On Labour & Green Party climate policies

Labour released its climate policy yesterday.

Already in the election campaign I have fronted on climate change in a number of public meetings, with Labour (and National, and ACT….), with several more events still to go. Inevitably one of the questions asked is – how might Green and Labour climate policies reconcile if you are required to form a coalition government?

The answer is the same on climate policy as with all other policies: it will be a numbers-oriented negotiation around a table. Weighting will derive from the democratic election verdict.

But as we go into the election campaign, there is no doubt in our mind that the Greens’ policy reflects a more acute sense of urgency, a greater acknowledgement of the magnitude of the challenge, and a more resolute determination to begin the economic transformation to a carbon-neutral society.

There is a fair bit in common between Green and Labour climate policies.

  • A national risk assessment, as called for in the ‘Wise Response’ petition, including the need for an adaptation strategy.
  • An independent climate commission, one that reflects the British model that is enshrined in legislation and proving to be so effective.
  • Five-yearly carbon-budgeting.
  • Measures to ensure a just transition in which households, firms and farms that are genuinely participating in response to incentive are properly supported.
  • A suite of effective complementary measures in energy and transport, investment, agriculture and forestry to assist in mitigation.
  • More constructive and purposeful participation in the international negotiations for an effective global treaty.

There are differences, however, in the end-goal, the speed of change and the method.

  • Labour speaks of a “more sustainable, low-carbon, future”. The Greens speak of ‘net carbon-neutrality’. Ours is more specific and more ambitious – an imperative, essentially.
  • On timing, we specify 2050 as the target date. Labour appears to be a bit more indeterminate.
  • And on the method – the economic instrument – Labour would retain the emissions trading scheme (ETS), while the Greens would switch from a market to a fiscal mechanism.

Green support for the original Labour ETS was always predicated on an understanding that the scheme would be strengthened from the beginning in 2008. But National’s gutting of the scheme in ’09 and again in 2012 has effectively killed the scheme. It has gifted New Zealand unites (NZUs) to polluters and halved their surrender obligation to cut emissions. It has allowed New Zealand businesses to buy cheap foreign offsets and pocket the more valuable NZUs they were gifted (a process known as arbitrage). It has discriminated unfairly against forestry in favour of business and farming. Essentially, the ETS encourages emissions.

So, the Green Climate Protection Plan to dismantle the ETS and introduce a carbon tax will ensure that carbon polluters take responsibility for what they are doing, and face a strong inducement to transition away from fossil fuels.

Labour would “continue with free allocations for carbon-intensive industries exposed to export competition, such as steel and aluminum”.

The problem with this is that it presumes a problem of necessary industry protection, and integrates that presumption into economy-wide policy.

In contrast, the Greens would externalise the problem and, to the extent that it genuinely exists, invite individual companies to apply to an appropriate body (either the Commission or the Environmental Protection Agency) with proof of potential hardship, before relief is granted. This preserves the integrity of the central component of the Climate Protection Plan. It will, in short, be more effective.

On agriculture, Labour would gift free NZUs to 90% of the sector’s 2005 emissions, – about 37 m.t. CO2-e each year. That means only 10% will be exposed to a surrender obligation, of which half can be in the form of doubtful international ‘hot air’ credits. That effectively means $60+ m. in 2016 for greenhouse gases from NZ agriculture. The Green Plan will tax dairy at $12.50/tonne, and let the Commission determine when other agricultural sectors should participate.

Notwithstanding these differences, Green and Labour climate policies are clearly headed in the direction of emissions reductions, rather than the ever-increasing emissions growth the National Party will bring. It is now clear to voters that a new government will take the issue of climate change seriously.

To be continued – on the hustings, and especially from 21 September 2014.

15 Comments Posted

  1. @bjchip
    You’ve missed my point. What Kennedy desribes as far as a system of protection for emissions intensive trade exposed firms is what happens now. Firms that apply and qualify are protected from up to 90% of the emissions price. I’d like to know how Kennedy thinks the greens’ approach to this issue is significantly different (to what exists now or what Labour’s original ETS design did that they propose to restore). What is going to be different about the result for treatment of EITE industry?

    Allowing overseas units into the scheme lowers the price of emissions. Agree that a low emissions price is an issue, but not one you can address by altering the industry assistance settings.

    Agree firms passing through costs that don’t exist would be an issue. But it would reflect a problem with competition in the relevant sector not with environmental regulation.

    I doubt carbon tariffs will ever happen. Determining effective carbon prices in all the countries we import from would be incredibly hard. Take a look at the Aust Prod. Commission work on this. Then you have to determine the appropriate price uplift for given products e.g. what is the carbon price content of a piece of imported hothouse fruit? And you have to decide what to do about very high effective carbon prices due to inefficient policies overseas. A shaky technical case at the WTO, plus the risk that it is illegal under WTO rules. I assume these are the reasons why it is not proposed by the greens.

    Labour govt announced a Carbon Tax scheme in circa 2002. They didn’t implement the price but they did implement an industry protection policy – because this had to be in place before the price was introduced. See here for more background if you are interested http://www.mfe.govt.nz/publications/climate/policy-review-05/index.html. The mechanics of this were basically the same as what Kennedy describes, what exists now, and what labour proposes. Which brings me back to my original point. Why reinvent what has now been reinvented twice at great cost of time?

    The emissions price and levels of industry protection under the NZETS can very quickly be changed without the need for yet another massive policy and legislative flip flop. Time is too short for longwinded reform processes.

  2. Well, yes, except that Russel talks about growing the renewable energy sector and exporting our prowess. How does he think the rest of the world will go about the business of getting emissions down to zero? What sort of world will that look like? Does making our economy dependent on an unsustainable global society sound good? Russel doesn’t have a solution to global warming, but at least it’s sort of in the right direction. I understand the political realities but I’m more concerned with the physical realities. We’re already virtually certain to hit 2 degrees this century, which looks to be at least double the dangerous limit, but 2 degrees has been deemed the target for so long that reality is going to take a long time to hit home. Solar and wind aren’t going to make much difference to this reality and will cause other problems.

  3. While we may have the information and sense of urgency to make moves on climate change, the majority may not. If we want to make people look we don’t lambast them with negatives but put things in a positive framework, such as Russell is. The negatives will be shown in news items about troubled places so lets look to solutions. If we don’t do this in a democratic process we create backlash and situations where the power hungry who may be the root cause, manipulate and get greater traction.

    It took about 15 years to get Nuclear free here. 5-10% opposition was hard going then suddenly 50% after about 10 years, and then a clear majority. We are just sneaking up to the 50% but more concerned about their economic livelihood and poverty, so again Russell is hitting the right buttons. We need to frame things so people see the growth model is less important than the sharing and survival model and fear isn’t the way to go.

  4. Saw Russell on the Climate Voter debate. He did reasonably well but I wasn’t too impressed. The Maori party representative mentioned the most important point; that we need to change our attitudes and practices, first and foremost.

    Russell said something about the “opportunities” in climate change. A high tech clean New Zealand, eh? He seems to be steeped in the old paradigm but I guess it’s political expediency. Thing is, how do I know what he really thinks?

  5. I will say also that “There should be no compromise on protecting the only environment we have. Labour’s weasly words of “more sustainable” are just a nicer way of saying “less unsustainable, but still unsustainable”.

  6. http://www.theguardian.com/commentisfree/2014/sep/02/limits-to-growth-was-right-new-research-shows-were-nearing-collapse

    While this is not news, it is one of the most important pieces of information published currently.

    In 2008 the CSIRO reviewed “Limits to Growth” report and found Scenario one ( the worse case) to be right on track. No effective mitigation had been put in place in spite of 36 years of warning.

    The John keys of the world don’t give a stuff as greed drives them, not regard for people nor the world that spawned them.

    For those who have little back ground a basic explanation about LTG is well put together here

    http://elmhcx9.elmhurst.edu/~chm/onlcourse/chm110/labs/limits.html.

    Over the top? – I doubt it.

    Magic and immaculate conception to one side.

    Mankind has exhibited blind greed and a cacophony of ignorance. Implications of the consequences are now better understood. The future environment looks likely to be more hostile that was detailed in the original LTG discussion.

    IPCC has no answers and the mitigation plan for holding temperature to 2 deg C ( for a limited period only) contains a wish list without means to implement it. So the mitigation plan for a 2 deg C containment is but an encouragement to try with failure assured. But try we must if any human survival is contemplated.

    One of the drivers for our journey into the dark depths of consequence is the political systems that allow banks to drive exponential wealth accumulation into the hands of a few. Private banks and bankers need reigning in.

    State collective responsibility controlling the banking system is avoided by most political parties in NZ.

    One party has consistently stood alongside the concept of a state bank issuing money and not the private sector. It is but a minor party

    Labour has touched on it from time to time and the Greens are right in the printing money for common good. The private banks do it all the time for their corporate wealth.

  7. Uh… no. What happens under the current regime is the government accepts foreign credits, allows full charges to customers, subsidizes emissions and fails to accomplish anything. Basically it has constructed a mechanism for fleecing the taxpayer. Labour might improve on that but I doubt that they would have much better luck. The mechanism exists and it is VERY clear.

    As for the previous “Carbon Tax” can you explain exactly when that went into effect?

    With a tax we leave it open to tax any IMPORT that has no carbon cost comparable to our own. This is a measure easily within the guidelines of the WTO.

    That this provides for higher levels of employment of New Zealanders is bonus.

    That it makes it more expensive to buy “stuff” is not a great disadvantage if it causes us to make more of that stuff here. The economy becomes more diverse… and that is a good thing too.

    You can never do “just one thing”.

  8. Hi Kennedy

    Your plan for emissions intensive industry will not result in a different result than Labour’s (or even from National’s for that matter).

    You state that you would “invite individual companies to apply to an appropriate body …with proof of potential hardship, before relief is granted”

    In order to prove hardship companies would need to submit financial and emissions/energy use data and the government agency would need to set thresholds for hardship at which it would provide relief and run a process of auditing the information.

    This is precisely what happens now under the ETS (free allocation) and what happened under its predecessor, the Carbon tax (Negotiated Exemptions – “NGAs”)!

    Please explain how your approach would result in a different outcome.

    A couple of other things to consider:
    -Why not just institute a fixed price and phase out existing support over say 5 years? Why spend a huge amount of bureaucratic effort to recreate and run tests for industry relief. This will slow the introduction of your new plan

    – By offering assistance to trade exposed industries and exemptions to parts of agriculture you will again be in the situation where its really only service industry and households paying the emissions price. Perhaps just start with a low price and ramp it up = providing assistance to everyone?

    If you are bent on dishing out assistance because you are scared that industries will close, look at the relative merits of providing support directly to workers in emissions intensive industries whose closure (full or partial) can be plausibly linked to an emissions price. You could buy an epic amount of income support and retraining for green collar jobs with the billions spent on free allocation/exemptions.

    Good luck!

  9. In an economic analysis of the loss of oil by climate change reduction or by Peak Oil shortage needs a total rethink of resource usage and a change of distribution of productive agricultural land. This means an immediate change of fiscal pressure to push land holdings to a far wider community base – along with local seed distribution etc. I believe moving away from income tax to land value rating as the main source of revenue for social purpose. Land holdings would become smaller and financial institutions would have to be looked at in the light of new imperitives. This has already happened in a model test forced on Cuba at the end of the cold war. http://www.powerofcommunity.org/cm/index.php
    The site above has a video that many community groups still have that explains the changes we face. They had a drop of 90% of their fuel so maybe we have some leeway. Food for thought.

  10. An article that shows the need for urgency in the resolving of climate change.

    The Green position is the only sane position and as the severity of weather events increase so will the impact on the world economy.

    If we read between the lines our very global distribution could be compromised.
    With the temperature only at 25% the target being looked at there are rogue sea waves 40m high, twice what they used to be and shippers are already aware it will get worse. Air turbulence is expected to double. The cycling of evaporation systems will see more torrential rain that beggars crops and even removes the topsoil.

    And this government wants to put deep sea oil rigs out there.

    http://www.nzherald.co.nz/environment/news/article.cfm?c_id=39&objectid=11312773

  11. I’m concerned that the fast reducing ‘energy profit’ from our various extraction activities is reducing fast enough that we’re unlikely to need to discuss mitigation as much as adaption to the lower net energy future we appear to face – a discussion notably absent from policy discussions. Perhaps the Wise Response risk assessment will alert politicians to this fact.

    “The rising cost of energy will transform the global economy, probably within the next seven to ten years. What’s happening, why and what does it mean for the world and for New Zealand?

    In its current form, the industrialised global economy is utterly dependent on cheap energy. Without it, virtually nothing can happen. The great bulk of this energy comes from non-renewable fossil fuels. Transportation and manufacturing depend on oil and gas, and a high proportion of electricity generation processes burn coal, oil or gas.

    So, in creating tomorrow, it is obvious that we need to be very well informed about the future for energy, and especially fossil fuels.

    Unfortunately, published information about the global outlook for energy is riddled with contradictions and confusion.

    Most of this is due to deliberate manipulation and spin, as producers of oil, natural gas, and coal work continually to maintain investor confidence and to reinforce their very strong political networks. Politicians, economic advisers, investment houses, and banks all welcome continual reassurance that the outlook is for reliable supplies at affordable prices.

    This position is actually false, irresponsible and dangerous. Some of the confusion also arises from interpreting short-term variations in energy prices as medium and long-term trends. We have a current example – oil and gas prices dropped during the ‘financial crisis’ recession – but the medium-term trend is still sharply upwards.

    Another current example of misleading interpretation has arisen from the recognition of large shale gas reserves that can be accessed by fracking. In the United States, the rush to exploit these resources – stimulated by pre-recession high prices – resulted in a short-term oversupply of gas into a recessionary market. Prices plunged, leading to public and political perceptions that large supplies of gas could be supplied for many years at moderate prices.

    These beliefs are false because shale gas can be extracted profitably only at much higher prices. Despite huge reserves of gas being potentially available through fracking, all are accessible only at relatively high cost. Hence, these reserves are not sources of low-cost future energy.”
    Read the full article by Dr Wayne Cartwright here: http://bit.ly/1pKHXZx

    See also ‘Oil limits and the Economy: One Story, Not Two’ http://bit.ly/1kS6L2o and articles 25-34 from this inquiry: http://bit.ly/1qC0ab7 for further corroboration of Dr Cartwright’s position.

  12. There should be no compromise on protecting the only environment we have. Labour’s weasly words of “more sustainable” are just a nicer way of saying “less unsustainable, but still unsustainable”. Labour is not interested in abandoning economic growth or interested in taking the problem seriously, despite what Kennedy believes. Taking the problem seriously involves a rapid reduction in emissions to zero (2050 is far too late). That will effect an economic hit but the environment underpins EVERYTHING we do and ALL life. No compromise.

  13. It would be good if adaptation strategies were a bit more thoroughgoing than the usual simplistic don’t-build-on-the-high-water-line things and it will have to be (if they ARE more thorough) something we ease into, as there is no easy way into a future that has 10 or 20 meters more sea level than we have now.

    It would also be good if adaptation strategies recognized the risk that trading partners we have today may not be around to trade with a century from now. Their refugees may keep washing up on our shores but we get an awful lot of stuff from countries that are MORE vulnerable to any substantial change in climate than we are.

    This underpins an argument for a more diverse economy that is entirely separate from the nominal argument that the more diverse economy is healthier, more robust and more sustainable. It is all those things and it is also more likely to survive a major climate event.

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