What to do about carbon emissions

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.

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