You did read that right. Not only will our large industries get a completely free ride in terms of emissions, they will get so many free credits that they will be forced to sell the excess on the market for about $145 million. A free ride plus free money, but still it is not enough.

We won’t throw stones at National, because the first ETS had similar provisions. But Labour’s freebies would have declined to zero by 2030. What Smith took away from big polluters in the early years of his ETS, he gave back many times, all that way out to 2089. Compensating big industry for both emissions and electricity price rises was somthing the Greens fought against, but lost. Nobody else gets compensated for electricity price rises under the ETS, so why should they?

The real question here is whether the Leviathans of New Zealand industry should get any more free money from the taxpayer than they are already getting. My thinking? No way!

The numbers from Treasury are nonsense. Treasury can’t tell us what the deficit is going to be in December let alone what’s happening in 2030 or 2040.

Now, I’ll admit to having a go at Treasury forecasting myself from time to time, most notably about oil prices.  But the thing that is extraordinary about this statement is that it didn’t come from here at the lily pad, or from a Green or Labour MP.  It was made by none other than the Prime Minister, in response to Treasury advice on Nick Smith’s limp excuse for an Emissions Trading Scheme.

That’s right – John Key expressing a complete lack of confidence in a Government Department that he is ultimately responsible for.

Nick Smith chimed in too, unusually for him somewhat more moderately:

Figures beyond the first decade are highly speculative and dependant [sic] on assumptions about future international agreements, the carbon price and the growth of industry.

What a pity Smith didn’t apply that sort of logic to the other debacle he currently presides over – the gutting of ACC, where he is himself using highly speculative figures about the cost of claims decades in the future to justify levy increases and cover and entitlement cuts now.

Here’s what Treasury had to say about the regulatory impact statement for the ACC-gutting Bill currently before Parliament:

The Treasury Regulatory Impact Analysis (RIA) Team has reviewed this regulatory impact statement (RIS) and considers that it does not meet the RIS requirements. The RIS does not contain the required information and the analysis is incomplete in a number of key areas. For example, some of the proposals to remove ACC entitlements will shift costs onto other government agencies or onto individuals but the RIS does not quantify these costs. The proposal to introduce experience rating and risk sharing in the Work Account will increase administrative and compliance costs for business and for the ACC Scheme, but these costs have not yet been investigated. In addition, the RIS consultation requirements have not been met.

Pretty damning stuff, but Smith will no doubt blunder on with this ill-conceived Bill and Treasury can expect another serve from the PM for providing advice which is embarrassing to the Government.

An odd Flikr photo from 'Dead Scene'

Well known conservative commentator Thomas Friedman contends that destroying our biodiversity to fuel unregulated economic growth is like burning the Mona Lisa to cook dinner.

The issue of how we should treat natural capital in our economy resurfaced today. A new NZIER report on environmental priorities notes that using up natural capital can be irreversible and impossible to replace, which means ‘it becomes more valuable to protect it in its natural state to sustain the benefits it provides for future generations’.

Russel Norman’s response was:

I’m pleased to see mainstream economists recognising that it is not sustainable to trade natural capital away.

Applying natural capital theory to pollution and overuse of water, the rush to mine our conservation lands, and the threat to species and ecosystems from habitat loss, we can see that strong environmental protection rules and standards are crucial.

But beyond that step in the right direction from the think-tank, Russel pulled no punches on their reductionist ideas of separating environmental issues out and picking winners.

The report, Sustainable Development: Have we got our priorities right?, applies a theoretical cost-benefit analysis to some of the environmental issues facing New Zealand. It concludes that air quality and biodiversity should be top priorities, while waste and greenhouse gas reduction should be low priorities. It got plenty of comment on Morning Report this morning.

Russel criticised the failure to connect the dots (as does The Standard): first, between climate change obligations and actually reducing emissions:

It is nonsense to think that we can prioritise meeting international climate change obligations without reducing our greenhouse gas emissions. We cannot pull the wool over the world’s eyes, pretending to be a team player without contributing to the team effort. The world will see through that and our economy will suffer when emission reductions are forced on us in future.

Second, the dots between a low carbon economy and an economy at all:

The report overlooks the economic opportunities of moving to a low-carbon economy, and the dire economic consequences if we don’t do that quickly and deliberately. A fair and effective Emissions Trading Scheme would help, as would Government leadership on low-cost emission reduction opportunities – but unfortunately the National Government is dragging its feet on both.

Third, between reducing emissions and solving other environmental problems at the same time:

The report also fails to see the links between environmental problems and their solutions. Suggesting that New Zealand should prioritise air quality and biodiversity at the expense of greenhouse gas emissions reductions overlooks the fact that:
• climate change is the biggest long-term threat to our biodiversity;
• home insulation and vehicle standards improve air quality and reduce emissions, as do more buses, trains, cycling and walking;
• lower-intensity dairy farming reduces emissions and water pollution; and
• pest control to protect ecosystems can capture climate change emissions.

And fourth, between Kiwis’ mucking-in give-it-a-go willingness to be part of the solution:

The report also fails to account for New Zealanders’ love of doing their bit: the popularity of individual environmental action like recycling, planting trees, and using cars less. It is disrespectful to dismiss these useful contributions to creating a healthier planet.

When will our Government understand the fundamental connection of the natural environment to our economic livelihood, and pursue policies that protect it rather than cash it in for short-term profit?

Addendum: The PCE has just put out a statement calling the report muddled and superficial: “I couldn’t agree less that climate change should be considered New Zealand’s least important environmental issue”, she said.

No doubt the ‘Director, Climate and Risk’ , recently transferred along with others from MED,  (‘restructuring’ people who care for the environment with those who care more for Big Brother, perhaps?), thought it too risky to release anything other than the title. The current political climate is simply too risky for the truth about our government’s subsidy shenanigans to be known!

Moderated NZ ETS: Detail on industrial sector free allocation parameters proposed for inclusion in draft legislation

The result is a blank two page document!

Maybe we should change the ‘Director, Climate and Risk’ persons name to Winston Smith?

Other documents released by Nick Smith on Friday afternoon have other interesting items withheld. We’ll never really know what was going through the mind of our beloved Minister.

While some are crying for Smith to be fired and Labour’s bullduck is trying to cast aspersions on his fitness, I reckon he knows exactly what he is doing.

More is the pity. George Orwell would be very impressed….

In the meantime, the rushed consultation period is coming to a close, hot on the heels of the urgency motion that created this fat invoice to the taxpayer.

In summary, the Government is moving fast to emasculate the already weak ETS and turn it into a subsidy programme for big polluters. You only have until Tuesday 13 October 2009 to have your say.

Use the Green Party ETS Submission Guide to help you get your head around the issue and have your say.

The Guide gives you a simple how-to for making a submission, and highlights some of the bigger issues with the National-Maori Party ETS Bill. We encourage everyone to use this as a starting point and add any other issues that you feel are important. The Bill is so flawed we couldn’t possibly cover them all!

First dig up Southland. Probably farmland at this stage, but could be conservation land once the Minister’s review of Schedule 4 is finished.

Extract lignite, the lowest quality coal, very wet and of low calorific value. Add copious water pollution, coal seam methane and land disturbance from open cast mining.

Then a chemical process will react the lignite with nitrogen from the air and make ammonia, then urea. Lots of greenhouse gas from the carbon in the lignite, but hey, we can capture that and store it underground for hundreds of years, where it will do no harm. That way we won’t have to pay for any carbon emissions. How do we know it will stay there? Well, we think it will for a little while, and even if it doesn’t, how are you going to prove it? Quite a complicated process, trying to monitor carbon dioxide seeping out from the ground. Probably no-one will want to pay to do that.

But I’m getting distracted. There’s a huge market for urea in NZ as a nitrogen fertiliser on farms and currently the plant at Kapuni that makes it from natural gas can’t make enough so we are importing. A good kiwi business, Solid Energy – really wants savings on our import bill.

It’s urea that makes it possible to run five cows per hectare rather than two, and increases milk production.

It’s also urea that causes cow urine to emit higher levels of nitrous oxide and the higher stocking rate also increases it. Along with climate changing emissions it greatly increases the runoff from farms to waterways, increasing nitrate levels and faecal bacteria in the rivers we want to swim in or drink from.

But it’s also urea that makes farming profitable, right?

Wrong. I’ve visited a number of dairy farms in the Waikato recently who have given up using urea and dropped their stocking rate. The extra milk they could produce isn’t worth enough to pay for the urea, for the bought in feed to enable them to run those high stocking rates, and to pay for grazing their young stock off the farm to make more room for milking cows. If they are also able to claim the organic premium, they are laughing all the way to the bank. They also tell me their stock are much healthier, their vet bills halved or better, their soil micro-organisms more abundant. Here’s my Straight Furrow article.

This dog of a project has only emerged because of the Government’s proposed changes to the ETS. These changes mean that there is no cap on the emissions for Solid Energy making the urea, or for farmers piling on more nitrogen.

New Zealand’s emissions will rise substantially, but you, dear taxpayers, will foot the bill.

Muldoon would be proud of this new Think Big, which will no doubt be as profitable as the last lot, if anyone is old enough to still remember them.

The Green Party is analysing the full impacts of this proposal and we expect to be able to give you some numbers when we’ve finished. But as usual, at the moment we have more work on than we can handle.

That table, to the extent it was comprehensible at all, showed there would be a $415m cost to the taxpayer from now to 2013; a saving between 2013 and 2017; but numbers for later years were missing.

The full table occurs on page 33 of the explanatory note to the draft bill. The missing two columns, for 2020 and 2030, show a hefty annual cost to the Crown which by 2030 is estimated to be $2 billion every year. Isn’t that the same amount National can’t find the money for to put into the superannuation fund? It would also fund the completion of Auckland’s passenger rail network – in just one year – and take more cars off the road than the ETS will.

Your suggestions for what they should do with the $2 billion each year after that?

None of the ETS amendments have anything to do with reducing climate change emissions. They are about progressing foreign, trade and industrial growth policies – strengthening CER towards a full common market, and encouraging growth in energy intensive industries.

The measures in the Bill which are copied from the Australian draft legislation include:

• free allocations based on output  so that the more you grow your pollution the more free allocation you get;
• free allocation based on 90% or 60% of the industry average emissions per million dollars of output;
• the industry average is the Australasian average, not the world average;
• adopting the Australian definition of “trade-exposed”  which is what qualifies a firm for free allocation;
• a cap on the price of emissions until 2013 which is effectively $12.50 a tonne (Australia is A$10) when the world price is currently around $26
• a 2 year delay for agriculture to 2015 – the date Australia may bring in agriculture itself;
• phasing out free allocations to industry at Australia’s 1.3% a year rather than 8% in the existing NZ scheme;
• use of Australian data and benchmarking wherever possible.

Funny how this is so easy when aligning with an Australian standard on light bulb efficiency was so hard.

Wildings at Craigieburn. Photo by www.flickr.com/photos/mollivan_jon/

The Department of Conservation battles every year to push back the spreading tide of wilding pines, spread as seedlings from poorly-located pine plantations. A lot of them are pinus contorta, written off years ago as not even useful for timber. They encroach on regenerating native forests and other ecosystems such as tussock lands and left alone can completely dominate. The problem is widespread east of the Southern Alps, from Southland to Marlborough, as well as in the Kaweka Forest Park (near Napier) and the Central Plateau. As well as threatening native biodiversity and iconic landscapes like those around Aoraki/Mt Cook, it has economic costs too. It reduces productive values of grazing land and, unchecked, will reduce the volume of water entering our hydro lakes.

However, controlling wilding pines on the 210,000ha of conservation land that is at risk is turning out to be an expensive job for DOC. On top of the cost of staff and transport and chainsaws and herbicide, they are now being charged a deforestation carbon penalty by MAF. Control of these weeds for the public benefit is being hit by the same rules as private companies who convert forestry to dairy.

For the first six months of this year, this cost DOC $811,000 – a large amount for a department that has already had its budget for this year cut by $13.5 million. That money could have saved some endangered species, increased the area of land under pest control,  or – got rid of more wilding pines. The irony is that DOC’s pest control efforts for browsing mammals like goats and possums increases (or maintains) carbon stored in our native forests, but they get no carbon credit for that.

Because of this perverse disincentive to deal with wilding pines, DOC has apparently suspended all wilding pine control; meanwhile the pines continue to spread and grow and the problem worsens.

If National wants to get just one thing right in its apology for an emissions trading system it intends to legislate for this week, they could stop this ridiculous attack on our conservation lands.

They were a very large user of  NZ’s dirt-cheap Maui gas for many years, with peak annual production being 2.33 million tonnes.  By 2004 the field had largely run down and further gas was being negotiated at a much higher price so they rapidly wound down their plant and stopped production altogether at the end of 2005. With new gas contracts in 2006 they reopened the smaller, Waitara Valley plant and last year announced some production would resume at  their Motunui plant.

Last week, days before the Government announced their big ETS subsidies for carbon-intensive plants, they announced they will be moving to full production at both plants, even though they don’t have an assured gas supply.

This reminds me strongly of just how many fish fishing companies caught in the early eighties, which became the baseline year for allocating fishing quota.

Anyway, under last year’s ETS legislation, companies like Methanex, if they were competing with companies that didn’t face a carbon price on natural gas, would get 90% of their 2005 emissions for free, and have to pay full price for the rest, and for any future growth in emissions.

The curly bit for Methanex is that in 2005 they produced only 340,000 tonnes and this would form the baseline from which their free credits would be calculated. Assuming the same level of production and a carbon price of $25/tonne of emissions, the value of free credits to Methanex under the current ETS would be $12.7 million. However NZ Inc would have been liable for only a small part of this under our Kyoto obligations. If they grow their production, they would have to pay the full $25 for each extra tonne, as that is what the NZ government is liable for.

However under National’s new scheme, the more they expand their business the more free credits they get.

Assume the starting point is still 90% of 2005 levels for free, and then 90% of the emissions from each extra tonne of product; the price is still $25/tonne; and the plants are run at full production of 2.33 million tonnes. Methanex will get $87 million in free credits each year. Their increased production and emissions raises New Zealand’s total emissions and all of this increase has to be paid for by our government after 2012.

Under the Labour scheme Methanex would have paid for their growth. Under National’s scheme, taxpayers do.

However that’s only at the start. Under the existing ETS, the free credit subsidy phases out by 8% each year till in 2030 it is zero. Under National, it reduces only by 1.3% a year and by 2030 is still over $60 million!

Was it a coincidence that Methanex made that announcement days before the National-Maori Party announcement, or did they know what was coming? Just as business leaders whose press statements welcoming the deal appeared with unseemly haste appear to have done?

Basically, it’s less obligation for everyone, and more delay. Taxpayers pick up the cost. It seriously weakens the scheme we have now, and will do little to reduce emissions.

There are serious problems with entry dates, a price cap, free credits to big emitters for the rest of the century and a two for one deal that halves the price signal.

However the worst feature of the new proposal is none of these. It is the proposal that free credits be allocated on the basis of how much a firm produces. It’s called “intensity based” or “output based” allocation. It means there is no limit ever to NZ’s emissions; they never peak and start to trend downwards; and the incentive is to grow our most polluting industries. It works like this.

Suppose a cement plant (or steel, or aluminium) currently produces 100 tonnes of product and emits 500 tonnes of greenhouse gases. Under the existing law, let’s assume the same numbers were true of 2005. They would then get free allocations for 90% of this pollution, or 450 units, and have to purchase 50 units. If they managed to become more efficient and reduce their pollution they would have less to purchase. If they grew their production to 150 tonnes at the same energy intensity and therefore emitted 750 tonnes of carbon dioxide equivalent, they would still get only 450 free credits.

So when they did the financial analysis about whether to expand production, the cost of carbon credits they would have to purchase would be part of the calculation. There would be a strong incentive to find new technology that emitted less pollution per tonne of product, or to invest their capital in something with lower greenhouse gases per dollar of value created. This is how a country can transition to a low carbon economy. At the same time, cement, steel and aluminium become more expensive and new technology is developed to build strong buildings using less cement, and in some circumstances to substitute strengthened timber for steel or concrete.

But that was last year’s scheme, which is about to be cancelled. Under National’s new scheme, the plant gets a free allocation for every tonne of product they make. If the starting  point is 450 tonnes for 100 tonnes of production, when they expand to produce 150 tonnes of product they get 90% of 750 units, or 675 units. When considering whether to expand, the firm never faces the full price of carbon on the next unit of product. They only ever face 10% of it. This leads to an economy where our most carbon and energy intensive industries grow and there is little reason for new technology or low carbon production or switching from high to low intensity materials. It is an economy stuck in the past, unable to transition to the new, hi-tech, climate-friendly future.

There is also a provision that the allocation will be related to the industry average emissions for that level of production. This raises more problems than it solves. It is unclear at this stage whether the industry average is international or NZ, and how it is determined.

Of course, if the plant expands its production and raises its emissions, that becomes part of New Zealand’s obligation under Kyoto. As a country, we have to purchase units overseas to balance out that extra 250 tonnes. The difference between 450 free units under the old scheme, and 675 under National’s proposed scheme is picked up by taxpayers.

In short hand, the more you pollute the bigger the subsidy you get. It’s not polluter pays, it’s pay the polluters.

I’m going to Copenhagen in December. I’m thinking of a large sign round my neck: Ashamed to be a New Zealander.

Raising benefits is the correct way to compensate for higher prices, rather than the Government’s proposal for a three year transition where the energy and transport sectors only have to purchase one tonne of emissions units for very two tonnes emitted by their products, effectively halving the price from $25/tonne to $12.50. A rise in the core benefit would achieve two things:

• it would give financial relief to the households who most need it, without subsidising those who don’t;
• it would not dilute the price signal  that makes it worth while to save energy and fuel.

So beneficiaries could take their higher benefit and use it to purchase more efficient appliances or vehicles in order to reduce fuel and power costs permanently.

It is not clear from the Government’s announcements so far whether the family assistance measures negotiated  between the Greens and the Labour Party as part of the 2008 ETS legislation will be allowed to stand. First, the billion dollar home insulation fund which is in the legislation but may be repealed by National’s bill, was to have offered 100% subsidy for low income households and a lesser subsidy for those who could have afforded to put up some of the money, and none for those on the highest incomes. When we worked with National to reinstate the scheme, it was a bottom line for them to have no income cap, so 100% funding for poor families was not affordable.

It was also part of the agreement last year, though not implemented through legislation, that every household would get a one-off payment in compensation for the higher power prices, and the CPI based benefit adjustment would occur in advance rather than in arrears. Those changes were to cost $180m but may not survive.

We argued with Labour for a general benefit rise last year, and failed. National should reconsider it this year.

Probably the most vexing issue is the Minister’s cynical use of a flawed NZIER/Infometrics report, which he commissioned, in order to inform his 2020 emissions reduction target, a use for which the report itself claims it cannot be used:

To be clear, this report investigates the impact of changes in New Zealand’s AAUs under the framework of an international agreement whereby New Zealand takes responsibility for any emissions above a given amount. This is not the same as investigating different domestic emissions targets and should not be interpreted as such.

How were the terms of reference for this report developed, and who developed them? The seriousness of the flaws has prompted significant debate in economic circles, with a damning analysis by economist Geoff Bertram:

Economic models are, unfortunately, rather like fast cars, alcohol and tobacco: their consumption has significant external effects which makes them lethal to the public interest in the hands of addicts and children.

Is this a veiled reference to Smith? He goes on:

To retain the idea of “Business As Usual” as a world in which New Zealand has no emission commitment is a basic analytical error unless the assumption is made that withdrawal from Kyoto is feasible and likely.

When Mr Bertram re-runs the same models with the assumption that New Zealand is in fact part of the Kyoto Protocol, (i.e. reality), he concludes that the picture for New Zealand is much improved, and surprise, surprise:

Pushing technical change in agriculture would really yield a big gain in emission reduction at low cost to the economy.

I could go on, but there are other issues with the Minister’s analysis, like the complete pretension that forestry has no role to play in our carbon reduction scenarios.

The 2020 Cabinet Paper that Minister Smith sent to his colleagues claimed that:

Estimates of the economic impact of the different 2020 target scenarios do not include the impacts on forestry, due to difficulties in modelling this.

However, an OIA by NoRightTurn found yet another government forestry report, aside from the one we Greens used for our Getting There analysis, showing that forestry is one of the biggest and one of the cheapest options for New Zealand going forward.

Why is the Minister deliberately playing this down? Why the proposal to cap the price of carbon, which will kill any chance of the market (and forestry) to save our necks, while making the taxpayer subsidise all of New Zealand’s foreign owned big emitters?

Gareth over at Hot Topic discusses the vexing issue of hiding the facts on forestry in great detail so I won’t say more.

Another issue is that of alignment with Australia. While pleading our uniqueness, the Minister repeatedly refers to the need for alignment with an Aussie ETS that doesn’t even exist. The Australian ETS legislation was shot down in flames last week for a second time, and the likelihood of it being resurrected before Copenhagen are slim to none.

How can the Minister continue to claim alignment and that he’ll have a modified NZ ETS before Copenhagen in December? It’s not possible and Smith is deluding himself and the public if he thinks he can do it. There is speculation here at home that National cannot even get the numbers to amend our ETS. Does he think we’re stupid?

Meanwhile, the scientific head of the IPCC calls the Smith’s position “disappointing, inadequate and unambitious“. Smith’s response? To write him and

to explain how New Zealand’s high proportion of farm emissions means it is a developed country with a developing country’s emissions profile.

This was was not well understood, he said.

“I don’t think in his comments he has comprehended the scale of the challenge that New Zealand has in reducing emissions,” Dr Smith told Newsroom.

In other words, to write and whinge like a petulant two year old with special pleading.

I could go on, but this post is far too long as it is. Back to my original question. Is Nick Smith incompetent, negligent, or something else? Is it time he was replaced with someone who will do a proper, bottom up analysis of new Zealand’s options?

RadioNZ’s Insight doco at 8am was on carbon offsetting. Reporter Ian Telfer narrated a well-rounded look at the benefits and risks inherent in the largely-unregulated voluntary carbon market. Includes Jeanette Fitzsimons. Podcast here.

On TVNZ’s 9am Q&A show, Guyon Espiner interviewed Minister Smith on climate change targets. The show’s panel was well-informed – made up of  former Minister Simon Upton, political scientist Terese Arseneau and our own Jeanette Fitzsimons.

Frog will look in a later post at the new NZIER/Infometrics economic analysis of the ‘cost’ of a 40%announced by the Minister, but it seems to again ignore the economic benefits and opportunities of moving to a low-carbon economy, the long-term threat of climate change to the whole economy, and the threat to NZ’s premium brand if we don’t set a responsible 2020 target. Jeanette noted that the Government has yet to do an assessment of what NZ’s emissions reduction options are possible and their costs and benefits, so the economic analyses rolled out are just straw-men to make it all seem too hard. A bit like the All Blacks deciding to play for a draw just cause the Spingboks forward pack weighs more than theirs.

The Minister also pointed to the importance of supporting low-carbon technology transfer to developing countries, but seems reluctant to recognise that a responsible 2020 target would allow NZ to facilitate that through assisted emissions reductions offshore. Story and video here.

Last, RadioNZ’s Sunday Group panel on “Irrigating the Mackenzie Country” [not online yet, but will be here] held an informative debate about the impacts of massive irrigation in this iconic dryland landscape, including the threats to tourism, water quality, and biodiversity. Recommended listening.

So much good stuff, I might need a Sunday nap!

The Green MPs personally pay to offset their flights through carboNZero, choosing native forest regeneration projects like the Hinewai Reserve on Banks Peninsula as preferred use of the credits. Photo credit – EBEX21.

The research project, Environmental Impacts of Multi-Story Buildings Using Different Construction Materials, modelled the life cycle energy use and carbon dioxide (CO2) equivalent emissions of four similar office building designs that used different materials as their main structural element: concrete, steel, timber and ‘timber-plus’. The latter also used wood-based non-structural elements.

This new report is a very positive contribution in that it takes a life-cycle analysis approach to the environmental impact of construction materials. This sort of analysis is the science of the future.

The report’s conclusions around timber as the most environmentally sustainable material can only be strengthened by regulation that prevents the import of illegal and unsustainable timber from tropical forests.

Deforestation accounts for about 20% of the world’s carbon emissions, the largest single source. Much of that is a result of illegal and unsustainable logging, and New Zealand still imports timber and wood products of this deforestation.

Timber that is sourced by destroying rainforest cannot be considered environmentally friendly, and continuing to allow its import undermines sustainable forestry here and in developing companies.

Fortunately, the Government has an opportunity to find the best regulatory solutions through my recently-drawn Members’ Bill.

The Customs and Excise (Sustainable Forestry) Amendment Bill will have its first reading in September, and requires majority support to proceed to a select committee for consideration.

The other essential mechanism to ensure that the carbon values of timber are recognised in the economy is a price on carbon. Forests capture carbon, in contrast to the production of concrete and steel which emit carbon.

A price on that carbon through the Emissions Trading Scheme would incentivise the use of environmentally-friendly timber in building construction and create jobs in the foresty industry.

But the riff I want to highlight is the idea that the problem is so big, and the proposed solution is so small, that it’s better to do nothing than take a step towards the solution. Funnily enough Members’ Bills can only ever be partial solutions due to the constraints of standing orders.

Jeanette Fitzsimons’ Resource Management (Climate Protection) Bill sought to return to the RMA “the consideration of climate change in the granting of air discharge consents and the formulation of regional plans”. The Greens argue that climate change requires responses at all levels – individual, community, council, government and international – and having climate change emissions ignored by the RMA makes for planning and decision that make emissions worse. For example, the commissioners on the Rodney gas station were unable to consider the emissions from that plant as having any impact on the environment. Despite this, one of the arguments used by National’s Nicky Wagner in the debate [not online yet] was that climate change is far too big an issue to leave it to the RMA or Councils to deal with. Well, obviously, but is that a reason not to allow the RMA and Councils to play their part?

Also up for Second Reading was former MP Matt Robson’s Liquor Advertising Bill that would have restricted liquor advertising on television to between 10pm and midnight (currently 8:30pm to midnight). The Bill’s new sponsor, Brendan Burns, acknowledged that the Bill was not the whole answer to the problem, but that: “It confronts what can be done immediately to reduce the harm of alcohol advertising.” Yet, despite National MPs accepting that excessive drinking by young people is a serious problem, National’s Nikki Kaye tried to argued that:  “We need to consider the whole problem” as a reason to oppose this step. Despite it being a conscience vote, all National MPs voted nay.

All I can say is that we’d be well advised to apply the motto from Paul Kelly and Kev Carmody: “From little things, big things grow…”

In 2006 the MPs measured their emissions from air travel to create a baseline. Air travel makes up the vast bulk of emissions from travel for the MPs, and was easier to calculate than other forms of travel – although by no means simple or quick to measure!

Since 1 Jan 2007, the Green MPs have been paying to offset their air travel emissions. They pay from their own pockets – it is not paid for by Parliament. They are currently paid up to the end of 2008, with emissions for 2009 to date still being collected and calculated.

Offsetting is not perfect. In a Green world, there would be alternatives to fossil-fuelled air travel, such as much better provision of video-conferencing facilities, biofuelled aircraft, other swift transport options for inter-city travel, and MP life may even be a little less frenetic. But to a great extent, our MPs represent New Zealanders all over the country and the public needs access to them, so they need to travel. Our MPs continually advocate and work for a low emission transport system, and alternatives to travelling such as flexible working hours that reduce flight demand. We’ve also long advocated a carbon price (either via tax or ETS) that prices domestic flight emissions, and for international emission to come into Kyoto. A price on liquid fuel emissions in the ETS, which was due to come into effect 1 Jan 2009 when first mooted by Government in 2007, is effectively a compulsary offset. However, it is now uncertain whether it will even come into effect in 2011 as provided for in the ETS Act.

We use one of the most credible offsetting companies, carboNZero. It is owned by the CRI Landcare Research, is Kyoto compliant, enables the money to go to native forest sequestration, and has won many awards.

We also continue to pressure other MPs into making offsetting common practice across parliament, and to get better access to video conferencing facilities. The MPs’ secretaries go to considerable effort to make an MPs visit to a particular place as efficient and productive as possible.

We can’t “leave agriculture out of Kyoto” – it is already in, for all countries, and all countries have liabilities that include all their emissions above their 1990 related baseline. The argument is about whether we leave it out of our carbon pricing system, in which case NZ would still face the full liability for all our emissions but the farming sector would pay nothing towards that liability, so everyone else would have to pay twice as much, because agricultural methane and nitrous oxide is half the total.

Even if you leave out farming, our carbon dioxide emissions per head of population are very high – well above the global average – partly because our transport system is quite inefficient and we have long distances as well.

No, I’m not advocating genetic engineering – that is quite unnecessary. Once we understand which genes in cows reduce their generation of methane we can test a blood sample of calves for that gene and selectively breed, just as we do now, for example, to identify rams resistant to facial excema. Genetics is a very valuable science if you keep it in the lab and use it for diagnostic purposes.

Re stocking rates, it’s not as simple as you’d think. High stocking rates give you less production per cow. Lower stocking rates can often be more profitable for the farmer as input costs are much lower and stock health better. It doesn’t help our trade balance to have to import heaps of palm oil kernel for winter feed (apart from the fact that it’s grown by clearing rainforest) or veterinary medicines for overcrowded cows.

My comment that many things farmers could do that would reduce emissions don’t count under Kyoto is not evidence that the whole trading thing is a sham – it’s because measuring the effects of many better farm practices is incredibly difficult and Kyoto only credits what you can measure and verify. Our interest lies in advancing this science so that the practices we want credit for are measurable and verifiable and then get them accepted under Kyoto.

Have we wasted the whole last decade debating climate change policy, if we need to go back and start from scratch with a select committee review of ETS? No party was happy with the scheme that was finally passed in September. It took years of negotiation and huge political compromise from those who voted for it. Now National will consider “any amendments or alternatives to it, including carbon taxes”. Are we just starting again then? Given that US president-elect Barack Obama is committed to a cap and trade scheme and even the United Nations is working on plans for a “Green New Deal”, why on earth are we choosing to give up our competitive advantage (ie years of policy work)?

At Hot Topic:

To avoid further damage to our international credibility, National should immediately issue revised terms of reference and a tight timetable for their “special” select committee: taking out all references to considering the science of climate change and the possibility of a carbon tax, and explicitly limit the committee to considering amendments to the ETS framework. To do less (or nothing) will do further damage to business in NZ and our international reputation.

And also:

Time for the NZ scientific community to make it clear to Nick Smith and National that the starting point for any review of climate policy has to be an acceptance of the IPCC’s Fourth Report, and the NZ Royal Society’s statement issued earlier this year. Anything else would be like appointing Ken Ring to run MetService.

And Audrey Young at the Herald:

Act’s position has changed markedly over the years. When Labour proposed a carbon tax, Act opposed it and National wanted an emissions trading scheme.

When Labour proposed an emissions trading scheme, Act supported a carbon tax. It has now won a review that will include looking again at a carbon tax.

During the short space of the campaign Act has argued that climate change is not happening and it is a hoax, that it is happening but it is a good thing, and that it is happening but we should not do anything because we are too small to matter. Now it seems, because Rodney Hide can’t make up his mind about climate change, the rest of us are to be subjected to further delay.  And all just at the time when the rest of the world is arguing we must act now if we are to take our best opportunity to avert a crisis (and embrace an opportunity).

“three strikes” law and order policy, cutting government spending and dumping the emissions trading scheme.

All of which sends shivers down many Green spines.  Act does empty bluster and noise better than most parties so I guess we’ll have to wait and see how many wins Key is willing to allow his junior partners. 

We already knew that National would support a cut in government spending and tougher law and order policy (it’s hard to imagine that it could get too much more punitive than it already has under Phil Goff, but there you go). So those are easy for Key to agree to. But the Emissions Trading Scheme will hopefully be a sticking point in these negotiations for two reasons;

1. While Act is rejoicing in its bizarre climate change views, National has moved away from that kind of anti-science stance and now agrees that there should be an Emissions Trading Scheme of some sort. National, which has worked so hard to capture the middle ground can’t afford to go off on internationally discredited tangents such as Act’s climate change denials represent.
   
2. National has no credible plan with which to replace the Emissions Trading Scheme. It has opposed it, knowing that lots of its constituent vote doesn’t like the direct economic impact it has on them personally. But that does not change the fact that we have Kyoto responsibilities and liabilities.  National has never articulated an alternative and has given the impression that its alternative would be, at most, be minor tinkering.  We have a bill to pay and we need some mechanism, other than just increasing taxes, to pay that Kyoto commitment.

I think this issue is probably the most important one to watch in the next few days of negotiations between National and Act.