Cows in a field

Government tinkering with a failed climate policy

There is a growing consensus that National’s climate policy is not only failing to stop pollution, but is actively encouraging the growth of highly polluting sectors of the economy.

For all the ambitious talk by the Prime Minister at the Paris climate conference, National has shown little appetite to implement real measures to transition New Zealand towards becoming a low carbon economy.

The government is asking for feedback from the public on its principal climate change policy, the Emissions Trading Scheme (ETS), and this has encouraged a fair bit of critical analysis of the government’s approach to climate change.

The government’s review of the ETS, critically, has refused to even consider the option of requiring agriculture to reduce climate damaging pollution, despite the sector accounting for almost half of New Zealand’s greenhouse gas emissions.

Westpac’s Investment Bank released a damning report last week on the government’s climate policy. Westpac argued that excluding agriculture provides an implicit subsidy to the sector, paid for by tax payers and other businesses.

Westpac argues that these subsidies unfairly advantage polluting sectors like dairy and have the potential to “skew the New Zealand economy” towards agriculture.

National's policy mean more cows and less investment in the clean economy
Expect more cows and less investment in the clean economy under National

The government continues to argue agriculture shouldn’t pay for its pollution because it risks making the sector uncompetitive internationally. This argument, however, ignores the history of New Zealand farmers who have thrived for 20 years without subsidies, while competing against countries that have maintained them.

The latest signal that things are going backward since it signed the Paris climate agreement has been the calls from the electricity sector to keep the Huntly coal-fired power plant open.

Genesis announced last year that Huntly would be closed in 2018 because of high costs. At the time the Prime Minister gloated that the decision was, at least partially, the result of pressures from the government’s climate policy (the ETS). The reality is that the government has whittled away any incentive to cut pollution in the energy sector by allowing them to pay for one tonne of carbon pollution and get the second tonne free. 

Huntly Power station - New Zealand last big coal-fired power plant
Huntly Power station – New Zealand last big coal-fired power plant

If the ETS provided a real incentive to invest away from fossil fuels we would see the industry looking to new market and renewable energy solutions.

The Green Party is continuing to argue the government should scrap the failing ETS, and replace it with a simplified, revenue neutral, carbon tax. This would return tax revenue to businesses and households through a cut in the corporate and income tax rates.

The Green Party policy would give all New Zealanders a stake in reducing climate damaging pollution.

The Green Party submission on the ETS review  can be read here.

 

14 Comments Posted

  1. PS We need a campaign to stop farm sales to foreigners so a real economic correction can happen, and the banks take some of the loss from their bleeding the economy to date. Seymours suggestion to sell Landcorp should be countered with the suggestion of using it purchase defaulting farms and reallocating them to people with skills and training to grow more climate friendly produce – a chance for our young here and overseas to contribute to the path ahead. Where is our imaginative responses? Growing fiber to replace nylons must be a winner. Listen for the knockers!!

  2. Sorting old papers lately and I have found some letters I sent in the mid 80’s where I was predicting health issues with air quality damage, based on good science at that time. I got a lot of very luke warm response from politicians of the left and right, and little support from other groups. I was suggesting a simple monitoring system measuring air in many places, then corelating this with health data by geography. As I was being concerned at new virus adaption related to acidity, I felt it was a call to sort things. Now we have super bugs and more to come and still little being done to change life style direction. The people of the earth have lost the plot and I believe the research I was looking at today. One aspect was acidity would dull out parts of the higher brain thinking in 2/3 of the population at it’s worst. It makes it hard to get a political majority in that sort of scenario.
    I consoled myself to the fact that I would just have to plod on to do the best I could in lifestyle and in influencing others, until populations fell. A large number of people cannot see their impact properly, and unless questioned won’t even try. The burning of witches was around one other natural correction. The difference is the number of Green supporters is still increasing and a gradual increase is probably more healthy and long term. Those ignoring and calling looney left are in fact the show ponies who just want to clip the ticket, maybe even want some of the old lifestyle security back, but don’t really understand or want to except a finite planet. The difficulty is the more you want to focus on your basic lifestyle, the harder it gets as the abuse of the remaining resources gets pushed. I have always thought a full constitution that gauranteed the rights of clean habitat etc. was essential but even the Greens are slow to get there. I think now as I watch the northern hemisphere falling over, it is time NZ got very defensive of what we have so the dickheads don’t get too entrenched or move here. We have a paradise in comparison with most of the world but we let too many of the wrong outsiders in to live.
    I still believe the Greens have an important role here and I suggest that Jeanette Fitzsimons was great because she had a real vision of the urban rural balance. The general population are doing the right thing, look at the Able Tasman beach purpose, local action stopped selling potential wetland reserve in Hamilton, the mindless intensification of Auckland is being slowed by Aucklanders, the provinces need the people and not the immigants we have been getting. The TPP and climate protests are real so the show ponies who just use labels are loosing their call, and the press with all its lack of real data and focus on the glamour world are spurring on the sharing of information at a community network level. Even Act think they can dress up in Green to get some credibility, but the young are being more Green, I trust that.

  3. I predicted this when Sue Bradford led us to the brink of complete electoral annihilation.

    This is the battle James has. I don’t envy him a tad, it is a long road, but Sue is not alone in her actions to put personal crusades above party electability.

    People are happy to pay to pollute *IF IT DOES NOT COST MUCH*

    We are, of course, violently agreeing on this, but this leads to the question of what is “too much”? In these days of petrol being essentially free with a box of corn flakes, one doesn’t have to look back very far to see that folks were accepting of paying $2.20/L, now its $1.89, I haven’t heard of anyone suggesting 30c/L carbon charge, folks a were suggesting 3-5c/L. We’ve seen that an order of magnitude more doesn’t cause mass migration to electric vehicles, just a lot of whining.

    Energy is where most people should be hit with carbon charging, however achieved, either direct on petrol and electricity bills, or indirectly through costs of stuff going up because the embedded energy in the stuff, be it a banana or a flat screen telly.

    I remain convinced that any for of reasonable carbon charging applied that consumers end up paying is going to be fairly ineffective, even with smart ideas like the redistributive model BJ’s championed.

    What I believe our government needs to do is to get on board with the idea of moving big carbon emitters to less emissive (or better still, zero emissive) schemes. In my opinion, the targets should be electricity generation, and industrial and commercial heat. The government should use its power to directly influence how these sectors emit. For example, for electricity, create the right incentives for generators to move to renewables, perhaps by instructing the EA to alter the priorities on how it allocates generation resources, Tear down the barriers to building renewable generation. Tax incentives. These mechanisms can change how generators emit. Adding a carbon charge is far more likely to have minimal effect.

    And as an aside, lets not forget that when we do move towards electric vehicles, we’re going to need a lot more electricity, and it needs to be greener electricity than the highly efficient petrol engines its replacing.

  4. Well – since my storyline involved the Labour Party going much further down the road to alliance than I have any reason to expect them to travel, I think your predictions are not in danger. 🙂

    I do think that an alliance with Winston leading would be sufficiently potent to make the needed difference… but we aren’t getting over the loony left label easily. It would take his influence to overcome that.

    Being correct is no defence against the labels. The only defence is for the media to question the labels when they are applied, and they are at present all too happy to ignore them. Key runs against the Greens every single day. Never misses an opportunity. Our responses are never real-time or reported in the same way.

    The problem is that New Zealanders are, by and large, entirely wrong about trade, entirely wrong about economics, entirely wrong about what the future holds and entirely wrong about the Greens.

    I predicted this when Sue Bradford led us to the brink of complete electoral annihilation. I said then it would be 10 to 15 years before we could recover from what she did to us, and there is no doubt that our travails since were all coloured by her expenditure of our political capital.

  5. Sorry to disagree with you DBuckley but I have explained HOW it could happen and you have to address that

    Only too please to explain why: The reasons are all to do with swing voters.

    Elections are won and lost with swing voters. No left winger is going to vote right, and vice versa. The only votes that matter are the swingers. A government minister even gave this thinking away by talking about “relevant voters”.

    Many folks underestimate John Key and his advisors. Many dismiss Key as only being relevant to the 1%. They couldn’t be more wrong. Key has spent almost his entire time in government persuading swing voters that they are actual National supporters. At all levels of society. First increase in benefits above inflation in decades was a masterstroke: Key told those folks on benefits that his government does care about them, in a way that no government for years had.

    Thus thanks to a long term approach to power, I believe that Key has changed the game, and that I don’t believe that any opposition currently has the numbers to overhaul the right wing alliance.

    There is a second problem which prevents a left alliance being attractive to voters, and that is the perception that the Green Party are nutters. Its not entirely true, of course, but the Green Party is a broad church, and MPs a long way up the list have views a lot of the electorate regard as “extreme”. Those swing voters that do fancy a bit of left, but have felt the love of a bit of right, are now scared that if they vote for some form of Labour that they find acceptable, the cost of that will be Loony Left policies from the Green party coalition partners.

    So, although totting up the numbers of individual parties votes might lead one to conclude the numbers are there, if those numbers are examined in the context of what that would mean for a government, then that support will wither.

    The other problem, a constant piece of background noise, is, of course, who are Labour? They are a party torn by internal strife, an ongoing war between those who believe that the path to electoral success is “back to the Labour party roots”, and those that believe that Labour needs to become “National Lite”. The former were proved wrong with the defeat of Cunliffe, and the latter have failed to notice that National has been drifting gently leftwards to close up the gap that existed a decade ago. Labour – literally – have no where to go.

    The perhaps bizarre thing is that the Green Party could become the left party of choice, but to do so, they are going to have to dump a lot of nutter MPs. James knows (but obviously won’t publicly state!) this; he’s been quietly publicly clarifying the party, but there are a lot of traditional (very) left wingers in the Greens, and I suspect he’s up against a losing battle. Which is actually a shame.

    Finally, can I point to my track record of election prediction. Its solid. I also called the Valentine Day’s quake 16 days in advance of it happening, but that is a bit more far fetched, I grant you 🙂

  6. Sorry to disagree with you DBuckley but I have explained HOW it could happen and you have to address that. Winston in alliance with Labour can beat Key. An alliance can probably beat Key. Labour has been tending towards such a change of view. Last election it was all “me-me-me” and no “united we’re strong”.

    I (and a lot of other people) objected to what the current government did to “fix” the ETS. I recall calling their actions criminal, to their faces, in the chamber. The way the ETS was when it was passed would have had some effect. What was done to it by the current government WAS criminal.

    Any scheme that allows one to spend money in exchange for the right to pollute is just legitimising emissions. It turns out people are willing to pay to pollute.

    You aren’t entirely wrong about the way it works. People are happy to pay to pollute

    *IF IT DOES NOT COST MUCH*

    That it works however, has been proven everywhere a non-trivial amount is charged. It works better than any regulatory regime imagined. Regulations can be gamed around, but a cost on the carbon itself, that’s like thermodynamics. Its inescapable.

    The problem with the ETS is that it was VERY vulnerable to being gamed. It wasn’t what we wanted. The tax was simpler and harder to fiddle.

    I think Key is vulnerable — IFF Labour continues to embrace the notion of alliance with the rest of us. I think that the odds of getting a Green into government are slender if we don’t find a way to achieve a rapprochement with Winston… I don’t know precisely why he hates us but I have some notion that Greens weren’t kind to him before I was part of the scene. Greens have had the idealism problem for a long time, and the shift to pragmatism and realism hasn’t erased that past.

    We aren’t what we were though… THAT way didn’t work. We know that. Whether we can get people who aren’t involved to re-imagine the party however, is a problem. People remember.

    Still… National, as it is currently constituted, can never accept, or be accepted by, the Greens. We don’t go into alliance with people who are damaging New Zealand and stealing from its future.

    The people of New Zealand however, have to understand some unpleasant truths before the process changes. They HAVE been fools, and for a long time now. The nation is far less prosperous and less strong than it might have become had the alternative to Labour Union driven protectionism not been seen as Free Market fundamentalism.

    That is what we are fighting. The perception/fear that we would take the country back to a situation where meaningless make-work is supported by government policies.

    A high carbon price moves things, because it applies to imports too, and the cost of shipping becomes non-trivial. Businesses survive when they have a moat. Ours is large enough, but in the imaginations of too many people, it is ignored. The business trying to get into a market in the US or China knows better when it counts up the travel and shipping overheads. With carbon priced properly, the desire to get into those markets and the NEED to get into those markets, is diminished. Instead of using the moat however, we’ve been busy trying to ignore it. So we no longer make Whiteware, we no longer make anything much apart from milk powder. Which can be made by pretty much anyone and when we intensify to make more our base costs go up too fast for our stuff to get across the moat.

    It all goes together – arguing it separately is hard.

    I wish I could check this properly. I have to do my TPPA submission this weekend. No time…

  7. BJ States (along with a well reasoned argument as to why):

    On current form, Labour can win the next election

    No. Simply no.

    Folks in here have been convinced that every election would be Labour’s election for a goodly while now. [Back in 2012], against the popular opinion, I explained what would happen in the 2014 election, correctly, and prophesied will happen in 2017, which I’m even more convinced now will be a National victory.

    From 2012 I was opining that 2020 would be Labour’s year, but now, I think that is much less likely.

    So, better get used to the blue hue, its going to be around for a good few years yet. Sorry boys.

    And CoroDale, I know you read very few of the words I actually write, and substitute an interpretation of your own, but I have a suspicion I know what you are going to say, so let me head it off at the path: I am not a National supporter, and have never voted national, or Act, or any of those other right wing parties. [Back in 2011 I stated] that “…the next Key led government will fuck us over more than any government in our history”. I see no reason to change that opinion.

  8. Ah yes, the ETS. The Greens bête noire.

    Back in 2008, as parliament was vacillating over the ETS, [I noted that]:

    The ETS will test the Green Party’s real commitment to the environment. I’m almost convinced they will come up wanting. I’m hoping (but not expecting) to have to eat humble pie.

    Well, history records that I did not need to consume the humble pie; the Greens came up wanting, and did indeed support the ETS, and so this “failed climate policy” of which James speaks was fully supported into law by the Greens. It’s taken a few years to figure out that they were wrong then. The problem is that there is no evidence that they are any less wrong now.

    James says “climate policy is not only failing to stop pollution, but is actively encouraging the growth of highly polluting sectors of the economy”. Well, Doh. This is pretty much what I stated would happen back in 2008: []:

    It frustrates me enormously when the supposedly environmentally aware party of NZ supports legitimising emissions with the ETS (with a two thirds vote by people who expressed an interest), rather than actually reducing emissions by way of using available renewable energy sources that someone is actually ready to build.

    Any scheme that allows one to spend money in exchange for the right to pollute is just legitimising emissions. It turns out people are willing to pay to pollute. Yes, really, they are. So a carbon tax is no more effective a solution than an ETS at reducing emissions. Perhaps particularly in New Zealand where the game is rigged against the very factors that might make carbon pricing work.

    So, Green Party people; feel free to continue to figure out ways to rearrange the deck chairs upon the Titanic. But don’t be under the misapprehension that you are doing anything other than that. You’re falling for the kool aide. The Verve were wrong: the drugs do work.

  9. Good question BJ: “Emission weightings for Agriculture?”

    Certainly nitrogen fertiliser must pay full costs, ASAP.

    Signal that methane will also join, in near future, especially if milk price rebounds. Give farmers time to plan for a future in biologicial farming or changes to land use. It’s that gentle transition that’s required, starting now.

    Must review reviews; there is enough info there, but… I’ve seen two different views from Green Peace on this, in recent times, and I’m also getting lost. The correct answer will act as a drivers towards biological farming. But it requires a “push-pull” principle, not just a tax-like “push”. An example of “pull” would be, “regulate Fonterra”. Sorry that Fonterra is farmer owned.

    The poor farmers are also victims here; they’ve suffered heavy brainwashing.

  10. Thanks Corodale… now elaborate slightly (“Add agriculture” – in what form? Are you disagreeing with the science that excludes it in the long run?)

    The problem with the ETS is that it is this government that broke the damned thing in the first place. Greens came within a hair of NOT agreeing to it when Labour originally proposed it at the last possible moment, because it really is the WRONG way to make the changes that need to be made.

    It winds up being an ideologically driven thing with mutable values, complex implementations, and unpredictable costs from one government to the next. Business has to hate that. The tax and rebate scheme is vastly simpler and has more predictable results. The government can alter it still, but it is harder and more obvious when it is gamed.

    OTOH, the point that it does exist NOW has merit. The internal discussions in the party were divided over whether to try to fix it or scrap it. I don’t think we’ll have that choice.

    On current form, Labour can win the next election… if it allies itself with NZ First and the alliance proposes Winston as the PM and lets him run the show and we (Greens) manage to make peace with Winston and he accepts us as allies as well. An alliance like that would get a lot of votes and while I think James Shaw can hold his own in a beat-up with Key I don’t see anyone in Labour doing it, and James hasn’t got the name recognition that Winston has… not yet.

    So we don’t get the change we want, we compromise and take the changes we can get.

    It isn’t like this isn’t familiar territory for us.

    I think that’s the best way it can be made to work and break NZ out of the clutches of the neo-liberal gnatwits. Which has to happen before we get much further along the path to hell they are following so blindly.

    We have to keep some objectives firmly in mind here.
    1. Get rid of the current government because long term, it is hurting New Zealand.
    2. Prepare the country for the catastrophe that is coming
    3. Reduce NZ emissions to meet our obligations properly (ag emissions aren’t part of the base).
    4…

    I don’t really expect to get to 4…

    respectfully
    BJ

  11. Submissions on Emission Trading:
    1. Block credit imports
    2. Add agriculture

    Morgan’s team are commenting on this… Oh, something about being diplomatic and consulting credit owners.
    …with ETS fixed, no carbon tax required!

    Better Green Tax Priorities:
    *Financial Transaction Tax is key to current market fluctuation…
    *Capital Tax would pay for UBI.

    Carbon Tax would be a distraction… especially when emissions trading scheme (ETS) is a more efficient economic tool – just needs fixing,

    Bankrupt farms could be bought by a Govt Farming Cooperative, at govt valuation prices. Farmers could continue to share-milk under govt cooperative ownership. Biological farming methods would be a cooperative requirement.

    Fonterra should be regulated to force acceptance of organic milk delivery at a small premium, nation wide.

    Modify Organic Standards (AgriNZ), 5year exemption for chemical gorse control. If IFOAM throw their toys, then see how it goes under a new “Sustain-Bio” standard…

    Rural subsidies can be best applied using the European LEADER model. This fits the Green vision of regional development aimed at increasing social and ecological capital.
    http://ec.europa.eu/agriculture/rur/leaderplus/pdf/factsheet_en.pdf

    Lets not talk too much about Huntly, they are on track to convert to gas. We should talk about Taranaki; where the gas is coming from. Taranaki need regulatory support, not Huntly. Huntly just needs an electric rail-way that stops on-route HamilTron-to-Auckland

    Happy farmers, despite being poor, that’s my medium term vision. Massively lower emissions go without saying.

    Ok, dinner is cooked.

  12. Yes… our agriculture is definitely accelerating a part of the process, but in the long run it is still a CO2 neutral process and needs to be identified as such. We should leave it alone as far as the ETS or a future tax that is dealing with CO2 and climate is concerned… but it isn’t going to be untouched by the ETS in any case.

    As soon as you start applying taxes to the CO2 generating processes you have hit Fonterra on the cost of its milk solids. The drying uses coal in most cases as I recall, and you have pushed up the price of fertilizer and support for the denser herds. Those will help somewhat.

    However, the rest of the regulations/taxes/limits that might apply have to address directly the damage that is done to the land by the farming . Let the cow patties fall as they may in that sense. It’d be related to the notional land taxing arrangements… and damage to the land can be one of the things that causes a higher tax rate to be applied. I hadn’t ever heard of a “livestock tax” before. Something new every day… and I am not sure that I agree that that’s the best way to work it out as I can’t see what the livestock count has to do with anything. My rule of thumb says you tax the thing you don’t want directly. Livestock numbers aren’t the problem, the damage they do is. So my preference is to tax the damage to the land, whatever it works out to be.

    That said, I’m pretty flexible on that. I’d rather have someone who has studied the problems of taxes and farmers and livestock help with it, than address it myself from the theoretical view that is the only view I have of it.

  13. I agree completely bj. I do see, however, that the carbon/methane issue does relate to animal populations that are of a size that weren’t naturally there. As you say, the impact is showing in the water and probably impacting native ecobalance for microbes. Kauri die back and many things we aren’t seeing may be related as balances alter. The question of limits to stocking numbers has arisen in the past, and the ETS would be a crude limiting device in the meantime, maybe allowing a lower amount on smaller stock density. With all these sorts of things the soil and location has huge influences on the wisdom. This may be better dealt with in the present taxing regimes, removing them as a capital value after a ratio influenced by land value/productive value? http://nzica.com/News/Archive/2013/December/Livestock-tax.aspx I haven’t looked into it that closely but food for thought.

  14. Agreed – scrap ETS, use carbon tax and push it upwards gradually, refunding to citizens.

    That part is needful because government should NOT be dependent on a tax on something it wants to disappear.

    However, there is a point about the pollution from the ag sector that needs to be made.

    When a cow eats grass that has grabbed carbon from the air and turned it into CO2 like a good little plant… and then belches methane and eventually dies and decays, the methane and decay are of carbon that was originally from the air… part of the natural cycle. The methane converts to CO2 and eventually gets turned to grass again.

    The cow is NOT a primary polluter in terms of carbon… messy enough in a lot of other ways that aren’t paid for, but in terms of carbon NOT really an issue. The fact that the CH4 is a problem for us has more to do with the other sources of CH4 that are not related to agriculture.

    So the fertilizer gets its tax, the electricity and diesel get theirs… but we have to pay attention to the science here. That CH4 is not the big problem here… though it is a problem. The big deal is fracking and fugitive emissions and carbon that got dug up and piped to refineries.

    We did set a goal of helping to find something that would help the cows produce less methane, and that’s a good thing, but it isn’t the bit we absolutely must do.

    This is a place where we have to think a bit harder if the policy is to really be evidence based.

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