Mike Butler: ETS report fatally flawed

A government report always gets what it sets out to get by carefully phrased terms of reference and hand-picked review panel members. The Doing New Zealand’s Fair Share. Emissions Trading Scheme Review 2011: Final Report, (1) released on Thursday, carefully avoids embarrassing fundamental questions, and delivers a message intended to placate traditional National Party supporters in the run-up to the election.

The terms of reference are everything in political reports. But first, for those who may have forgotten, and for many more with only have a hazy idea of what it is all about, emissions trading is a market-based approach to control pollution by providing financial incentives for achieving reductions in the emissions of pollutants. (2)

Based on the theory that greenhouse gas emissions resulting from human activity, such as burning fossil fuels, are warming the global climate and melting polar ice, raising sea levels, melting glaciers, causing floods, the New Zealand Emissions Trading Scheme (the ETS) was created to encourage businesses and households to reduce their greenhouse gas emissions by imposing a cost on these emissions. Note, the main greenhouse gas is carbon dioxide, which is not a pollutant.

Now here’s the thing. New Zealand contributes just 0.11 percent of total global emissions, according to the Carbon Dioxide Information Analysis Center, an organization within the United States Department of Energy. (3) This mean that if all human activity in New Zealand ceased, global emissions would reduce by 0.11 percent, which is not going to have any effect on the climate anywhere. That’s assuming the human-induced global warming theory is true, when that is looking increasingly unlikely, since the computer modelling it is based upon has been discredited, (4) and there has been a scandal involving allegations that top climate scientists falsified data. (5)

In short, it doesn’t really matter what New Zealand does regarding emissions since it not going to change the climate. Therefore, the New Zealand Emissions Trading Scheme is an elaborate edifice built on a whole lot of nothing to appease climate alarmists and to benefit recipients of emission trading credits.

Now for my terms-of-reference point. The ETS panel was told not to focus on: “whether an emissions trading scheme is the most appropriate response to change for New Zealand, whether New Zealand should be taking action on climate change, or climate change measures outside the ETS”. This means that even if any panelist had concerns about the effectiveness of the New Zealand Emissions Trading Scheme in light of the total scientific validity of the scheme, he or she would have to set those concerns aside.

And this is a pity. David Russell, the former chief executive of the Consumers Institute, who had an illustrious career advocating for consumer rights, participate in this ETS panel. He may have had a concern that consumers are needlessly paying five percent more for electricity and four cents a litre extra for fuel. Unfortunately, the terms-of-reference straitjacket would prevent him from expressing that concern.

A principles of the Treaty of Waitangi and tikanga Maori expert was appointed to the panel to show the government’s commitment as a treaty partner. But behind the treaty mumble there lies a significant cash benefit for the Climate Change Iwi Leadership Group, since tribes have been given significant areas of forestry as part of the settlements concluded so far, with much more to come. The only visible sign of concern, in this report, for the cost of the scheme to households was for Maori households.

The report, which runs to 98 pages, concedes that uncertainty over international climate change agreements is likely to continue, but believes that pressure for emissions policies will increase. In other words, the climate activists are not going to go away. Therefore, the panel recommends that the government continue to try and change our nasty emissions behaviour, irrespective of the futility of the task.

The panel acknowledges that the ETS is going to cost everyone, but should not be too costly, but should also be certain so that everyone can plan ahead. It provides a number of technical recommendations including increasing the cost of emissions from the present cost of one NZ Unit for two tonnes of emissions to one unit for one tonne in 2015. The price cap of $25 per NZ Unit should be increased by $5 a year starting in 2013.

The panel thinks agriculture and waste should enter the scheme on the existing timetable. The panel wants to introduce offsetting for forests planted before 1990 and liability reduction measures, including averaging, for forests planted after 1989. The panel wants small landowning Maori trusts to be made eligible for the less than 50-hectare forestry exemption.

Of course, these and other more technical details won’t mean a blind bit of difference to most people who have no means of benefiting from the scheme and who will only find petrol, electricity, rent, in fact everything, rising in price --- for nothing.

How does the National-led government use reports and taskforces? Usually to suit themselves! The 2025 Task Force was an obligatory deal with the ACT Party so it was ignored. The Tax Working Group created an opportunity to hit property investors and rake in more tax, so many of its recommendations were followed. The Whanau Ora panel fitted National Party Thinking, as did the foreshore and seabed group, so many of its recommendations found their way into policy.

The ETS panel is like a useful little talking hand puppet that offers sage advice that the government, which includes a number of climate doom true believers, can quote as it saunters on down this climate change blind alley.

Given that the report excludes discussion about the ultimate ineffectiveness of the scheme, that at best it is, as the report’s title suggests, a token gesture, this National-led government’s response raises serious questions about their ability to deal with existence in the physical and economic universe. The only reality this government understands is pressure from stakeholders and special interest groups.

Sources
1. Emissions Trading Scheme Review Panel. 2011. Doing New Zealand’s Fair Share. Emissions Trading Scheme Review 2011: Final Report. Wellington: Ministry for the Environment.
http://www.climatechange.govt.nz/emissions-trading-scheme/ets-review-2011/review-report.pdf
2. Emissions trading, Wikipedia. http://en.wikipedia.org/wiki/Emissions_trading
The Wikipedia Emissions trading entry explains that a central authority (usually a governmental body) sets a limit or cap on the amount of a pollutant that can be emitted. The limit or cap is allocated or sold to firms in the form of emissions permits which represent the right to emit or discharge a specific volume of the specified pollutant. Firms are required to hold a number of permits (or carbon credits) equivalent to their emissions. The total number of permits cannot exceed the cap, limiting total emissions to that level. Firms that need to increase their emission permits must buy permits from those who require fewer permits.The transfer of permits is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions. Thus, in theory, those who can reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest cost to society. There are active trading programs in several air pollutants. For greenhouse gases the largest is the European Union Emission Trading Scheme.[3] In the United States there is a national market to reduce acid rain and several regional markets in nitrogen oxides.
3. List of countries by carbon dioxide emissions due to human activity, Wikipedia. http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions
4. Climate Models Go Cold, David Evans, Financial Post, April 8, 2011. http://www.fcpp.org/publication.php/3739
5. Climate change data to face independent scrutiny, by Nicholas Kralev, Washington Times, 26-2-10. http://www.washingtontimes.com/news/2010/feb/26/warming-put-to-new-grand-challenge/?page=2