by frog
The Business Council for Sustainable Development’s report arguing that an emissions trading scheme could lead to more than $12 billion of investment over the next 10 years and create nearly 10,000 jobs has certainly thrown the cat amongst the pigeons.
The interesting thing to me is not so much the validity or not of NZBCSD’s research but the internal criticism it immediately drew.
The NZBCSD is a membership driven lobby group like any other, so it’s no surprise that some of its members with a less than carbon friendly reputation, such as Holcim, Shell, Fonterra and Solid Energy are not entirely enamoured with the report. It’s interesting that NZBCSD has held together a relatively unified approach on the proposed legislation up until now when you looks at its extremely diverse membership. It suggests the business community is not as uniformly opposed to climate friendly legislation as same have painted it.
Fran O’Sullivan is calling it a rushed report that promises too much. The National Party is calling it a cynical bid by government-owned Meridian Energy and Mighty River Power companies to influence MPs’ votes.
Jeanette however has welcomed the report and noted it shows the weakness in the reports produced by the biggest polluters, namely that they have ignored the massive economic opportunities an emissions trading scheme creates:
In particular, it shows the failings of other reports, such as from NZIER, which assume no-one takes advantage of new business opportunities and the economy does not change
However, we should not pass any old sort of [emissions trading scheme]. The current scheme is unfair and not very effective.
What we are left with is reports arguing there will be some winners and reports arguing there will be some losers from an emissions trading scheme. The key issues are making sure the takes effect quickly enough to address the urgent danger we face, making sure that the winners are ordinary New Zealanders trying to be more climate friendly and sustainable, rather than big polluters.
Published in Environment & Resource Management by frog on Wed, June 25th, 2008
Tags: Business Council for Sustainable Development, climate change, Emissions Trading Scheme, Fonterra, Holcim, Jeanette Fitzsimons, Meridian Energy, Mighty River Power, shell, Solid Energy
on the trolls and those who are unable to keep on topic
My emphasis.
Typo eh?
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The money to be made from the ETS is in the trading of carbon credits. In other words, trading paper money that has been invented by government whim and could vanish at the whim of government in the future. I would not be investing in them myself. The returns might look good on paper but who knows what the law will be 10 years from now, your profit can disappear at the stroke of a pen.
My brother has been doing some calculations around the effect of the ETS on the forestry sector. Not surprisingly, there is a lot of money to be made in this sector from the ETS, assuming governments around the world force business to buy paper money off you. But there is a large uncertainty in profit depending on the carbon price and possible changes in legislation, so it is difficult to know exactly where you should be investing as you really need to know what the situation will be in 30 years. Most sectors spend money, forestry and renewable electricity generation might be able to earn some.
I would be very surprised if the net result for NZ would be positive (remember this is one report among many, most of the rest saying the ETS would be negative), unless the carbon sequestration in pasture was taken into account and farmers were found to be in credit rather than in deficit as at present. But farmers being found to be the good guys wouldn’t go down that well on this blog, farmer bashing being the best entertainment, just ahead of “christian fundie” bashing.
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Yes, typo, oops. Will fix. Thanks
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look
I have a concern with another aspect of this post, that is an accumulation of many others to a point of the straw on the camel’s back!
THis issue is with the economically ignorant who talk about ‘big profits’ and ‘big business’, as if they were something to be in the same category as pig slime.
Like it or not, it is business, (i.e. the use of ‘the peoples” savings) that have created a society in the OECD where we can have a standard of living that our ancestors couldn’t imagine, never mind dream about.
Without the willingness of ordinary people to save, and have their savings invested for better than inflation growth, we would still be churning our own butter from our cow in the back yard. A hefty proportion of babies and mothers would die in childbirth, the average life expectancy would be significantly lower than it is, and malnutrition would be routine.
Look at the total tax take from big business’ profits that supports our ability to agrtgue about how much money should be allocated to a particular party to advertise its electability on Television. There wouldn’t be a television to advertise on without ‘big business’.
Finally, look at how many ‘big businesses there arethat are New Zealand owned and based – NONE!
We ride on the back of other peolples’ savings, and protest at them wanting to make a return on them. We demand a range of choice, in everything from wall paper through carbohydrates to closthes that far exceeds our natiuonal ability to create. We expect to be able to go visit friends and family ‘up there in the Northern Hemisphere’ for two weeks at a cost of less than a month’s income for the family. None of these would be possible without big business making (relative to something an individual can get a grasp on) big profits, to enable big savers to enjoy a big retirement when the time comes. In return, we don’t contribute but we do protest.
Get off the back of those who created a life-style we all enjoy and delight in, and go back to suggesting ways to maintain and improve that life-style with the least possible impact on nature and more people will listen to the message. Carry on demanding things that will, if whol;eheartedly adopted in this country, cut us off from the world and leave us wearing homespun and churning our own butter, and you will see the crusade buried in the mass demand for ‘more, more, more’.
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Strings:
Well said. If the government (pushed by the Greens) continues to bite the hand that feeds them, one day the hand may pack up and leave…
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The Green Party’s original premise was correct.
If you believe there is a need to reduce fossil fuel use then a plain and neutral carbon tax is the most efficient if only because there are far fewer opportunities for fraud.
My friend and colleague Prof David Henderson (ex head economist of the OECD) is very persuasive on this.
The main problem I have with the report commissioned by the BCSD is its makes fundamental errors of policy analysis. eg they identify geothermal power as a major source of job creation and wealth creation if we adopt the ETS.
Nonsense. Geothermal power is one of the most cost effective sources of new generation for NZ and will be rapidly and comprehensively developed with or without an ETS. A key principle of credit allocation is that credits encourage investment that otherwise would not have taken place. Anyone claiming credit for developing a geothermal plant should be immediately charged with fraud.
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Owen, even versus good ol’ cheap coal? The NZIER report made a few interesting assumptions too…
Why do you think so many people opposed the carbon tax plan several years ago, but all of a sudden it’s all the rage? “GW is all a hoax” etc etc but anything else?
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It is precisely the OECD attitude that has got us ALL into this mess, with the attitude of spend, spend, the planets resources like there’s no tomorrow. Well there may not be a tomorrow!
We have to adopt a warlike attitude against this mess. Get real. There will be winners and losers like there are today. Are you postulating that we live in a fair society ?
I had hoped by now that most reasonably minded industrialists, agriculturalists and everybody would realise that there is much profit to be made from Green technology, possibly more than from old dirty technology.
T Boone Pickens has just invested $4 billion in wind farms in the USA whilst making a killing from gas and oil of course but hey, that’s business. Farmers must join with the rest of us to feel the pain for a while. It’s only pain that will get us all off our a##es to actually do something and stop fiddling while Rome burns.
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Strings
“Like it or not, it is business, (i.e. the use of ‘the peoples? savings) that have created a society in the OECD where we can have a standard of living that our ancestors couldn’t imagine, never mind dream about.”
False. More correctly without business wouldn’t have grown to the extent that they have. Its inconclusive as to what form the economy would have taken or what people’s standard of living would be if the government hadn’t of intervened on behalf of the ruling capitalist class in order to impose and enforce the prevailing social relations.
Without the willingness of ordinary people to save, and have their savings invested for better than inflation growth…
False. The government has usurped the sovereignty of the people by allowing private banks to issue the currency through loans. Only a portion of the loan is actually backed by bank capital.
All your deposits are still held in the bank, but the bank issues credits and expects to be paid back the loan plus interest. Deposits are only a form of security and a justification for the need for a bank, because otherwise the money would be circulating through the economy and therefore free to be spent on consumption. The success of the system is dependant on people not knowing how it works.
As J.K. Galbraith said, “The process of money creation is so simple, the mind is repulsed”
Henry Ford said:
“If the people of the nation understood our banking and monetary system, I believe there would be a revolution before tomorrow morning.
“Finally, look at how many ‘big businesses are there that are New Zealand owned and based – NONE!”
Thats because the corrupt Labour and National governments allowed capitalists both domestic and foreign to loot our formerly publically owned enterprises for pennies on the dollar in highly leveraged deals.
“None of these would be possible without big business making (relative to something an individual can get a grasp on) big profits, to enable big savers to enjoy a big retirement when the time comes.”
Wrong. Big business wouldn’t exist let alone be profitable without massive government intervention in their favour whether its direct assistance through subsidies or price supports, tax breaks, guaranteed markets, legislation that erects artifical barriers to entry, infrastructure developments, funding of education to provide them with a source of skilled and educated labour, limited liability that allows them to accumulate massive amounts of capital Need I go on?
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bigblukiwi:
“I had hoped by now that most reasonably minded industrialists, agriculturalists and everybody would realise that there is much profit to be made from Green technology, possibly more than from old dirty technology.”
This is exactly what the agricultural industry IS doing voluntarily. Two examples:
- Rapid adoption of the “eco-n” nitrification inhibitor to reduce nitrate and nitrous oxide losses.
- Establishment of riparian zones around streams on many farms, especially dairy farms.
Sure you can find some bad examples if you look, but you can also find tonnes of great ones.
Plenty of people are already doing it, so if you think there is so much money to be made from it go and do it yourself, then tell us once you are a multi-millionaire.
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Climate change will bring winners and losers, too. The ETS is an attempt to allow us the time to organise ourselves to avoid the worst consequences of doing nothing. If business thinks the ETS is to expensive, then they can ONLY be gambling that there is no greater risk in ignoring climate change.
No rational person who accepted the reality of climate change could oppose an ETS of some sort. There would be a sense of urgency.
Clearly, many in the business community have no sense of urgency at all. Those that don’t oppose any ETS outright are wrapping themselves in greenwash while doing everything they can to delay.
Not a pretty sight. I can imagine the same thing happening in Pompei before Vesuvius buried the place…and those who delayed too long.
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heh, http://stuff.co.nz/0a17216.html
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OutinFront:
The issue is not whether or not climate change is real (that can be debated too, but is not key here). The issue is whether or not the ETS will actually do anything, and how much it will cost.
Assuming climate change is real, we must reduce global GHG emissions. The ETS may reduce emissions from NZ, by forcing business to countries outside the ETS. These countries (mainly in the third world) generate electricity predominately from coal, as opposed to the mainly renewable electricity here. This means that CO2 emissions for a business overseas will be higher than if that business is in NZ. The ETS will therefore increase global GHG emissions through higher emissions from manufacturing and transport. It will therefore INCREASE climate change, not decrease it. And it will cost an enormous amount of money to do so, potentially causing many job losses in NZ as businesses relocate offshore. As it won’t help, it isn’t worth spending this money.
On the other hand, if climate change turns out to be untrue, it is even more of a waste of money.
So, whether or not climate change is real (and I go by the assumption that it is), the ETS is bad policy and detrimental to both NZ and the world. Don’t distract from the issue by turning this into a “believers” vs “deniers” religious debate, we are debating economics here.
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Any thoughts on the Council’s report though Mr Dennis?
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Here is a flow chart of what Fonterra could become – a Green energy producer plus a dairy company.
http://picasaweb.google.com/bigblukiwi/FonterraEffect/photo#5216000661293645746
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Someone’s done some work…How is methane actually captured for energy generation bigblukiwi? I know it’s currently being done with pig farms, but I have no idea of the technical details. Also, where is the biomass/ethanol for the power plant(s) supposed to come from? cheers
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Stephen R,
They can use effluent from the cows in the milking shed and convert it into methane and rich fertiliser using a biodigestor in an aneorobic process.
You may have to scroll down a bit to read the article.
Energy to Dairy – Biogas Economic/Environmental Benefits
http://www.ruralenergy.co.nz/blog2/archives/05-01-2006_05-31-2006.html
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StephenR:
I am not surprised to see one report which says the ETS would be good. The backers Mighty River Power and Meridian certainly could benefit, and would see things in a positive light, resulting in a positive report. I come from the agricultural field and see a negative result for agriculture, hence am predisposed to feel the entire thing is negative. Everyone has their own bias.
However remember that this one report is unusual. Most people are predicting the ETS to have a net negative effect. Also the NZ Herald article linked to by frog (thanks for being honest and linking to negative stuff as well as positive) outlines a number of criticisms of the report itself.
It stands to reason that if you impose extra costs to business in NZ, most business will be less competitive against business in other countries. You would also expect a few people will benefit in one way or another too, but less to benefit than be harmed.
So my thought on the report is basically: Interesting, worth considering each issue identified in detail, but most likely incorrect as it contradicts the majority of other reports.
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bigblukiwi:
Like StephenR I find your comment on that flowchart “solution to methane emissions” fascinating. Nowhere do you say what this solution is. Remember the majority of methane emissions from NZ are produced from sheep grazing in the open, followed by cattle grazing in the open.
If you are meaning SleepyTreehugger’s suggestion of using effluent to create methane to collect, you are actually making more methane (which is burnt), NOT reducing methane emissions. This is no solution to emissions, although it can be used to generate electricity.
I would love to know what your solution to methane emissions is, since the industry has been spending millions trying to find one and hasn’t yet.
StephenR:
Methane is “captured” for energy generation by digesting the effluent (producing more methane) in a digester where it can all be collected. This works for pig slurry and dairy shed washings, and therefore can be used to reduce emissions from housed pig farms (not free-range ones) where all effluent is collected. However on a dairy farm most methane is belched from cows while in the field grazing. Short of making the entire farm an enormous greenhouse with some sort of chemical collectors in the roof there is no feasible way of collecting it.
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Mr Dennis – the 11:57 post – a corker.
I’m waaaaaay from convinced that an ETS will even reduce emissions here at home; the additional costs will simply be, well, additional costs, and business will continue as usual. One only has to look at how little the enormous rises in energy prices are having on consumption. An ETS of $1/gallon on petrol you would certainly think would have an impact on consumption, but $0.05 or whatever is a weeks rise in prices, forgotten about in a month.
Mind you, a $1/gallon ETS charge would almost certainly have an impact on the future of whichever party(s) were brave / dumb enough to institute it…
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What other reports Mr Dennis? All i’ve seen is the NZIER, and that made quite a few strange assumptions. I haven’t looked too much at the Council’s report admittedly, but it seems the gist is that the country will benefit, but the benefit will accrue to different sectors, with winners and losers. The ‘winners’ seem to be based on new business opportunities arising out of the ETS.
Did you read the stuff on agriculture in the report? It did talk very optimistically about nitrification inhibitors – as we have discussed ourselves, but seems pretty rosy about agriculture on the whole.
It’s worth noting that Sinclair Knight Merz did the bulk of the research, but of course how the research is used is up to the Business Council/Meridian/Mighty River. A lot of businesses in there though!
Yes, I was wondering about the burping.
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Mr. Dennis,
“If you are meaning SleepyTreehugger’s suggestion of using effluent to create methane to collect, you are actually making more methane (which is burnt), NOT reducing methane emissions. This is no solution to emissions, although it can be used to generate electricity.”
When methane is burnt its converted into carbon dioxide, which is a less potent GHG.
Bacteria convert effluent into methane as part of the natural cycle, so its better to convert it into something into a less intensive GHG whilst also reducing the need for construction of new thermal power generation AND saving the farmer money in the long run.
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SleepyTreehugger:
The point is that you are NOT greatly reducing methane emissions from dairy farms, the bulk of which come from cows belching, not effluent.
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StephenR:
To be honest I haven’t had a chance to read the report in detail, but will do shortly when I have time (I may be saying too much before reading in some ways). By “the bulk of reports” I mean NZIER plus all the smaller things that keep popping up in the news like the report that the Tiwai Point aluminium smelter would have to move off-shore causing massive job losses, all of which together indicate that the ETS would be damaging to business.
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Well then you’re really obliged to read the commentary on the reports to see if those reports are missing something. e.g. I didn’t realise what the NZIER one was missing til i read around a bit.
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StephenR:
Fully appreciate the comment. I have a lot of reading to do on this issue in my spare time! By the way it is good to kick round these issues here with you, you have done the reading and generally have something useful to say that I can learn from, even when I disagree with you!
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I sometimes despair at the amount of reading that I really ought to be doing instead of say, sleeping…
frogblog gets ever more constructive with every new specialist (like ag-research types) who decides to start commenting on here, mwa-haha.
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Mr Dennis,
I didn’t say it would.
I personally believe its rediculous to include agriculture under the Kyoto protocol, because domesticated animals as a rule have merely displaced wild ones like bison, deer etc, which generate emissions too.
Admittadly not in New Zealand’s case, because it was primarily forested before the 1890s and we had few native mammals and no ruminants.
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Yes, there are some great discussions on environmental stuff here. Often concluding (based on the majority of sensible posts anyway) the opposite of whatever frog said. The only thing I don’t like about it is that I am increasing frogblogs (and therefore the Greens website) popularity rating by posting here…
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Sleepy, didn’t you just contradict yourself? And in NZ’s case, the object (as is the world over) is growth. This mean breeding more stock for the object of generating wealth – a parallel would be building more factories which say, generate their own electricity using coal. One consequence is more emissions.
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Well sometimes frog is just ‘putting it out there’…
If popularity increases, then perhaps more people will come on to discuss issues with, thus increasing frogblog’s usefullness! Blogs’ hit numbers are not an indicator of accuracy or ‘rightness’, just that a lot of debate is to be had.
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SleepyTreehugger Says:
June 26th, 2008 at 3:23 pm
> I personally believe its rediculous to include agriculture under the Kyoto protocol, because domesticated animals as a rule have merely displaced wild ones like bison, deer etc, which generate emissions too.
I don’t think we can afford to distinguish between greenhouse gas sources that have analogues from times before human intervention and greenhouse gas sources which don’t. Somehow we’ve got to reduce global warming, and it doesn’t really matter whether the way we do it is by reducing practices that have natural analogues or practices that don’t.
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kahikitea:
You are partly right there. If we have to reduce GHG emissions it doesn’t really matter where we reduce them from, so long as we reduce them. So we should be focusing on reducing them in ways that are cheap and effective. This means:
NOT trying to force farmers to reduce much, as this is incredibly difficult. NOT trying to reduce NZs emissions while increasing emissions off-shore, as this is pointless. NOT promoting distracting ideas that don’t actually do any (or much) good – cropped liquid biofuels, hybrid cars etc.
Actually reducing emissions from inefficient and unnecessary sources. This will save us money, not cost (at least in the long term). A few examples:
- Reduce off-shore emissions by reducing imports of unnecessary junk that has been produced with high GHG emissions e.g. stop buying plastic junky toys. Stopping the import of plastic Halloween costumes and McDonalds happy meal toys might reduce global GHG emissions more than the entire ETS, while actually saving money…
- Reduce fuel use where this can be substituted by electricity from renewables in a cost-effective manner. This might involve exploring electric vehicles for within-city transportation (where cheap, recyclable lead acid batteries can be used), but keeping petrol vehicles for country travel (where far more expensive and environmentally damaging batteries would have to be used if we were to switch to electricity. We could both save money and reduce reliance on oil this way, while reducing GHG emissions almost as a side-effect.
Just food for thought. It doesn’t matter much who seems to have the highest emissions, rather where can they be reduced efficiently.
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