Julia Gillard seems however to have received some misinformation about our ETS:

Gillard said Australia needed to catch up with New Zealand on pricing carbon, saying New Zealand’s ETS was “working successfully”.

I guess it depends on how you define success. We do have an ETS and the Government has managed to avoid the negative political fallout that Labor seems to be facing.

But, our ETS is certainly not going to reduce Greenhouse Gas Emissions much.

It’s unlikely to stimulate much low carbon economic development as the costs will be mostly borne by households and taxpayers, as opposed to polluting businesses.

It does do a bit for forestry, but even foresters have been reluctant to take up the scheme (PDF) because they risk having to pay a much higher carbon price in the future when they harvest their trees.

It may even subsidise the development of lignite coal in Southland, which would significantly increase our emissions.

Fortunately, the Greens hold the balance of power in Australia, and they are working hard to get a real price on carbon from July 2012. What will this mean for New Zealand?

If the Aussie Greens are successful in holding the line and getting a realistic price on carbon next year, it will be New Zealand who will have to play catch up.

By 2015 when the Aussie ETS is meant to be operational and presumably integrated with our own, the economic benefits of a higher carbon price in Australia should be kicking in.

Low carbon business in Oz will reap the benefits, while kiwi polluters will have to pay.

The alternative is that we drag our larger neighbour down to our level, and a trans-Tasman ETS benefits the coal industry while households are left to foot the bill.

One thing is for sure, Australia’s commitment to climate change mitigation is further evidence that the world is moving in this direction. The sooner we act to transition our economy away from fossil fuels, the less it will cost us.

First the serious part. The Climate Change Response (Low Carbon Economic Development) Amendment Bill aims to incentivise clean, green and low-carbon economic development so our children and grandchildren can continue to prosper for generations to come. It does this two ways; firstly, eliminating expensive ETS subsidies on lignite coal and secondly, establishing a clean green taskforce to explore developing our green economy. It’s one of the recommendations of the Parliamentary Commissioner for the Environment’s report into lignite coal.

Even if it isn’t pulled from the Member’s Ballot, I think it’s important to highlight the massive subsidies the taxpayer will pay to develop these dirty resources, trashing our climate credibility and valuable clean green brand.

Now the fun part. I’ve also launched a game where you can keep the coal in the hole (and out of the atmosphere), which you can play here.

There has been a lot of rhetoric but few hard figures. How much impact will this have on the dairy industry?

Luckily for the quality of debate in this country, the Ministry for the Environment knows the answer to that:

The cost of emissions for farmers will depend on a range of factors including the size of the farm, the farm type, and the intensity of operations. Initial analysis suggests that in 2015, at a carbon price of $25/tonne CO2-e, farmers will face the following costs on average:

around 2.5 cents per kilogram of milk solids

Yes, you read it right. 2.5 cents. How much does a farmer get for selling a kilo of milk solids? $8!

The first person to tell me what percent 2.5 cents is of $8 gets a green star.

“The plans to increase lignite use are extremely concerning as they would produce huge quantities of carbon dioxide which contributes to climate change – the biggest environmental threat we have ever faced.”

The PCE also recommends changes to the ETS,

“Those extra emissions are likely to cost hundreds of millions of dollars a year and much of that cost could be borne by the taxpayer unless changes are made to the Emissions Trading Scheme.”

It adds further weight to Jeanette Fitzsimons’ argument that we have to keep the coal in the hole.

You can access the full report here.

That is, unless you work in the Parliamentary complex itself—in which case you can’t.

Not because the PCE doesn’t want you to have the report. But because of an IT stuff up a couple of months ago that has not been fixed. Numerous calls/complaints/jobs have been made to ICT and nothing has happend.

Essentially parliamentarians do not have access to an electronic copy—or any of the other information on the PCE’s website—while they’re on the Parliamentary network. Despite the fact it is the Parliamentary site that Members need access to.

In the meantime, while we wait for access to the PCE site, here is a clip from the IT Crowd.

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!

You can watch the show at http://tvnz.co.nz/back-benches/s2010-e26-emissions-trading-special-video-3736153

I think Russel did really well – as usual there was a lot of overlapping points being said at the same time but IMO he came through clearly and robustly. I liked his closing statement 3/4 of the way through Chapter 4 about how we can choose to embrace the green economic revolution and be prosperous in the process.

He also said words to the effect of: The ETS is about deciding whether the taxpayer picks up the tab or the polluter. National want the taxpayer to pay the vast majority with the polluter paying a tiny bit, Labour pretty much the same but slightly more on the polluter, and the Greens would prefer the polluter pays more of it. (1/3 of the way through Chapter 3)

There was a really interesting selection of people who were interviewed, including Gareth Morgan. It was great to hear about the success of the Sustainability Trust‘s insulation scheme involving 1,200 homes.

Watching it on TV is quite different to being amongst the crowd – the cheers and jeers are hardly noticeable on the recording. Next time there’s an interesting Back Benches on, come and be there with us it’s great fun!

I asked what phased milestones the Minister had to achieve his stated goal of reaching 90% electricity generation from renewable sources by 2025.  His reply was that his Government did not ‘determine the investment decisions’ needed to increase the availability of renewably-generated activity.  Rather it sets the ‘regulatory and policy environment’ in which investments are made (such as the amended RMA and ETS).  Phased milestones would be possible ‘only if we lived in a command-and-control-style economy’.   “We do not,” he observed.

Mr Brownlee is correct.  We do not live in a command-and control economy.  We never have, although a National Prime Minister came closest three decades back, igniting the neo-liberal revolution of the ‘80s that dominates this Government’s thinking even today.

But we do live in a country that is part of an unsustainable global economy, whose most obvious symptom is dangerous climate change from excessive carbon emissions.  Switching to renewable energy sources and developing a low-carbon economy within a short time-period is a condition of enduring economic welfare, both for New Zealand and the world.

It is generally recognised that this switch must be completed within two decades at the latest.  New Zealand’s goal of 90% renewable electricity is one part of that transformation.  Identification of phased milestones is a legitimate part of attaining that goal.  It does not reflect Kremlin thinking.  It reflects an agreed aspiration, through consensus, to ensure that a final goal is more likely to be attained, with public and private sectors working together.

Most people and most governments and organizations do it.  The household budget contains milestones to pay off the mortgage.  The National Party will have a fund-raising plan, most probably with targets, for the 2011 election.  The Government has a phased milestone, signed by the National Cabinet in 1997 in the Kyoto Protocol to achieve the goal, signed by the National Government at Rio in 1992, of stabilising the global climate at a level that is not dangerous to the planet’s life-support systems.  The UN has phased milestones, under the well-known Millennium Development Goals, to halve global poverty, improve educational attainment, and increase maternal health and longevity.

We all have milestones, Mr Brownlee.  It is not a betrayal of the private sector as the driver of the national economy to lay down mid-point milestones to measure how well we are moving towards a stated target.

In fact, you have them yourself, or at least your Government has access to them, notwithstanding your momentary lapse in acknowledging this.  The NZ Electricity Commission’s draft Statement of Opportunities, released in July, is intended to “provide interested parties with independent information to consider in assessing the potential for grid management efficiencies and, in particular, investment in upgrades and transmission alternatives.”  The SOO, says the Chairman, is not a plan for the future development of the grid or of generation.  Rather it is a set of scenarios as to how the generation and transmission of electricity may develop, given a range of reasonable assumptions.

The scenarios show a trend for each year for all energy sources between 2010 and 2040.  Each renewable source – geothermal, hydro, wind, tidal, solar – is expected to increase.  The Government, and the public, will have this available to assess the effectiveness of the Energy Strategy over the next decade.

The policies of the previous Government, through the thermal power station moratorium and its ETS, were broadly on target for the market to deliver a 90% renewable by 2027.  The Green Party’s ‘Getting There’ document of August 2009 showed how we could achieve 90% by 2025.  This Government’s repeal of the moratorium and weakening of the ETS has left that in tatters.  Without a clear signal through government leadership, the market will not deliver on time.

Mr Brownlee’s Strategy speaks of “fostering the deployment of new renewable sources such as marine and solar sources of energy”.  How the Government plans to foster marine energy is left unclear.

If all you do is state an aspirational goal, leave it to the Commission to postulate scenarios based on assumptions, and leave unclear how you are going to foster new renewables, you will simply not attain the target.  Yet attaining the target is an imperative for our children’s generation.  And yours is the ministerial responsibility.

Here are a few personal thoughts on how to facilitate the attainment of the 90% target.  Assume a population growth rate of 0.8% per annum, and electricity generation growth of 2% p.a.  Based on these assumptions, the table below sets out a possible ‘phase in’ of renewable electricity sources and ‘phase-out’ of fossil-fuel- based sources.

* Some aging hydro stations decommissioned.

** Solar water heating has a negligible effect on national base-load.

This is not a command plan.  It is a heuristic tool.  It shows the magnitude of the challenge of switching to a low-carbon economy when energy consumption is growing exponentially.  The reality will not be precisely like this.  But unless we all – householders, voters, farms, companies, local authorities, government – have some idea of the phase-in / phase-out trend we need as a nation, we shall never get there.

And the only way to get there, in light of the above, is a robust carbon price signal for the market economy to react.  There, the Government is failing us as well.  But that is for another time.

It’s the sort of environmental entrepreneurship that the Greens envisage in the latest Green New Deal package released today. Full PDF here.

On forestry, the package proposes we plant 665,000ha of forest in the next ten years. Commercial forestry can do half it with some confidence in the carbon price; the Government can joint-venture with iwi and community interests to match that; and kicking-the-tyres of the Afforestation Grants Scheme and the Permanment Forest Sinks Initiative would spur more again.

Much of it can be native forest, planted or regenerated permanently for carbon; and we can use the opportunity with the rest to diversify our forests into higher-value, more durable species that are better for the environment. There’s 27 million tonnes of CO2 in this new forest over 10 years.

On pest control, the package suggests ways we can do more pest control, and do that on the ground so more people are employed and the fur industry can use more of the fur. Many of the remaining textile factories in New Zealand are dependent on possum fur, and are desperate to expand production. For example, Wool Yarns in Lower Hutt and Manawatu Knitting Mills. Done right it can be another win-win for jobs and the environment.

And on wilding conifer eradication, the package extends the argument of the Parliamentary Commissioner for the Environment in her high-country report, showing how, with future control funding brought forward, we could actually nip this problem in the bud. There’s some DOC video here.

Taken together we reckon that this would create 50,000 job-years over ten years (a job year is one FTE for one year). We’ve costed it and it adds up to less than half a billion dollars over 10 years. There’s plenty of opportunity there for a government keen to reduce unemployment, fix environmental problems, and bolster rural and provincial New Zealand.

A Green New Deal is about hugging trees with spades, traps and chainsaws. Is the Government ready to muck in and get its hands dirty?

The Greens have been keen on a carbon tax since 1993, and only supported Labour’s ETS after much soul searching and negotiating some big improvements as it was the only game in town. It was relatively easy to dismiss National’s version, as they fell into many of the traps outlined in the video above.

Feel free to discuss solutions to climate change in the comments, but just for once, let’s not have a discussion about whether climate change is happening, aye? As an experiment, off topic comments will be deleted.

The US and some EU countries are indicating that border taxes may be used to defend their local producers against imports from countries that have ‘soft’ climate change regimes.  The ETS that the government bulldozed through Parliament under urgency last week takes ‘soft’ to a whole new level; we’re talking marshmallows here!

While border taxes would be quite tricky to impose without contravening WTO rules about trade restrictions, and may not present a danger to us in the short term, we can’t be too sanguine about the longer term.

A much more urgent risk is that we are perceived as a country not making serious attempts to reduce our carbon emission, which will give our competitors an opportunity to turn market preferences away from our export products and services.

Given that we now have an ETS with no effective cap on emissions, and that does little to provide regulatory or financial incentives for our major polluters to change their ways and reduce pollution, we have handed our trade competitors a very handy club to beat us with!

Fortunately we do have some smart business people who understand the opportunities for genuinely ‘green’ or sustainable products or services that appeal to the growing number of socially and environmentally conscious consumers (the LOHAS  segment).

What a shame though, that any success they have in securing a share of this affluent, high value market will be despite the actions of the government, rather than being supported by it!

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.

There’s been commentary claiming the government hasn’t actually done very much in its first year. Rodney’s embarrassment aside, it seems safe to say that Rod wouldn’t agree.

First off is the long list of backward steps taken on environmental protection. National started the year as it is likely to finish it – under urgency. Under the guise of the collapsing world economy, legislation having little to do with the crisis was repealed, such as the act that set standards for sustainable biofuels, and one that established a renewable preference for electricity generation.

At the other end of the first year, we have the fiasco of the government’s 0-20% emissions target (for who knows where it will end up), and an Emissions Trading Scheme that will subsidise polluters by the billions at taxpayer expense, likely increasing our emissions rather than reducing them. I’d forgive Rod if what he might have to say about that wasn’t even printable.

The great worry is that this government has only just begun its programme of environmental negligence. The Resource Management Act part two reforms is an example of things still to come, with the government showing it will trade short term economic gain for long term economic and environmental sustainability.

And you can be sure Rod would be out there gathering signatures for the Green Party mining petition too.

Rod's tree at Parliamentary Library

One of the other early casualties was Rod’s beloved Buy Kiwi Made programme, ably implemented by Sue Bradford after Rod’s death. The Kiwi Diary 2009 notes today is the anniversary of when the Green Party won the battle to have the “Buy Kiwi Made” campaign restricted to goods and services manufactured and processed in New Zealand, 2006. Even Labour didn’t get it.

There are so many other examples. But most of all, I think Rod would be gearing up for the next public discussion on MMP, due to occur over the next two election cycles. Rod was a passionate advocate of the new system recommended by the Royal Commission and helped lead the coalition advocating change. Rod knew that MMP meant  fair representation for all Kiwi voters and that it would lead to the current diversity we see in the House today. I think Rod would agree that there are improvements to be made to our MMP system. I’m certain he would be fighting hard on behalf of all citizens for its retention.

Greens across Aotearoa are thinking of you today, Rod.

Agricultural intensification over the past 10 years has led to the highest rate of native vegetation loss since European colonisation.

Lake Taupo farm and forest

So says the 2009 annual report of Landcare Research, a Crown Research Institute, in an article about ‘Post-capitalism conservation’.

Landcare argues that the market is disconnected from natural capital, a problem that has contributed to the current economic crisis. Land biodiversity in New Zealand is a good example: where natural vegetation has been cleared away for intensive farming. This results in:

increased risk to the ongoing supply of essential goods and services (such as clean water) provided by biodiversity, as well as its intrinsic aesthetic and intellectual value.

They say that the fragmentation of native forests and streamside vegetation also make us more vulnerable to invasive species and impacts of climate change, and reduce resilience on the remainder of native biodiversity such that it further fragments.

I was staggered at the fact that the last decade has seen the fastest decline in native vegetation since colonisation. I knew we were still losing more native cover than we were gaining, but the ‘worst decade’ status is quite extraordinary. It’s certainly more evidence that the Labour government’s environmental rhetoric was just that, rhetoric.

The key instrument to arrest this decline would be a National Policy Statement on Biodiversity to give some guidance for the Resource Management Act. There’s no doubt it’s a difficult policy to write, because to work it would have to restrict landowners’ clearance of native vegetation, and incentivise regeneration and replanting. Given this decade’s performance has been so bad, current voluntary schemes like covenants, guidelines and accords are not sufficient. It is New Zealand Inc. that will pay the cost, including private landowners, with degraded waterways and more pest and weed problems. The Greens finally convinced Labour to commit to the NPS on biodiversity as part of ETS negotiations (pine forests in the wrong place can be another threat to biodiversity), after Labour’s earlier false start in 2000. National committed to one before the election:  “National is committed to developing a NPS under the RMA on biodiversity. It is likely the 2011 deadline will be met”. This then slipped to unlikely, but now seem interested again. Whether the two old parties have more than a Clayton’s interest will be seen in time.

Meanwhile, Landcare’s work is aimed at assessing and valuing the public values of biodiversity, including the idea of biodiversity offsetting. The Greens can see some benefit in biodiversity offsetting, but plenty of dangers too.

Mokihinui Gorge from the air

Take Meridian’s proposed land-swap to allow them to dam the Mokihinui River. Their proposal is to swap the 330ha of forest and river they want to inundated in the Mokihinui Gorge with 794ha of coastal forest land they have bought. This would then mean the gorge was effectively private land, and no longer conservation land, so no concession would be required from DOC to dam it. That’s a net gain of 450ha of native forest, right?

Wrong. The first problem is that currently there are 1030ha of native forest at the two sites. Doing the swap and damming the gorge will result in 800ha left – a net loss of 330ha. While the protection status of the coast forest would be higher, it is forest now and will still be forest after so little is gained. Fundamentally, neither area of forest should be cut down .

The second problem is that the nature of the two sites is very different. Damming the Mokihinui would result in one fewer wild river, obstruct a very health habitat of the already-declining long-finned eel and whio (blue duck), and destroy a unique landscape with its own intrinsic values.

DOC and the Minister of Conservation are currently considering Meridian’s proposed land-swap, so please write to Tim Groser to urge him to turn it down.

Frog will look deeper at biodiversity offsetting in future, but finally, Landcare’s article also notes the importance to pest control to ensure we don’t just have forests, but have healthy forests. The Green MPs write about the same in the latest issue of GreenTimes, which you can read here [PDF 800kb].

Eighty-two percent of National voters believe emitters should pay for any emissions in excess of New Zealand’s agreed limit under the Kyoto treaty, not taxpayers. Among Maori Party voters this rises to ninety-one percent. Voters of all types soundly reject the long phase-out of free credits and support more transparency around who is getting handouts.

Is it any wonder, given that the biggest change is that polluters will now be paid by the taxpayer not only for their current pollution, but for any increases for the next couple of hundred years. What a crock!

Nick Smith has made a real hash of his assault on ACC, picking on sexual abuse victims and baby boomer bikers. He’s also made a real hash of his ETS proposals, sucking up to business and kicking the taxpayer in the teeth for generations.

The only thing that remains to be seen is whether the Maori Party will support either of these debacles. It would be ironic if they provided their support in exchange for something they already have – kaitiakitanga  over the foreshore and seabed.

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.

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?