“People … may have been caught out…I just hope he gets his projections right in the future…” – The Groserian theory of emissions reductions

Every now and then, things emerge in the give-and-take of daily life that illuminate insights with a deeper, underlying significance.   Such was the case yesterday.

Some of us around the planet harbour a passing concern that dangerous, and perhaps catastrophic, climate change is likely if global greenhouse gas emissions do not begin to reduce very soon.

To prevent that, the UN Framework Convention (1992) requires all countries, starting with the rich developed ones, to reduce emissions.  Under the Convention’s  Protocol, they agreed on a flexible mechanism to ensure reductions within quantitative capped budgets.

The central mechanism is emissions trading schemes.  The EU kicked off with a pilot in ’05, and fleshed their trading scheme out properly in the 1st commitment period: 2008-12.  They renewed their targets for 2020 and refined their ETS in 2013.

New Zealand started its ETS in 2008, but only with forestry for the first two years.  Actual trading came in with obligations on energy and industry in 2010.  The price of a domestic unit (NZU) started at $22.  It quickly zeroed down over two years to bottom out at $3.

There are ways in which a government can adjust policy settings to influence the price for the market to respond. John Key’s Government influenced the price down, not up, through halving the surrender obligation for emitters, handing out free units as if they were lollies, and allowing in cheap foreign offsets that emitters can purchase more cheaply than the domestic NZUs.  ERUs from Eastern Europe continue to come in at around $0.20.

In this situation, NZ foresters, planting for carbon sequestration with a view to earning NZUs which can then be sold in the ETS to emitters, are undermined.  Result: afforestation stops, deforestation sets in, seedlings are destroyed.  Leithfield Nurseries in Southland recently destroyed 700,000 seedlings, Appleton’s Nursery in Nelson 300,000.  New Zealand, which scraped through its 1st Kyoto Commitment through net sequestration from forestry (our gross emissions actually increased) is soon to witness its forests turn into a carbon source.

Enough is enough, when it comes to farce.  The Iwi Leadership Forum plans to lodge a claim against the Government for $600 m. for lost value of their carbon forests.

This is the antithesis of the objective of any economic instrument whose job it is to reduce emissions.  The NZ ETS is not achieving its goal – our emissions are projected to soar from 32 million tonnes in 1990 to 98 m.t. in 2028 – and it is largely because the Government refuses to influence the price.

Why is the Government so determined not to intervene?  I asked the Minister, Tim Groser, yesterday: how can the ETS be seen to be working when this is all happening?

Mr Groser resorted to a peripheral, and near-irrelevant, sermon about forest cycles – oblivious to the requirement that planned and sustainable forests are not vulnerable to timber price fluctuations but respond to a stable and predictable carbon price signal.

We have become used to Groserian irrelevancies as the months have gone by. But what took the public’s breath away yesterday, what was so astonishing, was his callous disregard for the human dimension of the situation that he and John Key display.

In responding to my question, the Minister recalled the increase in seedlings over 4 years, then announced an expectation of a ‘market correction’:

“So the market has turned and people who overstocked may have been caught out by it”.

“I am very sorry for the company concerned and I just hope that he gets his projections right in the future.”

“Markets go up, markets go down’.”

This is extraordinary.  The Minister misperceives the point of an ETS.  It is to reduce emissions, and a carbon price is the selected economic instrument.  What the Key Govt. has done is drop the policy objective, and focus exclusively on the trading mechanism as if it is an end in itself.  Uncontrolled Groserian wizardry went further yesterday – reinforcing this worldview by merging timber prices and the carbon price of wood as if they are mutually-tradable market factors.

Through the commodification of carbon, the Key Government has lost the plot.  It has lost sight of the purpose of an ETS.  It has swapped a political goal – reducing emissions to prevent dangerous climate change – with a commercial gain – except that, in this case, it is a loss.  It is a loss for the Government.  It is a loss for the foresters.  And above all, it is a loss for the next generation.

26 Comments Posted

  1. In the particular proposal I made, the “Less” you speak of would not be utter cutoff from global trade. But I admit there would be “Less”, as green economies united with us struggled to replace those products that the carbon insistent economies currently produce. To start off the regime, the surcharges would be on those economies that were increasing rather than decreasing their emissions. So with that phase in scheme, there would be modest surcharges on Japan and Russia, heavy surcharges on China and Indian goods, and little or no surcharges on US and EU goods.

    Which means that most of the big guns of the G7 would not be taking much notice. Although this means the goods to replace are not high tech items, it does mean the goods you’d find at the Warehouse have to be produced either by us or partner low emission countries. So in the near term, Kiwis and other green economies that join us would easily have the skills to produce those missing items.

    As heavier sanctions are phased in, I will admit that green economies will be challenged to produce the most sophisticated products. At the end of the day, what this exercise represents is the carbon version of the classic illustration of how economic systems fail to deliver optimal results: The Prisoner’s dilemna. Currently those who take the path towards the optimal solution are punished. As the system is phased in, those green countries may be sanctioned by carbon intensive countries, and those goods also will have to find replacements. This is quite possible since many western nations will continue their pattern of taking the easy course and refuse to adopt aggressive emissions reductions proportionate to their per capita production of Green House gases.

  2. If we follow your theory, we will have no exports

    That has not ever been the case.

    Your “extreme” picture of trade warfare is an ASSUMPTION.

    The fact is that we will still (one hopes, the climate may not remain so benign) have surplus production of food, wool and wood products that the rest of the world will still need, because the people who live in quite a few of the more populous places are hard pressed to produce that sort of surplus. WE will buy fewer new iGadgets, more used and 2nd tier throw-away techno-rubbish, just as we buy 2nd hand Japanese cars. WE will build the things we really need to a greater extent, and make do with less expensive luxury items.

    This is not something that happens in isolation, there are really about a half-dozen policy changes that go together to make it workable.

    Having LESS is not the same as having NONE, and abandoning the notion of “keeping up with the Koreans” or the USians, would do our economic system a world of good. It if turns out that we have fewer imported bananas it also means that we will have fewer imported loans. It means that we will ship far less of what we work for overseas to foreign bankers and investors who are sitting on their collective bums and smirking about how they have New Zealanders working like “Mexicans with Cellphones”.

    DBuckley –

    The person who tried to turn NZ around properly was Muldoon, and his effort foundered on the rock of banker control of the currency… and some other shortcomings which probably would NOT have mattered if this sovereign nation actually had kept control of its currency. I didn’t count governments, and am surprised I hit close to where I wanted to actually.

  3. Ten successive New Zealand governments have now encouraged greater inequality, and we’ve moved to the bottom of the OECD.

    If I can count backwards through Wikipedia’s list of previous governments correctly, that gets us back to Lange, which is about when folks think “neo-liberalism” (what a bullshit term that is) came to the fore.

    Unfortunately, for those who choose to pick this as the start point of the downfall, we were already well on our way to the bottom of the OECD; we’d had been on our way for over thirty years before Lange declared that he could smell the uranium. I’m going from memory here, but I don’t think our rate of decent even changed from this point.

    I know its convenient for the socialists and Trotsky-ists and gini-ists and LSE-ists and may other -ists to blame Rogerfuckits and (the bullshit term again) neo-liberalism, but although its convenient, its just plain wrong. To claim otherwise is to ignore what went before.

    Amusing though this continued misunderstanding is, the real problem is what this misplacement of blame means for those who seek to effect change: It means they think that the answer to New Zealand’s woes is to undo what they think is wrong, which is, in short, what Rogerfuckwitism heralded. Which at best will result in no improvement.

  4. . (We have no way to make artificial boobs? Egad ! ) AND gadzooks

    Here’s where the digression fails:

    A research level capability for chips is one of the things we need to maintain here, and a university connected small scale foundry needs to be funded, in the interest of retaining knowledge and capability here in the event of problems with production elsewhere.

    That ELSEWHERE is the bad apple in your barrel of words. If we follow your theory, we will have no exports, and so no currency to purchase from “elsewhere”.

    GADZOOKS AGAIN. No bananas for the weekly allowance of Northland cornflakes, and no solar panels to heat the wooden greenhouses to grow the tomatoes, or I could grow my own veggies in the back yard -_-

  5. There is no reason for us to have NO silicon production capability. (We have no way to make artificial boobs? 🙂 Egad ! )

    A research level capability for chips is one of the things we need to maintain here, and a university connected small scale foundry needs to be funded, in the interest of retaining knowledge and capability here in the event of problems with production elsewhere. Problems which will appear as this century starts to grind up the economies nearer the equator.

    People do NOT run away to “higher standards of living” if they have a good quality of life and standards of equality. There may be some, but they will be balanced out by those who are attracted by the other two. Our quality of life is diminishing through the pollution of our rivers and poisoning of our environment at the behest of our government approved “industry” and resource extraction (which is not properly taxed or charged). If government support or protection is needed for any other industry it can be tossed… no matter what advantages its overseas competitors obtain.

    Ricardo never meant anything like what has been done here with his principle as the principal excuse.

    I don’t NEED the latest iWhatzit, and if I and my neighbours and my fellow citizens are in fact all contributing and benefiting fairly equally from the social contract we’re going to feel a lot better about what the society demands of us. That’s a fact of societies in general.

    The inequality in the current system is extraordinarily toxic, and the lack of industry (with the correspondingly small and shrinking middle class) and the large difference between what workers vs owners, has historically driven people to run away to places where they could do better.

    Not so many such places now that the neo-liberal dream has destroyed equality and opportunity in so much of the world. So that migration is going to be less of a problem. The privileged position of wealth is becoming a globalized condition.

    We put our graduates into debt (what happened to education funding?) and the salaries they can earn IF they can find work don’t cover the debt. Companies always complain that they can’t get good technical staff, but then work the staff they have like “Mexicans with Cellphones” with the owners paying a smaller percentage of their income in tax than the Mexicans.

    Our current economy is unbalanced to the point of being downright insane. A high range PAYE taxpayer, between 70 and 100k who has a house (to live in), kids and a mortgage is being ripped a new one. GST is brutal. School contributions are large. Rates are brutal. OTOH, the LAQC mob with its deduction advantages and others who get “economic rent” with the tax advantages given to that privileged income, pull in much more money, but almost always pay tax at an effectively LOWER rate than the top PAYE earners.

    I heard the excuses from Cullen, and they were wrong then. “The problem is that there aren’t any big money makers here in NZ” – well SURE there are. Take out mortgages on multiple properties and rent them to other people. Now you can deduct enough of the mortgages (and rates? never asked), to not pay any tax at all on any income you earn, and if you’re clever about who you have living there for SOME of the time you can mask intent from the IRD and sell for profit that is clear of tax as well. That IS being attacked, but I know it is still going on.

    Prices are in general, reflective of the incentives related to the almost universal lack of a land tax . Property developers and bankers (those who are paid the interest on the mortgages) are the ones getting wealthy here and half of that description ain’t even here.

    Even the farmers (who earn the bulk of our export income) aren’t doing nearly as well.

    You can’t build an effective economy if you don’t pay attention to the inequality you build into it. Ten successive New Zealand governments have now encouraged greater inequality, and we’ve moved to the bottom of the OECD.

    Neo-Liberal dogma is working, but for whom?


    I discussed two things, one was tax on CO2 the other was a trade barrier to protect local industry, the sets are separate.

    Sweden, British Columbia for CO2 charges, Japan, China, the USA all employed or employ protectionist measures to build their industrial base. The destruction of the industrial base in the US followed the free trade movement there, and the US returned to domestic content laws. Free trade is what everyone ELSE has to do. What does the TPP have to do with trade?


  6. Regarding refrigerators- That’s the idea- only I think you would be surprised about those “flash features”- many are built with turn key components that you can get anywhere. Recall what I said about going after a French like voter. Instead of leading from the left and the heart with the science and getting labeled as well meaning but impractical/ extremist Climate change Chicken Littles, you approach from the voter’s right. You go after pocket book aspirational themes first, leading with the NZ manufacturing sort of nationalist, individualist, “let’s not trade middle class jobs building real things in exchange for McJobs at McMega stores.” It telegraphs to the proprietor and the skilled worker why they aren’t going to lose their job/ business and have to take a lower paying menial job that can’t be automated or outsourced. After you have their attention and are looking for a reason to believe what they’d like to believe- that’s when you give them the vision of a growing vanguard of green economies united via some sort of common carbon tax trade regime as I described. That’s a vision where NZ is leading the world, not a servile colony of carbon economies trying to be as servile to drilling and wealth extraction initiatives as possible in exchange for scraps the major players throw NZ’s 1%.

    The rhetorical counterattack from the right will be exceptionally predictable, and we saw a case here. They will point to their own Armageddon stories- essentially forced to say- Sorry Bloke- it’s better to exchange your skill for the certainty of a McJob than risk global war since puny NZ will be crushed by a mighty axis of unified carbon economies seeking to pulverize us with trade sanctions. It may be true that some countries are so madly addicted to carbon that they will refuse to accept that there must be surcharges on carbon industries and countries in order to send an effective price signal to the markets. These countries may indeed brand NZ as indulging in protectionist tariffs to create a positive trade balance through artificial means. My view is that most western democracies under progressive governments will not indulge in this chicanery.

    But before departing this subject, there is indeed a colonial meme that can get dusted off for good purpose here. It goes like this: What the carbon addicted countries are doing is nothing less than what Russia is doing in Ukraine or China in third world countries with resources. They are engaging in Carbon NeoMercantilism establishing a network of similarly carbon addicted colonies that will consistently make fossil fuel and emissions decisions palatable to the voters under the guise of maintaining a favorable trade balance and access to middle class lifestyle products that we could be producing here.

    We currently are one of those colonies. The Ukrainians understood what the Russian Loan meant. Look at the massive foreign financing of NZ enterprises. Our Gross National Income is going down as our GDP goes up. Why? Look at the national balance sheet. During the last decade, all of our GDP growth has gone offshore to pay foreign financiers. They have increased their money supply and essentially turned their trade partners into renters of the created money. Their assets are bought up and they become renters in their own country.

    Perhaps Kiwis have the guts to declare they will no longer be a colony- that we will be independent of this tyranny that is not just destroying Kiwi prosperity, but the planet’s climate.

    That sort of rhetoric broadens the Green tent to a different sort of voter. It is rhetoric that can be effective should we choose to become more adept at the literature of politics.

    DBuckley’s response to your policy framing is like a canary in a coal mine. It seems to me that until you get responses like buckley’s, you are talking about toy policies like the current Emissions regime which threaten no one’s current behavior.

  7. BJ
    good idea . . . . . . . . . .

    “we still need refrigerators and washing machines we start building our own…”

    With what is my problem question. We have no silicone production capability, our “brains” will drain to places with higher standards of living, and within a generation we will be left with fish from the seas and veggies from the garden This is the challenge, to be part of a global movement rather than a stand-alone rebellion.


    “The problem DBuckley, is that in the places that actually have these taxes, they’ve worked, and most places that actually protected their economies wound up with better balanced economies. ”


  8. OK.. I don’t see how that follows. If we don’t get elected we don’t have any real power to change anything at all. If it has to do with being “co-opted by the system” I’d have to respectfully disagree. We, being a political party, work within the strictures of existing governmental systems.

    If we were a movement we might consider active revolution of some sort, so there are limitations inherent in being a political party. I don’t think that they are particularly onerous here in NZ. We prefer the peaceful rearrangement of the deck chairs here.

  9. oops s/they/that/

    Once more, with feeling…

    If the goal is to attempt to head off climate Armageddon, that [as in, getting elected] may actually be the worst possible thing that could happen. q.v. Jimmy Carter.

  10. In the 21st century, it is every New Zealander’s god given right to buy overseas goods.

    Never said they couldn’t… but the cost of things will be dictated by the CO2 emissions for them plus the current costs. Which will make imported goods less competitive. A lot of people will get access to jobs and money that they do not have behind that change. Their lives get better, their food is cheaper, their house, school, food and other costs are going down. They get better control of their heating bills. They get a dividend check that represents the tax/tariff placed on the CO2.

    The problem DBuckley, is that in the places that actually have these taxes, they’ve worked, and most places that actually protected their economies wound up with better balanced economies. What has never actually WORKED is the sort of free-market fundamentalism that is evangelized here and believed in, in the same way a child believes in the tooth fairy, by far too many otherwise sane New Zealanders.

  11. Our FIRST job is to get elected.

    If the goal is to attempt to head off climate Armageddon, they may actually be the worst possible thing that could happen. q.v. Jimmy Carter.

  12. Since we still need refrigerators and washing machines we start building our own… again. THEY aren’t cheap, and probably don’t have all the trick bits but we don’t import anything to build them. Same goes for a lot of the stuff we need, can make ourselves and currently import because “it’s cheaper”.

    One can’t argue with the logic behind this… aspiration. But the unwashed wont accept it. We live in the information age, everyone can see that a quality, foreign produced washing machine costs $x overseas, and the locally produced one, is, well, not as cost effective.

    The reason that they can’t have the foreign machine has to be somebody’s fault; that’s the way the populace works. In the 21st century, it is every New Zealander’s god given right to buy overseas goods.

    Of course, if the actual world situation is actually and unarguably fucked, then the populace may be a bit more accepting of these sorts of things. But in a scenario where the sun comes up in the morning and the lights work at night, there is no evidence for the populace to believe that anything could possibly go wrong…

    The populace needs evidence. I’ve said it before; we need millions of people to be dying from sea level change. Millions.

    (Of course, by then it is too late)

  13. Dave – Manufacturing countries and corporations are, by and large, already supporting their internal producers and effectively violating the notional “free trade” you so love.

    Your end scenario is not however, plausible. There are several levels of difficulty with it.

    At that pint, we have no foreign currency income to purchase imports, and our dollar plunges in value as we have nothing to hold it up with. Our economy collapses, and we revert to fishing and garden veggies to sustain ourselves.

    Actually, we’d actually still have the milk and cows and ability to grow food in quantities large enough to feed ourselves… so there’s no requirement for us to all go to garden veggies.

    It wouldn’t be as profitable to do so intensively so the pressure on our lakes, rivers and streams would decrease and the relative cost of the produce would go down as we don’t get charged according to the “world price”, the local price actually dominates.

    Since we still need refrigerators and washing machines we start building our own… again. THEY aren’t cheap, and probably don’t have all the trick bits but we don’t import anything to build them. Same goes for a lot of the stuff we need, can make ourselves and currently import because “it’s cheaper”. New Zealanders wind up going back to work instead of swapping houses and selling each other burgers and imported shirts.

    The dollar plunging compensates for their tariff, it makes our goods and labour cheaper against the foreign competitor. It doesn’t “free fall” as you seem to imply… and there is no reason for it to matter in any case. The government of NZ is a sovereign state and has the right to issue its own currency for use within its own borders, backed by the work of New Zealanders. The bankers can take a flying leap.

    ” Little NZ, with less than 1% of global carbon emissions, and a similar factor of the global economy can never be the leader in such issues as carbon cost allocation as it is an internationally impacting proposal”

    False requirement. False reality. We don’t have to lead. We don’t CARE if we’re leading – and it is a good thing too because Europe and China are way ahead of us. We do “something” here and we’d have to go a fair way just to catch up… much less “lead”. We aren’t pulling our weight here, much less “punching above it” as we are so proud of doing.

    This is about New Zealand and its people. We’re on the wrong path for development of our economy, the wrong path to protect the environment of the country, the wrong path to prevent climate change, the wrong path to be able to control our own finances, the wrong path to achieve social equity and justice, the wrong path for the control of substance abuse, the wrong path for the support of children, the wrong path to have transportation that works through the next century.

    This government is so wrong about so many things that the word treason starts to fit, and yet most New Zealanders don’t have the first clew how things could be different because the previous labour government was barely different from this one.

  14. John

    My point is that IF we go to the voters in the next 10 months with the most extreme of the “plausible” scenarios, involving a tipping point that cannot be proven and in excess of what most professionals who study this problem will support, all we have done is paint a big bullseye on our party.

    People who would vote for us will vote labour instead and the wavering middle will look to the security of the devil they know once again.

    EVERY claim like that HAS to be defensible as sound science. No matter how likely you individually, or I individually, think that that tipping point actually is.

    You don’t think I understand? 🙂 That is actually funny… because I’ve proposed the exact same scenario to justify my own best guess at 1.7 Meters plus or minus 0.5. My reckoning is that we hit the instability later in the century with melt and ice movements are not complete at the end of the century… that the 1.7 is a point taken out of a rapidly rising sea-level.

    …but the word “glacial” isn’t also interpreted as “slow” accidentally. How much faster it can get??? I’m not sure… the scientists aren’t sure and you are not sure.

    This speculation has little to do however, with what we have to be careful to NOT do… which is to use speculative science to back our calls for action on climate.

    The public isn’t doing risk analysis any more than it is understanding the science, or how a tipping point works… and I don’t agree with your analysis of the “risk”.

    Our opponents aren’t going to let any opportunity to paint us as “dangerous extremists” pass by. Lets not offer them any easy targets.

    Our FIRST job is to get elected. We have to be able to defend the positions we take WITHOUT difficulty. This means we try not to set ourselves up to have to make complicated explanations of why we are preparing for a scenario that few scientists expect. Beware of “single-study-syndrome” too. The “ice that burns” is scary stuff, but it isn’t happening “right now” and we can’t run on it… we can’t point at it.

    The “art of the possible”. Not to bite off more than we can chew.

  15. Wouldn’t really be a problem would it.

    If NZ unilaterally put a tariff on imports to offset carbon production in the manufacturing process, how long would it be before manufacturing countries put a tariff on our products, especially those derived from bovine products, to offset the greenhouse emissions inherent in their production, pricing our exports out of the market. At that pint, we have no foreign currency income to purchase imports, and our dollar plunges in value as we have nothing to hold it up with. Our economy collapses, and we revert to fishing and garden veggies to sustain ourselves.

    To some, this is the Green Dream that they regard many “greenies” as espousing. Little NZ, with less than 1% of global carbon emissions, and a similar factor of the global economy can never be the leader in such issues as carbon cost allocation as it is an internationally impacting proposal. Being the first to give women the vote, the first with a 40 hour week, the first with . .. . . . . . . . doesn’t really matter because these were all internal issues, we are too small to challenge the world by a first in economic warfare, we don’t have the troops or munitions to even have the world take notice that we did it. Our entire economy is smaller than that of many American States, and so beneath the notice threshold, mind-share for such initiatives will never be achievable.

  16. You missed my point entirely. This is about speaking practically. This is about dollars and cents issues that makes NZ middle class jobs viable in the global economy.

    The saying about the French can also be said of Kiwi voters: Their hearts are on their left and their wallets are on their right. What I proposed speaks to both sides. The Briford Trailer proprietor watches his competitor, Elite Trailers, rid himself of his kiwi welders and ship his designs overseas to be manufactured in china. Maybe the Briford guy votes National because they are “more friendly to businesses”. We need to give a reason for National voters to vote for the Greens on economic issues. This is one.

    Because of China’s accelerated increases in Carbon emissions, the price of the Chinese trailer from Elite seems cheaper than it really is. Inside it is the hidden cost of accelerated carbon emissions. Isn’t it better for the NZ economy to keep middle class manufacturing jobs here rather than export them? So maybe the Briford guy thinks all the CO2 stuff is all well and good, but at the end of the day if the Greens are helping him outcompete the Chinese built trailers, you have a much more receptive audience.

    So is would the surcharge on the Chinese trailer be a provision for a loony extremist scenario? You misunderstand the Methane Ice Tipping event that Wadhams was describing. His Nature article was peer reviewed and shows that it is plausible within this century. Arctic scientists agree with him. Now, let’s just look at that in economic terms. The cost of that event alone would be approximately 60 trillion dollars. (source: U. of Cambridge) That should get everyone’s attention.

    Your rhetoric of your response was confusing. Your started by saying that most scientists claim that scenario is unlikely. Sure. Wadhams himself says it is unlikely. But this is the same sense that a Bushfire threatening a third of Sydney’s suburbs is unlikely. But it is plausible so it is something that responsible government officials need to prepare for. Having your children struck by lightning is wildly implausible, so it is silly to equip one’s children with lightning rods.

    Your proposition is that since National likes to play the game of conflating unlikely with “wildly implausible”, we ought to concede the point. In so doing we also concede the carbon global economy is “cheaper”, when one near term bill for it is 60 trillion dollars- with the bill coming due plausibly within our children’s lifetime.

    That’s science. But the point is that science is irrelevant if the voter would prefer not to be convinced. As I spelled out in the case of the worker or owner at the Christchurch trailer manufacturing company, believing the science gives them a better chance of keeping their jobs.

    That is the sort of proposition we need to work into our message.

    If you heard a wistful voice from some naive follower of an ideological movement you were quite mistaken.

    That’s a voice speaking of the practicalities of hardball politics.

  17. That story I linked described the views of the arctic research professionals… and most of them don’t expect the tipping point effect needed to hit that much sea level rise… not in the next 86 years anyhow. It is “possible” and I don’t disagree about needing to act, but when we go into a campaign the rules we have to follow are pragmatism and plausibility.

    We can’t push a UBI, the country isn’t ready. Most people do not believe or understand that private banks create the money we use. Same thing with the “tariff” word. Technically you are right. Won’t matter. That’s what it is going to be called. Important thing is that it is defensible at the WTO… even if it should not need to be. No way I buy the neo-liberal lunacy either, but being able to defend it in the existing situation is important.

    Similarly, while the 5 meter scenario is “plausible” the current scientific literature and most of the experts lean towards it being unlikely. If we promote it as the reason we are doing/proposing/requiring things to address climate change we will simply make it easy for those who want to paint us as extreme and dangerous, and we will lose votes.

    This isn’t a movement, it is a political party. We only get things done if we get votes and to get votes we have to pay attention to what the people of the country are able and willing to consider. If we were a “movement” the our actions could be somewhat different. This country desperately needs to be rid of National and Key, but it doesn’t realize how badly it is being served. Perhaps it needs to get bad enough that his own people realize what he is, but at that point NZ as we knew it will be long gone. Ideologues and idiots rule here, and there is little hope if we make ourselves easy to dismiss.

  18. Let’s deal with the facts, not opinion. Arctic scientists claim that the methane ice tipping scenario where sea levels rise 5 meters by the end of this century is plausible. (source: Guardian)

    Though another Hurricane Sandy is not likely in the American East again does that mean that the US east coast should not build up its emergency funds reserves and preparedness for the next storm? Of course not. Though it is in the single digits percentage chance of occurring, it is prudent to build up our emergency reserves and to adjust our infrastructure plans so that the worst effects of extreme weather are minimized.

    I don’t believe neoclassical theory that tariffs are a dirty word. Nonetheless, this does not meet the definition or behavior of a tariff on several scores. Firstly, the taxes are applied both to domestically and foreign produced products. Secondly, the surcharges are not protecting domestic markets since there would be no such taxes on products from countries that are reducing their emissions. Lastly, the fees recover the hidden carbon costs of producing those exported, imported and domestically produced products- Costs that will be applied to the emergency fund. In one implementation, the fees could be contributed to a UN emergency fund. So there are several arguments that would stymie a WTO objection.

    It is true there would be disruption as the world moves to a carbonless economy. Some countries will move before others, and will have not much company. These countries can and will survive just fine without the carbon based economies. The proposal I presented is one pathway towards a global autarky of green economies. Some nations need to lead the way, and NZ can be one of the first such nations.

  19. Let me fix your fix.

    Since the principle way of handling the resulting money is to GIVE IT BACK TO THE VOTERS, they are free to spend it on whatever alternative costs them less in gross CO2 emissions. The ENTIRE point of this is to put economic pressure on the CO2 emitting folks that DOES NOT APPLY to those who manage their affairs so as not to emit.

    Since we DO have choices and will have better ones with Green policies, this will lead to people choosing and being able to choose, lower priced electricity suppliers. They provide electricity from renewables right now. A little more expensive than the high carbon, but not a lot more.

    Of course a large increase in demand for their product will affect that too. The entire privatized electrical generation system is wrong though and the use of regulation of the market until that mistake is corrected is expectable. The goal is to make carbon-emitting power a money-losing proposition. The generating companies and then the government (once they are returned to their proper owners) will make investments appropriate to the need for cleaner energy.

    The problem here is the assumption of the power company asset sales and privatization being OK, and continuing unchecked by reality. It isn’t and it won’t.

  20. But the first step, because it is already in place, and easiest to address, is to put teeth back into the ETS and lay that cost on the carbon emitters.

    Let me fix that for you:

    But the first step, because it is already in place, and easiest to address, is to put teeth back into the ETS and lay that cost on the voters.

    All costs eventually end up on the consumer. Where the consumer has a choice of avenues they can take, such a cost might be called a price signal. Where the consumer has no effective choice, then its just a tariff. Or tax.

    As an example, lets assume that the cost of fossil electrical generation was to suddenly have a significant ETS element added to it. What would be the result of that? Over 70% (including all retail electricity) of all power is traded on the spot market, so the most reasonable result is that the average price of spot market electricity would rise [footnote 1]. This would lead to the retail prices of electricity rising across the board.

    As retail customers, what choices do you and I have to influence carbon production through our buying decisions? The only impact we can make is to buy less electricity overall. You can guess which parts of the populace that will hit the hardest…

    (Of course, you could alter the electricity system so that consumers do have real choice, and thus give them market power, and having done that, then an ETS might make good sense)

    1: You could argue that the ETS will influence the electricity supply industry to reduce the use of fossil fuels, and thus the rise in costs would not occur. But that would be a flawed argument. It is in the electricity industries interest to increase their costs, so that they can increase their prices, and thus whilst showing the same returns (ie they can claim to be not “price gouging”) actually return more dollars to shareholders. Electricity demand is fairly price inelastic, so utilities are not opposed to prices rising. Especially when they can blame it on “The Government”.

  21. At the prices prevailing as a result of this government’s policies, even if the ETS were fully applied it would make no difference. Where such things DO make a difference the charges are much much higher (as in 100x, 2 orders of magnitude). The changes in the ETS that the government put in place in its first year, over the objections of Labour and Greens, were such that it could not possibly make a difference.

    Adding in the GST surcharge you suggest amounts to a tariff, and we should not attempt to avoid the WTO issue by calling it something it isn’t. The thing is that it is not a differential applied to the other country owing to its being another country, but owing to requiring its production to be on the same rules as our own. Hence it is NOT discriminatory and the WTO should not become involved. I might simply base it on the net CO2 emitted in the production of and use of the product. I have always supported this idea. It is a good one. You have my vote if it comes to that.

    But the first step, because it is already in place, and easiest to address, is to put teeth back into the ETS and lay that cost on the carbon emitters. We can also accomplish much the same thing if we require the people selling their high-emitting goods here to purchase credits from our approved ETS sources.


    Even I don’t expect 5 meters in THIS century. That will take a bit more time, maybe to 2150 :-). I have a fair amount of trust in numbers like 1.4 +/-0.5. If we offer a number as a basis for our policies it has to be believable for the rest of the population, and that means the science supporting it has to be reasonably close to mainstream. Five would be an outlier and FAR too easy to attack even though we can easily go well above what the IPCC has so far described.


    The basic idea is a good one and has some twists I hadn’t considered, and I am glad that someone new has joined us here.


  22. Let’s be practical and admit the ETS is not changing emissions behavior. National dances on the precipice as if eventualities like a 5 Meter sea level rise within this century is impossible. They urge voters to party now, for that tomorrow may never come. Yet arctic scientists know this scenario is a plausible danger caused by our inability to change our emissions behavior.

    In the spirit of being practical, lets be realistic about lining up significant economic allies who will materially benefit from whatever policies we propose. Graham mentions there are adjustments that a government can make to influence behavior. Let’s look at the GST. What if there were a surcharge on products from countries that are increasing their emissions. Say that surcharge was proportionate to the damage caused to CO2 sinks (deforestation), or the increases in Greenhouse gas emissions. Say these Emissions surcharges were significant enough to cause consumers to buy NZ products or those produced by other well behaved Green economies?

    What this buys you is support from voters who are watching NZ jobs being shipped overseas. National calls this green protectionism, but it is nothing of the kind.

    Considering a 5 meter rise in sea level alone, this would meann a massive inundation of commercially productive rural and urban land. Large portions of Christchurch would be underwater, as would nearly all our coastal tourist destinations. All of our port cities would be forced to undertake massively expensive mitigation strategies to protect against tidal surge events. The impact to the NZ economy will be devastating.

    If countries insist on continuing their behavior that will lead inevitably to such scenarios, they should pick up the bill. Those who are being good citizens should not be forced to pay for those behaving badly.

    Such a market signal could be phased in gradually so that businesses could have time to adjust their business models.

    I can see giving exceptions for products that reduce emissions regardless of their country of origin. This would target solar and wind generation products, electric vehicles, and energy saving products like insulation. Obviously tax policy on domestic products also would have to be adjusted. Domestic production of fossil fuels and other products responsible for emissions need to have surcharges placed on them regardless whether they are sold locally or exported.

  23. For foresty the ETS is a disaster.
    Any trees planted now are subject to the ETS. They earn the (paltry) credits now and then are obliged to return them if they cut the trees or if there is a fire.
    It is obvious that the price of carbon will increase in the coming decades as the effects of climate change become more apparent. The cost of the credits required to harvest the trees will go up.
    Trees have become a liabilty.

  24. Without a change in Government there won’t be any change towards sustainability.

    Our current Government’s biggest chance to win the next elections is to demonstrate economic success, at the expense of the environment and future generations, hence they will support (directly or indirectly) the Dairy Industry and dairy conversion (at the moment via intensive farming = unsustainable), mining and fossil fuel exploitation.

    They’re successful in scaremongering New Zealand’s population with job losses, falls comparisons with a sustainable Europe, and with misinformation.

    There are many ways to support renewable energy and a low carbon society (one of them being a working ETS).

    Currently, due to the dairy boom and lack of responsible environmental (see NZ’s water pollution problem) and emission standards (no emission limi for SOx on coal boiler plants, etc.) NZ’s fossil fuelled Dairy Industry is booming.

    Example of recent or future coal and gas fired dairy plants with a thermal capacity (boiler output) in the excess of 200MW to 300 MW (about 4 to 5% of NZ’s heat production).
    – Fonterra, Darfield
    – Yashili, Pokeno
    – Synlait, Dunsandel
    – Westland Dairy, Hokitika
    – Fonterra, Pahiatua
    – Oceania Dairy, Glenavy
    – Gardians, Balclutha
    – etc.

    These plants will burn coal/gas for the next 30 to 40 years and they’re putting a huge burden on our children.

    …and they had an economic option: energy out of wood and biomass! …with all it’s social economic and environmental benefits.

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