In the wake of the Morgan Foundations hard-hitting report “Climate Cheats”, Simon Johnson (aka Mr February) asks if New Zealand Steel received millions of emission units for free under the New Zealand Emissions Trading Scheme industrial allocation provisions and yet still bought millions of the dubious international Russian units (ERUs) to make windfall arbitrage profits.
The Morgan Foundation’s latest report “Climate Cheats” has been sizzling across the various media in the last week. The language of the report is refreshingly non-neutral and unashamedly emotive. It is in equal parts compelling and condemning.
Carbon credit scheme a farce, reported the Herald. Climate change cheating, said Radio New Zealand. Dodgy deals, climate swindle, climate fraudsters, junk carbon scam, said report author Geoff Simmons.
As a consequence, “Climate Cheats” is an easy and engaging read – no mean feat given the topic – that is also thoroughly well-researched. It really is a ‘high integrity’ credit to it’s authors (if you pardon the pun).
In this post I want to look specifically at one particular type of corporate conduct – arbitrage profiteering – covered in “Climate Cheats”.
Why would Fonterra spend several million dollars on a process lasting nearly a year, seeking planning consent for a huge new milk drier that it knows will never be built? Perhaps that’s not a lot of money to them – after all, one million is only three months’ salary for their CEO.
Fonterra’s proposed Studholme project, just outside of Waimate in South Canterbury, would see two new spray driers powered by two immense coal boilers – one 65MW, the other 50.
This is the biggest new coal burning project in the country, with the hearing happening just as our Minister for Climate Change is about to travel to New York to sign the Paris agreement where we undertook to reduce our greenhouse emissions a totally inadequate 11% below 1990 levels. (It’s even more inadequate when creative accounting turns this into more like +10%).
Expert panels to deliver up-to-date overview of climate risks and mitigation options
Last year the Royal Society of NZ set up two panels to look at what our current understanding of climate change means for New Zealand, and the findings are due to be published over the next two weeks. The first report, Climate Change Implications for New Zealand, will be released on Tuesday, April 19th. It was put together by a team led by VUW’s Prof Jim Renwick, with a brief to:
“prepare a succinct summary of existing New Zealand information around the risks associated with recent and projected trends in greenhouse gas emissions, and the likely consequences for New Zealand in future decades and centuries.”
The Implications report will be launched at the RSNZ in Wellington at 11 am on Tuesday (free admission, register here), and the Mitigation report will be launched at the same venue in Wellington on the 27th (register here), and in Auckland on the 29th (register here). The RSNZ has also arranged a series of talks by international experts Prof Jean Palutikof (Co-chair of IPCC 5th Assessment Report on Impacts, Adaptation and Vulnerability) and Prof Jim Skea, co-Chair of IPCC Working Group 3, on to accompany the reports. Details here.
I’ll have more on what the reports have to say after their release, but they promise to provide a very useful overview of what we’re confronting, and how we might move forward to address the problem. At the very least they should offer a concise framework for policy-makers and politicians to work with.
Last week was a bad week for coal mines on the West Coast.
Early in the week Solid Energy announced 24 workers would lose their jobs from the Stockton mine, and by the end of the week Bathurst announced that it is putting the Denniston mine on hold, laying off 12 workers – terrible news for those workers and their families.
At the heart of this is the same issue that sent Solid Energy under: plummeting coking coal prices – a price that has continued to fall, and was again cited as the reason for Solid’s new layoffs.
Over on the Denniston Plateau, Bathurst’s woes have stemmed, in the first instance, from the long-signalled closure of the Holcim plant in Westport, its biggest client. Bathurst has had to seek domestic buyers for its high grade coking coal, because of the low international price.
Simon Johnson looks at ‘fix the ETS’ metaphors and argues that trying to incrementally ‘save’ or ‘fix’ the NZ Emissions Trading Scheme will ensure it remains ineffective in reducing domestic emissions for decades. Politically, its just flogging the dead horse. We don’t have time for a unending institutionalised cultural conflict over ‘fixing the NZETS’ like the one we have had for ‘fixing’ the Resource Management Act.
Other commentators are using a very different framing for the review; that of ‘fixing the NZETS’. For me that raises some fundamental questions. What are the political advantages and disadvantages of the two framings? Where will each framing lead us? Which framing is more ‘science-informed’?