Barry Brill: The Five Ws of Climate Policy

Despite its glossy 188 pages, the Climate Commission’s 2021 Draft Advice For Consultation provides precious few answers to the vexed questions that have bedevilled climate change policymakers, both here and around the world, for the last three decades.

The ancient Greeks held that a report can only be considered complete if it answers five questions (5W) – what, why, who, where and when?. Nowadays, we add H2 – how and how much?

Climate policy gives rise to endless sub-questions under most of these headings and I touch upon just a smattering of the questions that should be raised during the ‘consultation’ period which expires on 14 March 2021:

What?

The (draft) report comprises advice to the Government on setting ‘budgets’ for New Zealand’s emissions of greenhouse gases (GHGs) over the next 15 years. By thinking hard and applying some computer models, the Commission claims[1] to have taken account of all economic, social, cultural, environmental and ecological impacts of its preferred numbers.

We all know that New Zealand’s trivial greenhouse gas emissions can have no discernible influence whatever on the earth’s future temperatures. We officially produce 0.16% of the global annual emissions – and even that is an overstatement. This is less than one-tenth of the error margins of the measurements. It is negligible. It is irrelevant in any physical sense.

It is irritating that the Report repeatedly ignores this fundamental fact. Its rhetoric shows that the Commissioners see themselves as being engaged in a pious crusade rather than in bureaucratic planning to meet an international obligation.

The Paris Agreement set up a multi-lateral project to reduce global emissions – of which just 3 parties (China, India, USA) emit 50% while the remaining 50% is spread thinly over the remaining 190 countries. We can and will “do our fair share” as one of the smaller parties to that project.

The whole idea of Paris is that it must be a team project. Unilateral “look at me” ostentation and attempts to mount an arms race irritates other parties and makes it less likely that any team effort can succeed. It also engenders an inevitable backlash within the tryhard country’s population[2].

Given the membership of the Commission (all appointed by Greens leader James Shaw) there was a general concern that this Report would set out to have Aotearoa[3] “lead the world”[4]. That is exactly what has happened.

The Treaty quite reasonably requires that developed countries should move faster than others. Our objective should be to maintain our net tonnage of per capita CO2 emissions below the average of the 36 OECD countries – ie more than our fair share. However, the Report does not even begin to address this goal. It blithely ignores its statutory duty (in ss 5M and 5ZC) to consider the “responses taken or planned by other parties to the Paris Agreement”.

Wikipedia offers a list of the gross per-capita emissions of all 193 UN countries. A comparison with our major trading partners shows that our performance is already impressive:

                                          Mt                                                               Mt

Australia                          15.4                     South Korea               11.6

Canada                             15.1                     USA                             16.5

Japan                                 9.5                     EU (avge)                     8.6

New Zealand               7.7                     Non-EU OECD           9.8            

OECD (avge)                    8.9

Why?

The glib answer is that New Zealand has committed to ‘net zero emissions’ by 2050.

But our research scientists[5] have established that we had already over-achieved that goal by 2017, when: “the terrestrial biosphere in New Zealand was estimated to be a net CO2 sink, removing 98 (±37)Tg CO2 per year from the atmosphere on average during 2011–2013”.

The “terrestrial biosphere” is a collective description for all the farms and forests in the country – which act as both sources and sinks of GHGs. Carbon sequestration by forests, grassland and soil carbon not only removed all the CO2-e they jointly produced, but more than offset all the annual GHG emissions[6] generated by New Zealanders.

The annual removal of a net 98Mt[7] of CO2-e is a very big deal. Being a net sink means that our country is continually reducing the global concentration of atmospheric CO2. A satellite CO2 sniff over the Tasman Sea shows lower parts-per-million by the time it reaches the Chatham Islands.

However, for Paris Agreement purposes, CO2-e quantities are measured not by scientific facts but by endless byzantine rules that are constantly negotiated by and between international bureaucrats. Most people believe that every developed country should contribute to the global goal and our Government has volunteered to reduce New Zealand’s quantities by 30% by 2030.

How?

Worldwide, most private sector people believe that the Paris Agreement targets can only be delivered by global technology advances; and that every proposed policy should be judged by its medium-term contribution to that achievable end. The Commission disagrees[8].

The Commissioners (all from the public sector) believe progress can be best achieved by taxation and government regulation. It believes that all levels and agencies of government should be involved and that all aspects of the economy must be subject to government edict.

When a ‘cap and trade’ system exists, such as the New Zealand ETS, periodic lowering of the “cap” determines the maximum volume of emissions during the period concerned. All other policies combined cannot vary that volume. The NZ Initiative consistently points out that the Minister has his/her foot on the only brake (ETS carbon prices), and that all other well-meaning efforts have no more effect than flailing arms and loud speeches.

The Commission does not seem to grasp that all its schemes for electric vehicles, banning gas stoves, etc, cannot reduce aggregate emissions by a single kilogram. Secondary or alternative policies can only move the burden from one group or sector to another.[9]

When the UK government commissioned an independent review of its climate policy, Oxford Professor Dieter Helm emphasised that a scattergun set of intersecting and complex policies is counter- productive and creates unnecessary cost. There should not be “two stones for one bird”.

Electric vehicles

The Commission’s chrystal ball relies heavily on the rapid substitution of internal combustion engines (ICEVs) by Electric vehicles (EVs) over the next few years. Will this happen? Well it might – but it is just as possible that it might not. In fact, based on governments’ appalling track record in “picking winners”, it seems rather more likely that the future will play out differently.

Consider these factors:

• EVs have been around for more than 10 years, heavily promoted/subsidised by governments everywhere, but market penetration has been rather pitiful. In New Zealand[10], brave plans five years ago have come to nothing. Even the Government’s own fleet has successfully resisted edicts and commands.

• On a whole-of-life basis, EVs are said to have 18% lower emissions than average ICEs. But they are barely on a par with the Prius and other below-average-consumption cars, while being unattractive for trucks. There are numerous technology changes in the ICE pipeline (eg Achates). The emission rate of new vehicles entering New Zealand have reduced by 40% over the last 12 years to 180.7g/kilometre. This spectacular reduction rate of over 3% per annum was BAU – achieved naturally and without government intervention.

• A lot can happen in 10 years. By 2030, the traditional idea that virtually every adult will own (and garage, register, insure, etc) her own vehicle might well have become passé. I have discussed self-driving cars previously on this site – Why subsidise more congestion? Meanwhile, will Minister Shaw have coerced NZ into rebuilding its infrastructure for a future based on self-owned EVs?

• The Commission envisages that the phase-out of ICE vehicles will coincide with the electrification of other transport as well as all industrial, commercial and residential heat[11]. Professor Michael Kelly[12] points out that all this will require the doubling of not only generation, but of nation-wide transmission and distribution networks. He estimates an annual cost of $15-17 billion, which is roughly equivalent to the whole Education Vote. We don’t have either the personnel or other resources for this. Kelly asks how an academic Commission can possibly recommend such national transformations without so much as a comprehensive engineering assessment?

• New EVs are simply unaffordable, for about 90% of New Zealanders. The idea is that the citizenry will eventually be able to buy second-hand[13] government cars – and the Government has now ordered departments to convert their ICE vehicles to EVs (or hybrids), setting up a $200 million fund[14]. But this will provide less than 16,000 EVs, while the national fleet exceeds 4.1 million.

• Contemporaneously with promoting EVs the Government will be sharply increasing electricity prices by ramping up the ETS unit price from $25 to $175 per unit. Because the daily wholesale price is generally determined by generation costs at Huntly, ETS increases are paid to all generators in the system (producing large windfall profits for renewables). This energy-poverty-inducing system is accepted by the Minister because it dampens demand, encourages efficiency and incentivises renewables.

Recognising that a free market is most unlikely to deliver the rapid demise of ICEVs, the Commission recommends that their import be prohibited in 11 years. But we all live in a free market democracy. If EVs remain unattractive and unaffordable for an average voter in a decade’s time, no political party would survive such a despotic curtailment of our traditional freedoms.

After all that, I recognise that EVs might possibly dominate the New Zealand fleet by the 2030-35 phase of the Commission’s budget. I just don’t know. And neither do the Commissioners.

Who?

With almost all of its focus being on energy, the Commission plans that the vast bulk of its budgeted emissions reductions will be coerced out of the household and business sectors.

Households everywhere will need to walk and cycle and use much more rail, to reduce their use of road transport. The ETS will relentlessly increase petrol prices until quite large sections of the community will no longer be able to afford the use of a car. The Commission seems unaware that our existing taxes on petrol and diesel are already amongst the highest in the OECD

There is to be no price distinction between mid-city and rural families. Curiously, the Commission has not researched any of these effects and seems to have no clue as to the price-elasticity of demand for motor spirits that has been actually experienced in New Zealand – particularly its extent, timing and regressive impacts.

A concomitant rise in diesel prices will recklessly push up the distribution price of food, clothing, housing, hardware, medicines, etc. Australia’s Tony Abbot plausibly called this effect “a great big new tax on everything!” Small businesses will suffer and will be the meat in the sandwich.

But those diesel price increases will also have a huge impact on all the sectors that New Zealand lives on – dairy farms, tourist operators, meat producers, orchardists, fishing companies, vintners, timber processors, and the like. All these businesses are in the tradeable sector. They have no control of international prices and all increases in diesel prices will come right off their bottom lines.

When?

In a sea of shallow thinking, the Commission’s most ill-thought-out recommendations are related to timing.

Anybody who thinks about the 2050[15] target knows that the economic and social costs of achieving it will steadily reduce over time. The UK House of Lords Select Committee on Economics produced screeds of evidence to support that finding. Professor Helm warned against “over-egging carbon budgets in the early years, as technology improvements are very likely to drive a steep business as usual (BAU) trajectory in future decades”.

Our overall nation-wide energy intensity has reduced over the last 30 years at a rate of over 1.5% per year[16]. This constant efficiency improvement is simply driven by the free market and is not an outcome of climate policies. If this rate keeps up, we will reduce our per-capita energy use by about 50% by 2050 on a BAU basis – and that excludes any major advances in energy generation technology.

That last assumption is heroic to the point of being farcical. We live in an age of constant change – of endless disruptive technologies. A 15-year plan that looks to the past and projects it forward tells us nothing of much interest.

I have argued elsewhere[17] that advancements in various nuclear technologies will bring the whole climate change scare to a screeching halt within the timeframe of the Commission’s budget. The report has nothing at all to say on how New Zealand might promote that highly desirable outcome, whether by diplomacy, financial aid, R&D support or otherwise.

Further, in fixing its budgets, the Commission is directed by s5M of the Act to align New Zealand with the actual and planned reductions of other Paris Agreement signatories, and this obviously means mainly our trading partners and other members of the OECD. But it does not do so. It adopts a tunnel vision which does not even advert to the efforts of other relevant countries.

Even the Commission’s academics are politically astute enough to require no significant reduction in emissions during the current parliamentary term. But then they demand a huge but seemingly arbitrary leap to a 17%pa average annual reduction during 2025-30. The Commissioners (all boomers) say we must not push the problem on to future generations. This sounds much more like political correctness than an evidence-based analysis of optimum or least-cost timing.

How much?

Following a now lengthy tradition, the Commission makes no attempt to produce cost-benefit analyses to support any of their intuition-based recommendations.

The mandatory Regulatory Impact Statement (RIS) accompanying the 2019 Zero Carbon Bill was unable to quantify any tangible benefits but indicated through modelling work that the economic costs are expected to be both prodigious and highly regressive.

In his columns all around the world, sceptical environmentalist Bjorn Lomborg constantly uses New Zealand as the example of what not to do in climate change policy. He analyses modelling reports commissioned by Minister Shaw:

“According to the NZIER report, getting all the way will cost more than NZ$85 billion annually, or 16% of projected GDP, by 2050. That is more than last year’s entire national budget for social security, welfare, health, education, police, courts, defence, environment, and every other part of government combined. The report says Kiwis would need to accept a carbon tax of almost NZ$1,500. This is equivalent to a gasoline tax of NZ$3.50 per litre.”

There is no reason to believe that middle New Zealand will be prepared to lead the world in climate masochism. Average kiwis did not participate in the Government’s misleading consultation process in 2018 and certainly did not know that (in the words of a former chief economist of the Reserve Bank):

“I would be surprised if ever before in history a democratic government has consulted on proposals to reduce the material wellbeing of its own people by up to 25 per cent.”

The Commission made no reference to these forecasts in its report. In fact, it contented itself with soothing words and hopeful speculation, rather than make any serious attempt to understand and quantify the economic hardship its recommendations will wreak.

Where?

The object of the Paris Agreement is to reduce aggregate global emissions, and it does not mention New Zealand emissions. The geographical location of emissions is not relevant to future global temperatures. So why does the Act focus on local reductions only. Do Ministers want emission reductions to occur right here, so that they can get the credit? Is the key objective to ensure our current leaders can bask in the applause of international conferences?

The Commission is given the statutory power to consider what portion of our reductions should be achieved locally. It has settled on 100% – with purchases of more cost-effective credits from abroad only if the New Zealand-based savings fail to work.

This means that no effort will be made to retain the Tiwai Point smelter and Taranaki’s Methanex will be encouraged to close. Gas exploration will remain banned – despite the departmental advice that this irresponsible decision will cost us $29 billion while adding to aggregate global emissions.

General

There are many contemporary issues the Commission might have addressed. One which puzzles many is the fact that, as of December 2020, there was no atmospheric evidence of the reduction in global CO2 emissions from the global Covid-19 Economic Slowdown.

The massive and unprecedented reduction in worldwide economic activity seen in 2020 exceeds any measures that have been proposed to cut emissions. So why didn’t it show up immediately on the Mauna Loa official measurement record of atmospheric CO2? Are the measurements astray? If so, then everything will have to go back to the drawing board.

Another possibility is that human emissions – which were believed to make up 4% of all atmospheric CO2 – are a much smaller proportion. That puts the whole anthropogenic global warming hypothesis in question.

At New Zealand level, if a 5-week Level 4 lockdown didn’t measurably reduce our emissions, why should we think the Commission’s budget will work? The Commission doesn’t say.

FOOTNOTES: 

[1] Report p24, para [3].
[2] The Treasury report on the Zero Carbon Bill (at p150): “There is a general risk that other countries do not act in kind, leaving New Zealand to bear the disproportionate costs of ambitious climate change action, with little to no material impact on levels of global warming.”
[3] For reasons unexplained, the report repeatedly uses this term in lieu of “New Zealand” “Aotearoa” appears 435 times in the document.
[4] eg Report at [8.5]: “Aotearoa has a responsibility to take the lead in reducing emissions…”
[5] Steinkamp et al (2017), a multi-institutional peer reviewed journal paper. This paper, which was partly funded by MBIE, MfE and NIWA, is highly authoritative and has never been challenged.
[6] In 2018, NZ net CO2-e emissions were 69.2Mt (assuming a methane GWP of 25). About half (35Mt) stays in the atmosphere.
[7] 1 terragram equates to 1 million metric tonnes
[8] Report: “To meet the Commission's proposed emissions budgets, Aotearoa does not need to rely on future technologies. As new technologies develop, this will allow the country to reduce emissions even faster”….“it is not prudent to propose emissions budgets that could only be met if new technologies were developed and deployed”. (p54)
[9] This is well explained in Rupert Darwell’s “UK Climate Change Act after 10 Years : History’s Most Expensive Virtue Signal”. Highly recommended.
[10] The NZ Government declared on 5 May 2016 that NZ would convert 64,000 vehicles by this year (Government fleet, RUC exemptions, special funding, ACC levy reductions, access to bus lanes). But it didn’t happen.
[11] From a security standpoint, how smart is it to converge all the nation’s energy transmission into a single set of wires?
[12] A New Zealander, Kelly is Emeritus Prince Philip Professor of Technology, University of Cambridge, UK, and The MacDiarmid Institute, Victoria University of Wellington, NZ. These comments are taken from his formal written submission to the Climate Commission.
[13] Nobody yet knows how the value of used EVs will hold up. Batteries have a much shorter life than ICEs and technology is changing rapidly. Also, they may be overtaken by robo-cabs..
[14] The programme may be hindered by the doubling of the price of lithium and cobalt battery components
[15] As the Parliamentary Commissioner for the Environment (Hon Simon Upton) has pointed out, the year 2050 is wholly arbitrary. 2070 would do just as well. The Paris Agreement says “second half of the 20th Century”, but our political leaders were keen to “lead the world”.
[16] In the USA, which has longer records, energy intensity has declined steadily since its peak in 1950
[17] Climate scare could be gone by 2030

Barry Brill, OBE, JP, LL.M(Hons), M.ComLaw, OPM(Harv) is the Chairman of the New Zealand Climate Science Coalition. Barry was formerly a Minister of Science & Technology, and has been Chairman of the NZ Gas Council, Waitemata Electricity, NZ Manufacturers Federation, Business New Zealand, and the Electricity Supply Association.