Tuesday, July 26, 2022

NZCPR Newsletter: Unhinged Obsession

Climate change represents a major threat to New Zealand – but not because of the emissions produced by cows and sheep or from driving cars to the shops. The biggest threat comes from the unhinged obsession of climate fanatics – including New Zealand’s Prime Minister Jacinda Ardern – who are trying to force damaging policies onto the country that will have zero impact on the climate but will devastate the fundamentals of our economy.

First, some background.

Last Monday, Statistics New Zealand revealed inflation had hit 7.3 percent – the highest level in 32 years. To deflect the negative publicity, the Finance Minister Grant Robertson called an unscheduled press conference the day before, to announce that the 25 cents a litre fuel tax exemption was being extended until January – to help ease the cost-of-living pressure on households: “We know that the rising price of fuel has a direct effect on inflation, and making these changes is a targeted approach to a root cause of the cost of living pressure being faced by Kiwi households.”

The Minister of Transport added: “Extending the reductions to fuel excise duty and road user charges will also help to reduce the fuel burden on the road transport sector, and in doing so keeping the cost of food and essential goods lower”.

Treasury was quoted, as estimating that lowering the price of fuel will reduce headline inflation by 0.5 percentage points in the June 2022 quarter.

The Minister’s claim that the timing of his announcement, late on a Sunday afternoon, was not orchestrated defies belief. Clearly Labour went into damage control to try to defuse the negative media narrative. They also took the unusual step of emailing their supporters to reassure them that they were taking appropriate action.

What all of this highlights, is the staggering hypocrisy of the Ardern Government. On the one hand, they are reducing fuel taxes to minimise the inflationary impact of rising fuel prices – while on the other hand they are progressing radical zero carbon goals, which are designed to drive fuel prices and inflation even higher.

With today’s carbon price, established through the Emissions Trading Scheme (ETS), sitting at around $75 a tonne, the carbon tax on petrol is almost 17 cents a litre and over 19 cents for diesel.

So how high does the Prime Minister want it to go?

According to the Climate Commission, to get to Jacinda Ardern’s “ambitious target of net-zero by 2050”, the Emission Trading Scheme’s carbon price would need to rise up to $250 a tonne. 

Since every $20 increase in the per-tonne price of carbon results in the cost of petrol at the pump increasing by 5 cents, at $250 a tonne, the carbon tax on fuel would rise to over 60 cents a litre. On today’s prices, fuel would be pushed towards $3.50 a litre.  

We now know only too well what the result of that will be – to use the Finance Minister’s words, “the rising price of fuel has a direct effect on inflation” and is “a root cause of the cost-of-living pressure being faced by Kiwi households.”

But it’s not just fuel prices that are being driven higher by the rising price of carbon – electricity prices are as well.

This week’s NZCPR Guest Commentator is Bryan Leyland, a power systems engineer, who explains that if the government continues its pursuit of carbon zero, ‘escalating power prices and frequent shortages seem inevitable’:

“At the moment, the carbon tax is about $75 per tonne of CO2 and the Climate Commission predicts that it could go as high as $250 a tonne. Every $50 increase in carbon tax increases the cost of generation at Huntly by at least 2.5¢ and 1.5¢ at a gas fired station. ‘Green’ geothermal stations also pay carbon tax on the carbon dioxide they emit. 

“Between 2004 and 2018 wholesale electricity market prices increased at a rate above inflation – from about 7¢ to about 10¢. In 2018 prices jumped to about 15¢ and have been relatively steady at more than 20¢ for the last two years. This doubling of the wholesale price is already showing up in commercial and industrial tariffs and retail tariffs must soon increase. The economic damage will be huge and the underprivileged will be even worse off.”

What all of this means is that if Jacinda Ardern continues on with her ‘obsession’ of wanting to be seen as a global climate change leader, our economy will be sacrificed through the harshest restrictions in the world.

The process is already underway, with climate objectives increasingly embedded throughout our whole regulatory and legislative framework.

Just last week the Climate Change Minister, Green Party co-leader James Shaw, signalled his intention to tighten up the ETS to force the country’s big emitters to “make a larger contribution towards meeting our goal of building a net-zero future.”

To achieve this, he intends reducing the availability of the “industrial allocation” of free emissions units, that were introduced when the manufacturing sector was first included in the ETS – in order to protect emissions-intensive and trade-exposed businesses from unregulated foreign competitors.

The Ministry for the Environment consulted on this proposal last year, and the feedback was alarming. The first cause of concern was that the number of proforma submissions from environmental activists clearly indicated that the ETS is seen as a political lever to close down industry in New Zealand. And the second, is how vulnerable our key industries are to ETS changes.

Affected parties who manufacture critical products in New Zealand, such as cement and fertiliser, claim Minister Shaw’s proposed changes may force them to close down – not only at a cost of hundreds of jobs, but also resulting in the importation of replacement products from overseas countries with no emissions controls. 

New Zealand’s only cement works, Whangarei-based Golden Bay Cement, which employs around 550 staff, warned that changing the baseline and allocation settings, would increase production costs above the costs of imports, “which will shut down New Zealand operations in favour of imports – increasing global emissions as a result.”

Winstone Pulp International, which employs 281 staff at the Karioi Pulp Mill near Ohakune, says phasing out Industrial Allocations would erode their competitive situation internationally and result in processing capacity being transferred offshore.

The Taranaki based methanol producer Methanex, which employs 240 staff locally and over 3,000 nationally, explained, “Our competition is global, with major methanol production occurring in China, Saudi Arabia, Iran, Trinidad and Tobago, the United States, and Qatar. None of these countries applies a carbon cost to methanol production today; in fact, over 90% of methanol production globally does not attract an emissions cost, and therefore the Industrial Allocation is essential for Methanex to continue operating in New Zealand.”

Methanex also explained that while New Zealand methanol is produced from natural gas, over half of the global supply is produced from coal, with an emissions profile five times greater. They said that because of the Government’s ban on new offshore permits, the lack of natural gas supply had forced them to shut down their Waitara Valley facility. As a result, China had increased its coal-based methanol production to fill the supply gap: “This shutdown therefore runs directly counter to New Zealand’s stated policy of reducing global emissions.”

And that’s the problem Jacinda Ardern created for New Zealand in 2018 when, without any official advice – or even Cabinet approval – she made her Captain’s Call to close down new offshore oil and gas exploration. In doing so, she turned her back on the decades-long strategy of successive governments for New Zealand to be as self-sufficient in energy needs as possible, and, as a result of her recklessness, Kiwis no longer have security of supply. 

The reality we face, is that under Labour and the Greens, anything is possible – regardless of how destructive it is to the economic well-being of local communities. Through the stranglehold of climate laws and regulations, at the stroke of a pen the radicals now have control of every industry in New Zealand.

How can any business make long-term investment decisions when they could be crippled by the madness coming out of the Beehive?

The answer is they can’t. There can be no trust that the Ardern Government will act logically or sensibly – given they have failed to do so in the past.

New Zealand increasingly stands alone, hobbled by punitive climate restrictions that have been justified on the basis that such controls are necessary to avoid constraints on trade – yet the European Union trade deal exposed the fundamental fallacy of that rationale.

The reality is that countries are increasingly backing away from the demands of green fanatics for their low carbon fantasy, instead prioritising economic stability and public wellbeing over UN socialism.

Will Jacinda Ardern come to her senses and abandon her dangerous commitment to net-zero before more damage is done to our fragile economy?

And that’s the fundamental problem. The climate crisis is a political crisis – not one rooted in the real world.

It has arisen because successive governments have adopted the radical socialist agenda of the United Nations to restrict emissions of carbon dioxide as a means of regulating their economies.

Justified under the guise of saving the planet, carbon is, in effect, a proxy for State control of all economic activity.

It was Helen Clark’s Labour Government that led New Zealand down this path back in 2002, when they ratified the UN’s Kyoto Protocol and introduced an Emissions Trading Scheme – even though it had been designed for industrial nations, not rural economies where the main ‘emitters’ are cows and sheep.

Ruminants, of course, play a major part in a natural cycle that goes all the way back to the dinosaurs. Grass lands sequester carbon dioxide through photosynthesis, and when eaten by ruminants, carbon is released as methane, which breaks down into the carbon dioxide and water the plants need to grow. It’s a cycle of life, yet this is what misguided politicians like our Prime Minister are trying to demonise!

When National won office in 2008, instead of repealing Labour’s socialist climate agenda, they doubled down by signing up to the UN’s Paris Agreement to limit emissions, even as the world’s major emitters were walking away. 

Ironically, the Covid-19 pandemic partially delivered on the UN’s Paris objectives, when world economies shut down in early 2020, leading to a massive decline in man-made global greenhouse gas emissions.

However, instead of atmospheric carbon dioxide levels falling – as the UN had led us to believe they would – the US State Department’s National Oceanic and Atmospheric Administration found they had risen dramatically.

The Washington Post of June 4, 2020, carried the story: “Global emissions plunged an unprecedented 17 percent during the coronavirus pandemic… Carbon dioxide levels are the highest they’ve been in human history, and probably are the highest in 3 million years. The last time there was this much CO2 in the atmosphere, global average surface temperatures were significantly warmer than they are today, and sea levels were 50 to 80 feet higher.”

These real-life findings counter the dreadful scaremongering surrounding this issue.

They not only show that human emissions are so insignificant that their impact on the climate is negligible, but they also remind us that the earth has been both hotter and colder than today, irrespective of carbon levels.

The reality is that carbon dioxide is a trace gas that is present in only minute concentrations in the atmosphere – making up around 0.04 percent. Almost all carbon dioxide – 97 percent – is produced through natural processes including being released from oceans, rocks, volcanoes, and, of course, during the respiration of all living things. Only 3 percent of carbon dioxide in the atmosphere is generated by human activity and of that, New Zealand’s contribution is an infinitesimal 0.17 percent.

All around the world, governments are turning their backs on radical climate policies that will undermine energy security and economic independence.

Isn’t it time New Zealand did the same?

Please note: To register for our free weekly newsletter please click HERE.


*Do you believe the Government’s zero-carbon policy agenda will be good for New Zealand, won’t make much difference, or will be very damaging??

Dr Muriel Newman established the New Zealand Centre for Political Research as a public policy think tank in 2005 after nine years as a Member of Parliament. The NZCPR website is HERE. We also run this Breaking Views Blog and our NZCPR Facebook Group HERE


Anonymous said...

They’re not climate change fanatics, they’re just using it as a tool of oppression. Last year it was Covid and next year it will be something else.

Rob Beechey said...

The truth does not mind being questioned but a lie does not like being challenged. Have you noticed how Stuff refuse to debate this subject. For a very good reason, their global warming religion would not stand up to scrutiny.

Anonymous said...

Thank you Muriel for all the great information! If only more people would sign up for the NZCPR newsletter we would have a better informed population. MH