Friday, June 11, 2010
Mike Butler: National feeling ETS heat
Climate Change Minister Nick Smith alone is driving the ETS, Boscawen said, with the Prime Minister’s support.
The ETS will be extended across most productive sectors of the economy from July 1 this year, making them instantly more costly for everyone, he said.
Treasury has predicted a five percent increase in the price of electricity, and a four-cents-a-litre increase in the price of petrol, he said. Two power companies have already announced ETS-related price hikes.
“In three years (January 2013) there will be another round of similar increases making a total of 10 percent for electricity and eight cents a litre for petrol, just from the ETS.
Boscawen gave a detailed 90-minute presentation, without notes, occasionally picking up a copy of Budget 2010 to cite sources. He did not get into the claimed scientific justification for making emissions costly, arguing instead that whether or not you believe that anthropogenic global warming is taking place, it makes no environmental, economic, or political sense for New Zealand to proceed with an all-gases all-sectors scheme when none of our main trading partners are so doing.
Here is an edited and partly rewritten version of eight misleading statements and Boscawen’s responses:
Misleading statement 1
In the next 12 months the government has to pay $1.1-billion to foresters, in the form of emissions credits, for forests planted since 1990.
Smith’s officials confirmed to Boscawen that that was incorrect, and underestimates the true figure.
The $1.1-billion figure is a combination of payments for both pre-1990 forests, a lump-sum, non-recurring payment of $420-million, and for post-1989 forests, of $685-million. The latter is for forests planted in 2008, 2009, and 2010, and will recur.
Note that those who planted forests in the 1990s and early 2000s did so without any expectation of emissions credits. Budget 2010 shows that the payment due to foresters, who planted post-1990, is $1.6-billion over the years 2008-2012, and this is based on an assumption that 67 percent of foresters will take up the entitlement. However, more recent projections show that 87 percent plan to take up on the scheme, increasing the $1.6-billion to over $2-billion.
The subsidies will go to New Zealand and foreign-owned forests alike, funded by all New Zealanders who are forced to pay more for electricity and petrol, all for no environmental gain whatsoever.
ACT advocates compensation for foresters who planted after the forestry aspect of the ETS came into force on January 1, 2008, because they planted in the expectation of receiving carbon credits. Compensation would cost no more than $20-million to pay compensation.
Misleading statement 2
The government’s revenue from the ETS in the first year will be about $350-million.
Windfall profit gains from the three government-owned electricity generators were not included in the official $350-million figure, according to Smith’s officials. ACT expects the government revenue from the ETS to be over $500-million.
Misleading statement 3
New Zealand is not leading the world with an ETS because 29 other countries have one.
The New Zealand ETS is a single-country scheme, and no other country has such a scheme. The European Union as a trading bloc has a scheme that covers 29 countries. The European ETS imposes costs on the entire European trading bloc and 80 percent of European exports are internal, while the New Zealand ETS will directly penalise all exporters. The European ETS also excludes major parts of their economy, whereas our government has been proud of the fact that our all-gases all-sectors scheme is a world-first.
Misleading statement 4
New data shows that the moderated ETS has reversed the trend of de-forestation that was a major worry under the former Labour-led government.
New Zealand’s plantation forest area grew extensively through the 1990s, but foresters rushed to fell trees before January 1, 2008 so they would not be subject to a bill of $17,000 per hectare. This would not have happened if it weren’t for the ETS.
Misleading statement 5
National’s development and implementation of the ETS is in line with National’s 2008 election policy.
National did say that they would continue with an ETS, which they would amend, which they have done. ACT campaigned to “dump the ETS”. However, Key also said, in October 2008, that “we shouldn’t be a world leader because that will come at the expense of our economy”. Since the election, many things have changed. Much of the scientific justification for an ETS has been discredited by the “climategate” revelation in publicised emails from the University of East Anglia, which showed the extent to which some scientists manipulated data. New Zealand’s biggest trading partner, Australia, was on track to implement an ETS, but now that has been dumped. Neither China, nor the United States, which are the second and third largest trading partners for New Zealand, are unlikely to implement ETS schemes. Now, New Zealand is the only single country with an all-encompassing ETS, meaning we have unwittingly become world leaders.
Misleading statement 6
In response to ACT’s statements about carbon taxes on petrol, you will be told that 29 countries have implemented an ETS. Most schemes include some kind of coverage of petrol, diesel and electricity generation.
Of the 29 countries that belong to the European Union ETS, only three have a carbon tax on petrol that covers the domestic sector:
The UK has a carbon tax on petrol but it does not apply to the transport or domestic sector.
Sweden has a carbon tax on petrol and its introduction coincided with a major tax reform with the aim to reduce taxes on income and capital and to increase environmental taxes.
Norway has a carbon tax on all fossil fuels but some industry sectors were granted exemptions to preserve their competitive position.
Denmark has a carbon tax on diesel only and does not cover the transport sector.
Finland has a carbon tax covering fuels used for heating and transportation.
Ireland has recently introduced a tax on petrol and auto diesel that includes the transport sector but excludes 12,000 installations, covering industrial and stationary energy activities already covered by the European Union ETS.
Outside Europe, Quebec has a small carbon tax of 0.8 cents per litre.
Misleading statement 7
The government views the ETS as risk management. Uncertainties in the science are acknowledged, but the prudent approach is to take steps to reduce the risk.
The risk management approach is ridiculous. Not only are there uncertainties over whether global warming is occurring, and if so, whether it is man-made, everyone agrees New Zealand is too small to make any difference to world climate. The Prime Minister’s chief science adviser, Sir Peter Gluckman, has said “anything we do as a nation will in itself have little impact on the climate. Our impact will be symbolic, moral and political.”
Misleading statement 8
The government is concerned that issues relating to carbon footprint pose a risk to New Zealand industries exporting to high value consumer markets. (ie, New Zealand has to be seen to be doing something about climate change or no one will buy our stuff.)
A total 48.5 percent of New Zealand’s exports go to our top four trading partners – Australia, China, United States, and Japan. None of these countries have an ETS and are unlikely ever to have one. Our exports to all of the European Union countries combined total 14.3 percent of the total.
at 2:39 PM