Kiwiblog

The NZ Herald fact checks John Key and finds carbon emissions in NZ have grown even faster than what he said in the debate (mind you I think he was referring to emissions under Clark’s Government while the Herald is referring to since 1990).

Peter Neilson of the NZ Business Council for Sustainable Development defends his former Caucus colleague Helen saying:

As the New Zealand Business Council for Sustainable Development points out it is all a bit more complicated than it seems.

Chief executive Peter Neilson said that while the reality was that New Zealand emissions had been increasing, that was because our economy had been growing.

Many of the countries with reduced emissions were in recession .

So this means that the Government is now sucessfuly reducing emissions, by having the economy go into recession. Hey if we turn the recession into a depression, then we’ll make our 1990 target easily!

Nicola Kean in the Southland Times reports how National MP Eric Roy has planted 20 trees to offset the carbon emissions from the 1500 kms he will travel during the campaign.

What I found interesting is this part of the story:

Invercargill’s Green Party candidate Craig Carson applauded Mr Roy’s attempt to go carbon neutral.

“I think it’s great that he’s doing it. How well it works or not I’m not sure.” Mr Carson said that because he worked fulltime and had limited resources, he was not able to follow suit.

Think about the implications of that.

Brian Fallow looks at the costs of an ETS. It all depends on the price of carbon. Treasury is budgeting $23 a tonne, but a last minute change to the scheme has pushed this up to a likely $50 per tonne, and by 2020 it is predicted the cost will be $70 a tonne. For now we will go with $50 a tonne.

• Inflation to increase by around 0.7% per year for the next two years
• Retail electricity prices to increase by 20%
• Petrol prices to increase by 12c/litre
• Reduce payout to dairy farmers by 50c/kilo (once agriculture fully in the scheme) or 6%

As Fallow notes:

It would be a perverse outcome for the global climate if growth of the pastoral farming sector in New Zealand were hobbled by climate change policy here, only for the demand for dairy products and meat it might have satisfied to be met instead by production elsewhere in the world whose carbon hoof-print (emissions per litre of milk or kilogram of meat) is greater.

So the ETS exempts livestock emissions altogether until 2013 and taxpayers will continue to pick up the great majority of the bill (up to 90 per cent) until at least 2019.

Agriculture is not the only sector where the NZ ETS may simply lead to production transferring off shore, which will result in even worst environmental outcomes, and a drop in income for New Zealand.

Well it was obvious from day one the consultation was a sham. I feel sorry for all those who actually took the time to write in. The Greens have announced they will be voting for the ETS Bill. I wish it had been legal for me to bet $1,000 on that outcome – it was so obvious.

NZ First are in the bag also, so the ETS will be passed into law.

Now I’m not one of those who thinks having an ETS is necessarily bad. My preferred approach would be a carbion tax initially, but an ETS is probably inevitable. Of course the actual design of the ETS is very important – this is effectively about legislation for a complex new set of taxes and permits and issues such as forestry offsets, the profit the state stands to make from it etc should be worked out, before it is passed. They won’t be, so it will be a flawed beast and I suspect Parliament will have to revisit it often.

There is some bright news about Zimbabwe.

Now they do have some economic problems, such as:

• 85% unemployment
• Hyperinflation at around 1,700,000%
• -5.7% annual GDP growth
• 80% earn below US$50 a month

But the good news is they have massively reduced their carbon footprint. They no longer produce all their own electricity, the economy has shrunk 40% since 2000, and that nasty carbon polluting agricultural sector has largely shut up shop.

So let us celebrate Zimbabwe’s leadership role in obtaining carbon neutrality.

The ODT reports that the Greens have spotted what appears to be a unilateral agreement by the Government to reduce the carbon equivalent emissions target for the agricultural industry from a 20% reduction to a 10% reduction.

What will be interesting to watch is how the Greens will end up still voting for the Government’s Emissions Trading Scheme despite it being watered down repeatedly. Even the original scheme was derided by Greenpeace as achieving almost nothing.

But I predict the Greens will still vote for it. They have never shown an ability to play hard ball, which is why they keep getting taken for granted.

There is a story in The Press about how carbon emissions are increasing due to the power problems as thermal stations are being reactivated and running at full steam. They say:

Figures for the week to Sunday show estimated CO2 emissions from thermal power stations have risen by about 75 per cent from about 125,000 tonnes a week in mid-March to 220,000 tonnes a week.

Now Energy Minister David Parker tried to dismiss this by saying:

Asked if he was concerned about that and if anything could be done about it, Parker said the longer-term trend was more important and that CO2 emissions from the electricity sector had fallen since about 2000.

Now it would be nice if journalists did not take assertions like this on the word of the Minister, and actually checked the veracity of the claim that CO2 emissions from electricity had fallen since about 2000. Let us do it for them:

The MED has a report covering the period 1990 to 2006. Now what does it say on page eight:

In 2000 thermal electricity generation produced 4,942 kilotonnes of greenhouse gases or CO2 equivalent. And in 2006 it was 8,300 kt. So rather than having fallen, it in fact increased 68% in six years. The increase has pretty much all been coal.

Now we have quarterly reports for post 2006, up to the end of 2007. If you add the four quarters together then the 2007 total is 6,644 – still 34% higher than in 2000.

An analyst tells me the fall in 2007 is due to decommissioning some of the older Huntly turbines – the very ones which are now running at flat tack again!

While on Greenhouse gases, one should also look at the massive deforestation which has happened due to Labour’s policies. Deforestation in 2007 was the highest it has been for 50 years.

And listen to Forestry Minister jim Anderton on Radio NZ about this. He basically says deforestation was inevitable due to government policy!

The Hive has the first of a weekly series – a short essay on an issue.

This week is on why they prefer a carbon tax to a cap and trade emissions trading scheme:

Imagine a country that had a business tax. The size of the business tax varied daily, and was subject to international forces – global supply and demand and exchange rate variation. No one therefore knows the size of the tax but estimates suggests that the size will be somewhere between $15 and $75 per tonne of carbon emission equivalent (in the short term, long term prices in the $100 plus range are regarded as conservative).

Investors don’t like uncertainty. This tax would add considerable uncertainty. Would investors invest in a country that had such a regime?

And the alternative:

Compare the cap and trade regime with a carbon tax – it is simple, predictable and the size of the tax in the immediate future doesn’t need to be large to meet our liabilities under the Kyoto Protocol. $3 a tonne starting 1 January 2009 is all that is needed.

A number of think tanks, which are normally anti tax, say a carbon tax is preferable. They also suggest that the level of the tax be tied to the increase in global temperature so if things do heat up more quickly than expected, then the tax rises proportionally, and if the increases don’t happen, the tax drops.

The Hive concludes:

So at The Hive, we agree fully with the policy that the Green Party has been advocating since the early 1990s. A carbon tax offset against reductions in general taxation is the best way forward. We just can’t understand why so many people have decided to support the cap and trade alternative. Those on the left, we understand – it will screw the economy. But on the centre and right?

I am not sure an ETS is not a better solution in the long term, but agree that in the short to medium term a carbon tax would be preferable – especially with the price of carbon credits so variable.

I’ve popped into National’s Lower North Island conference in Wellington for some of the speeches. First up was Nick Smith who assailed Labour’s environmental record. Nick pointed out the following under Labour:

1. Carbon emissions increased 14%
2. NZ placed 38th out of 43 for growth in emissions
3. The proportion of energy produced from renewable sources has dropped from 72% to 66%
4. Coal generated power has increased from 4% to 12%
5. 75% of all new production has been thermal
6. The first deforestation since 1952
7. 40,000 hectares of forests destroyed in the last four years
8. The Marine Reserves Bill has been stalled since 2001
9. Funding for pest control has been cut
10. No national policy statement produced, as promised, on biodiversity

As I heard and saw this, it got me thinking about why you never hear that from the Green Party? It is a mystery to many commentators that they are only at 6% or so, despite Labour having dropped into the 20s.

The Greens need to think about whether they really want to gain significant support or not. Unless they like being a minor prop to Labour, they should set a target of 12% to 15% of the vote – something high enough that it is impossible for a centre left Government to be formed that does not include them.

To do that though, they need to stop being so polite about Labour’s record of failures. They need to take to Labour, like NZ First took to National in 2002 – and NZ First got 11%.

Could you imagine the media reaction if at a leader’s debate you did not just have Jeanette or Russel saying “Oh yes Labour could have done more” but instead was saying that the record was a litany of failure on the environment. The Greens would be on the front page of every paper.

Now one can say that I am fomenting mischief and the Greens attacking Labour will not result in a centre left Government. That is true. However a centre left Government is looking a very remote possibility anyway. So do the Greens want to be a 6% party in Opposition or an 11% party, which would guarantee it a significant role in a future Government?

The true dangers of being a “world leader” instead of moving in pace with our major trading partners was exposed yesterday as the owners of the Tiwai Point aluminium smelter near Invercargill announced they would move to close the smelter if the Emissions Trading Scheme is passed in its present form.

The plant is the largest employer in Southland and its closure would result in more “not bad news” with an estimated 3,000 job losses.

Now some would say that is the price Southlanders must pay, to help the environment.

But here is the madness. It would merely reopen it in China – which is not affected by Kyoto. So there would be no reduction in emissions – in fact an increase as the China plant would be less “clean” than the one in NZ which is one of the cleanest and greenest smelters in the world. The owners say the Tiwai Point smelter would be the first in the world to face such costs due to an ETS.

The Herald reports on what the owners would like:

Mr Deacon said it was to replace the arbitrary straight-line phase-out of free allocation of emissions units from 2018 by a series of reviews that would only discontinue that protection for trade-exposed industries when their international competitors faced a comparable carbon price.

In other words don’t tax our industries into the ground so they move to a country which are not paying a price for carbon. This has nil environmental impact then, and a negative economic impact. Kyoto excludes countries like China – the world’s largest emitter.

If the Government proceeds with the ETS without changes, and Tiwai Point is put on a path to closure, it will devastate Invercargill and Southland.

Judith Tizard, as Associate Transport Minister, has ruled out any chance of dropping the speed limit to reduce carbon emissions. Good. Nice to see a firm decision from the Minister.

Despite Helen Clark’s rhetoric of carbon neutrality, her Government looks poised to do a u-turn and delay aspects of the proposed emissions trading scheme, as political reality starts to bite that you can’t refuse to give tax cuts for nine years and just keep loading cost increases on.

So how should NZ proceed? A few views starting with the Dominion Post:

There is little doubt that the way to reduce carbon emissions is to make them costly, and the emissions trading scheme will achieve that. The question is how far New Zealand should go and whether, for example, it makes sense for it to be the only country to include agricultural emissions.

The need for caution is only underlined by the reality of the New Zealand contribution to global warming. New Zealanders may be large producers of emissions on a per capita basis, but overall contribute about 0.2 per cent of the world’s total. …

Against that background, rushing to lock in New Zealand’s policy is foolish. A more measured approach, with targets linked to what others do, rather than stand-alone statements of ecological purity, is more sensible.

The Hive puts forward a proposed consensus:

• that a modest greenhouse gas tax be introduced across all sectors as an interim action (there would be an immediate incentive to individuals and business to change behavior – the greater the amount of behavior change the less tax paid)




• that personal and business taxes be cut by exactly the same amount as the amount that the greenhouse gas tax is expected to raise (thus removing the “cost” of the tax to the overall economy)




• that Government agree that all revenues raised by the greenhouse gas tax be used to invest in greenhouse gas reduction technologies




• that New Zealand seek a plurilateral approach to greenhouse gas reduction involving Australia, Japan, EU and the US (ie we all introduce the same policy thus reducing the scope for leakage to occur




• that we increase the resource devoted to negotiating the replacement for Kyoto I.

I have considerable sympathy for this views, especially Points 1 and 4. The price of carbon is so uncertain that in the short term a tax may be preferable. If carbon reaches $50 a tonne, then reports suggest our farming industry may become unviable. What is especially important though is that any ETS we devise should not be stand alone, but at a minimum ih harmony with Australia, and preferably other major trading partners.

Bill Ralston looks at an inconvenient truth:

New Zealand produces 0.4 per cent of the world’s carbon emissions. This move will reduce our national emissions by 0.1 per cent. So, we are going through all this pain to reduce the world’s pollution by 0.1 per cent of 0.4 per cent. Meanwhile the planet’s greatest polluters, not tied by the Kyoto Protocol because they never signed it, continue to pump increasing amounts of crud into the atmosphere and reap the financial rewards of doing so. So much for New Zealand’s international competitiveness.

This is of course not a reason to do nothing, but the NZIER report points out if we act unilaterally then “carbon leakage” may mean that we suffer economic pain without the environmental gain.

The NZ Institute of Economic Research has done a report on the impact of the proposed Emissions Trading Scheme. The report is 77 pages long. For those who don’t read the whole thing, here are some key points:

• The ETS will reduce GDP by $900 million by 2012
• The average household will have $600 less spending
• A reduction in employment equivalent to 22,000 jobs
• By 2025, GDP will be $5.9 billion less than without an ETS
• The average household will have $3,000 less by 2025
• Hourly wages will be $2.30 an hour less by 2025 than they would be without an ETS
• The ETS will reduce emissions by 5% less than merely funding emissions reductions directly
• The ETS may be bad for the climate as some NZ production will become uncompetitive and shift to countries where their increase in emissions will be greater than if they stayed in New Zealand. This is known as “leakage”
• The ETS will see by 2025 a 12.9% reduction in dairy farming, a 41% drop in diary land prices and a 6.6% reduction in sheep and beef farming.
• As the decline in pastoral production in NZ will lead to greater pastoral production elsewhere, the increas in carbon emissions will be 3 million tonnes – around 25% of the reductions from the total ETS.
• Southland and Northland would be most affected by the ETS with a 3% drop in GDP, with Auckland and Wellington less affected.
• Paying for emissions reduction out of general taxation would be cheaper and more effective.

So they are not saying we should not be in Kyoto. They are saying the ETS, as proposed, will cost us more than alternative ways of meeting our Kyoto obligations. And also leakage due to industry relocating to non Kyoto countries will actually be worse for the environment than the alternative of direct funding of emissions reductions.

So one can say slow down with the ETS and don’t rush it into law just because of the election, without being a climate changer “denier” or “sceptic”. This is about how best to meet the Kyoto obligation, and it seems apparent there is a lot more work needed to be sure we have the right model. What will be interesting is what model Australia adopt as there could be considerable merit in harmonising between the two countries.

Helen had to miss out on the gala dinner in Singapore where she received a trophy made of recycled metal from the UN for being one of seven winners in the annual UN Champions of the Earth awards.Now Helen’s record on carbon emissions is worse than George W Bush and John Howard. Kyoto is all about what percentage increase or decrease one should have over 1990 levels and George and John did better than Helen in being closer to their target.

NZ has the fourth worst actual record of annex 1 countries in terms of meeting our Kyoto obligations (we are 29% over target) so one can only conclude, the award is yet another indication of the UN’s long demonstrated preference for rhetoric over substance. Typical UN – does not matter what you do in practice, as long as you churn out the right rhetoric!

No Right Turn also notes:

But while its great policy, none of this stuff has actually been implemented yet, so Clark has essentially been given this award on the basis of hot air.

I am not sure the policy is that great. They have yet to pass a single policy through Parliament. Their biofuels legislation has been rubbished by the Parliamentary Commissioner for the Environment and their Emission scheme by Greenpeace. Their Fart Tax failed due to the hypocrisy of treatment of debits and credits.

The future price of carbon is so uncertain, that I more and more think a carbon tax in the short term would be better than the tradeable emissions scheme. Under some dire scenarios the scheme could wipe out out food export sector. from Radio NZ yesterday:

Federated Farmers says the Government’s proposed emissions trading scheme has the potential to extingish [sic] extinguish food exports from New Zealand. The comments are based on a Ministry of Agriculture and Forestry report which shows the projected impacts of the trading scheme on farmers’ profitsm a range of different carbon prices and the corresponding financial impact the scheme would have on different sectors such as sheep, beef, dairy, horticulture and deer. The figures analyse the impact the Emissions Trading Scheme would have had on the sectors if it had been introduced without warning in mid-2006. Among the worst affected sectors are deer, sheep and beef, greenhouse tomatoes and dairy. Federated Farmers’ Dairy Section Chairman Frank Brenmuhl says based on the projections for a payout of $4.14 per kilo of milk solids and a full carbon price of $50 per tonne the average drop in farmers’ profits would be 123%.

Now for those who only have a degree in economic history, a 123% drop in profits means you will be losing money. In other words no food production at all. So we will meet out Kyoto target by importing all our food from overseas. Hmmn that will be great eh.

UPDATE: The Greens’ Frog Blog is also weighing in, comparing Helen Clark getting an award for being a Champion of the Earth to Brian Waddle being named Black Cap of the Year for his cricket commentary. Shit that is funny – Frog is being more sarcastic than me!

It is now just six months before the election, and Helen Clark’s record on climate change is more hollow than anyone could have imagined.

The last set of greenhouse gas figures, before the election, was released this week, and NZ is 26% over its Kyoto target. By comparison Australia and the UK are on target to meet their target.

Now Labour in defence says that okay we may have an appaling actual record, but we do have some good policy. But what is the record:

• Biofuels legislation slammed by Parliamentary Commissioner for the Environment
• Tradeable Emissions scheme legislation slammed as near useless by Greenpeace
• The deforestation disaster
• The Fart tax debacle (the issue wasn’t that it was a tax so much as the hypocrisy of taxing for carbon debits and not letting farmers share in carbon credits)

So as we get subjected to a barrage of taxpayer funded propaganda telling us about our wonderful carbon neutral aspiring Government, just remember than not only has the Government failed to reduce emissions, it has not even managed to stop them growing year after year.

The Government has trumpeted biofuels as part of its environmental and energy strategy. Helen Clark announced it last year.

I believe New Zealand has the potential to lead the world in its commitment to renewable energy.

On biofuels, the time has come to implement a sales obligation.

Biofuels can replace diesel or petrol, and reduce our greenhouse gas emissions. With domestic production they can also be positive for the current account.

The government has decided that a Biofuel Sales Obligation will be set at 3.4 per cent of the annual energy content of total annual petrol and diesel sales by 2012. This initial target is considered sufficient to encourage the uptake of biodiesel and the development of infrastructure for ethanol distribution.

NZPA have just reported the following submission from the Parliamentary Commissioner for the Environment on Helen’s biofuels legislation:

The Government’s biofuels legislation has been dealt a major blow, with the Parliamentary Commissioner for the Environment calling for it to be scrapped. …

But Parliamentary Commissioner for the Environment Jan Wright today told the committee the bill had major problems and would possibly do more harm than good.

While biofuels had a big advantage over fossil fuels in that they absorbed carbon dioxide while they were growing — potentially lowering their emissions — some had a carbon footprint equal to or higher than fossil fuels due to high emissions from infrastructure and cultivation. …

To meet the mandatory requirements New Zealand would have to import biofuels, which in some cases were worse than fossil fuels.

Ms Wright said the growth of biofuel crops overseas could also result in the felling of forests to free up land and shortages in land for food production that would push up prices disadvantaging the world’s poor.

Ouch. Eight years of huge growth in greenhouse gas emissions, and the Government’s sole response has been we have developed some really good policy.  That policy isn’t looking so flash now.