Matthew Hooton writes:
National has little choice but to withdraw from the multi-party consensus on the Climate Change Commission — or at least insist the Government ask its chair, Rod Carr, to resign.
This is not because National is against urgent action on climate change, but because it supports it.
This is key. If you want stronger action on climate change, you should not do what the Climate Change Commission has said.
It has become clear that the commission is not primarily or even mainly concerned with New Zealand reducing global emissions. If it were, it would reject entirely the domestic ring-fence imposed upon it.
By far the biggest contribution New Zealand can make to reducing climate change is funding projects in developing economies to reduce their emissions and prevent clear-felling of rainforests.
Such projects cost less than $20 to remove the equivalent of one tonne of carbon dioxide (CO2e tonne) from the atmosphere. Yet the Ardern Government regularly spends over $1500 per CO2e tonne on its projects to reduce emissions.
The atmosphere has no geographic boundaries. A tonne less CO2 emitted in say Nigeria has the exact same impact as a tonne less in New Zealand.
So if you care about the environment and have $1,500 to spend, what is better for the environment – reducing emissions by one tonne or by 75 tonnes? No brainer.
But despite the commission believing climate change is a global crisis, it doesn’t want New Zealand to do this. Instead, it wants New Zealand to achieve net zero when measured almost entirely by activity within our borders.
Even then, it says we could achieve net zero for around $50 per CO2e tonne, or a cost to emitters of around $4b a year, just a little above the current price of $41. That money would go to other New Zealand businesses. But the commission doesn’t want to do that either.
Instead, Carr explicitly rejects New Zealand achieving the biggest possible reduction in CO2e emissions for the least cost. He says he wants to use climate change to radically transform every aspect of how we live our lives.
The Commission has chosen to not go for the policies that will cost the least, to achieve the goals. So They are proposing it costs us more to achieve less.
Climate change policy is ultimately about neither more nor less than correctly pricing the CO2e externalities of human activity.
The ETS, the cap-and-trade scheme developed in 2007 by Labour’s Climate Change Minister David Parker and National’s Nick Smith, cannot fail to deliver net zero emissions whenever the Government decides to set the cap at zero.
That need not be 2050. It could be 2025, 2030 or whenever the Government decides to let the scheme run as Parker and Smith intended. And, as designed, the ETS could not fail to deliver that outcome at least cost.
So long as all sectors are in the ETS, then this is right. As the caps reduce, the price goes up and it is guaranteed achieve the emissions targets by the nominated date.
So in summary the Climate Change Commission has recommended policies that will reduce fewer emissions, cost us more to do it, and have no guarantee of actually working.
They were not agreeing to Carr and his colleagues using the commission to promote an extreme-left utopia that will in fact worsen New Zealand’s contribution to fighting climate change compared with Parker and Smith’s existing policy mechanism.
Collins is fast losing whatever confidence she ever had in Carr. If Ardern and Shaw won’t get rid of Carr, Collins should admit she was right all along and pull the plug.