know it exists. So what are you? Dumb or deceitful? (You can be both)

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  86. Pete George (23,687 comments) says:

    The reality is that it isn’t one great conspiracy. There are many political forces pulling and pushing in all directions, and many commercial forces pulling and pushing at the same time.

    Socialists can be self interested and corrupt and crooked, as can conservatives and capitalists.

    And anyone can be dumb and deceitful. Even you.

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  87. Redbaiter (13,197 comments) says:

    “The reality is that it isn’t one great conspiracy.”

    Good. Then maybe you can provide here a manifesto written by Conservatives and capitalists that demonstrates the same obsession with government control of the world’s financial markets, private property, individual labour, thought and speech as is contained in any socialist/ progressive manifesto.

    I provide as my first exhibit the manifesto of International Socialist, that global leftist organisation that has almost every Western leftist politician as a member, from Helen Klark to Tony Blair to Hugo Chavez to Parekura Horimia.

    Now, where’s yours?

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  88. getstaffed (9,186 comments) says:

    There are many political forces pulling and pushing in all directions, and many commercial forces pulling and pushing at the same time.

    I agree. Here’s a few forces:-

    Politicians of all shades crave power. Nick Smith treated climate change as pure bunkum when he was in opposition hoping this position would allow him to feel the reins of power. Now he’s there, he can envision his ascendency to the enormous trough proposed by the Copenhagen treaty and he wants a snout full.

    Scientists know the research monies flow, and they flow in the direction that allows politicians to upgrade their ambitions, so the scientists play along.

    New York bankers imagine the gargantuan profits to be realized by controlling an emissions marketplace so they support the Greenies who think their activities are going to save the planet.

    So… lot’s of agenda. Note that they are all designed to removed income (via taxation) from the average citizen , ie me.

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  89. Pete George (23,687 comments) says:

    Socialist International – about half of the member parties are not in power. You say you are presenting a manifesto – where is the manifesto?

    Not surprisingly, about half of the very diverse conservative parties of the International Democrat Union are in power too.

    What does this prove about one world government? Diversity is far more prevalent than conformity.

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  90. Redbaiter (13,197 comments) says:

    “where is the manifesto?”

    Once again, you turn to brazen deceit. Look at their web page. Every word on it is part of their manifesto. Why do they exist if they have no manifesto? Odious mendicant.

    http://www.socialistinternational.org/about.cfm

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  91. Whoops (136 comments) says:

    @side show bob and Redbaiter

    Again, no matter how correct you are, and how strongly you hold those views,… it doesn’t matter.

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  92. getstaffed (9,186 comments) says:

    Whoops, completely agree.

    It doesn’t matter, because there’s no issue.

    There no need to prostitute our integrity in an attempt to hold onto markets that get tetchy about us not joining their Emperor Has No Clothes Club.

    Tourists will still come here. We’ll still export the contents of cows’ udders.

    The climate won’t change, but our mix of forex earning partners can and should.

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  93. Whoops (136 comments) says:

    @Getstaffed

    What colour is the sky in your world?

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  94. getstaffed (9,186 comments) says:

    Blue. Yours would be red I’d suggest.

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  95. Whoops (136 comments) says:

    Nope. Blue as well.

    (assuming you’re alluding to political affiliation rather than atmospheric refraction indices – anyway… it’s irrelevant to this issue)

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  96. philu (13,393 comments) says:

    gee stuffed..

    you are really making a total dick of yourself on multiple threads tonight.

    …eh..?

    it’s a stuffed sorta friday..

    eh..?

    phil(whoar.co.nz)

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