National snub to Labour on ETS: part 2 – the fallout

Carbon News has a special update tonight with the gory details of the government’s snub to the Labour opposition on negotiations to amend the emissions trading scheme. CN has also made available the full text of Labour’s proposed memorandum of understanding with the government (PDF) — which reveals that substantial incentives for agriculture were on the table. Commenting on the news of the deal with the Maori Party, a surprised Charles Chauvel told Carbon News:

“Negotiations with Nick Smith were … (pause) …I’m not sure now we had any discussions in good faith. We’d need to be very careful about whether or not we’d have any discussions with them at any time.”

Labour leader Phil Goff accused National of a “major breach of faith” over the handling of the negotiations, and Chauvel indicated that ETS policy was now likely to become a political football.

Under Labour’s proposed Memorandum of Understanding, Carbon News reports that the agriculture sector would have been given:

…free units for emissions reductions made by farmers before the sector entered the scheme on January 1, 2013. The offer would be worth hundreds of millions and encourage early emissions cuts by farmers who would then have free units to trade on the international market.

[Disclosure: registered users of Hot Topic can claim a discount on subscriptions to Carbon News.]

25 thoughts on “National snub to Labour on ETS: part 2 – the fallout”

  1. I/S, we also need to make sure that Labour sets out a policy that allows them to go straight into government and start implementing something, not put another 3 year lead time on the next scheme. They’re terrified of upsetting business, but sometimes you have to make a bold stand on an urgent issue, and implement things without a lead-in time.

    1. Hmmm, I thought that was quite balanced. What part did you have a problem with?

      I disagree when he says it will cost government. Under this scheme the government generates revenue from auctioning some of the units it received from signing Kyoto and industry will end up with a cash outflow.

      So it wont cost a cent to Government, but will cost a little to industry.

      The $400 million seems to come from the amount the Government could generate if they auctioned all units – those were allocated to the Govt by the UNFCCC, if they were to not allocate them to industry but instead auction them they could raise money – but this is a funny way to look at cost – opportunity cost (of not being idiots) maybe?

          1. Non-trade exposed firms – electricity generators for example – will need to purchase emission units from a seller, from a trader, or from an open market. The units need to be either NZ units created under the ETS (eg from allocation or growing Kyoto forest), AAUs from offshore, or CERs or ERUs from offshore projects. There are variations of AAUs, but identifying those would take this thread off-topic.

            To the point – the govt won’t be selling any of its AAUs, not when the call is very close on whether it will be in credit or debit after the Kyoto period.

  2. The debate has long lost all sense of implementing policy in order to reduce emissions, and become more about who pays what, who keeps what, who clips the ticket along the way.

    Has anyone on this website mentioned how this will reduce emissions any less than the old scheme? Or are you all just upset that big bad industry and those dirty farmers wont suffer as much as they would have before?

    (Gareth I suggest you read the actual proposal by the Labour party to reduce emissions on farms before commenting about it in any reply – note reference to Waxman-Markey in select committee minority report)

    1. R2, the original scheme didn’t do much to reduce emissions, and this one does less. The allocation of free credits and lack of any cap for big emitters effectively locks us into a higher emissions profile… So, not only does the amended ETS transfer much of the cost of meeting Kyoto & any K2 commitments from polluters to tax payers (a subsidy), it locks us into a higher emissions pathway. A double whammy. Bad politics has delivered bad policy.

  3. R2 – no one was commenting on the effect it would have on reducing emissions – the supposed import of the ETS – we can all see that the proposed amendments to the ETS by National and the Maori Party does even less than the rather weak legislation already in place. What masquerades as a policy to combat Global Warming is little more than a tax on the poor to pay the rich with a couple of sops to the Maori elite.

  4. so at an International level [kyoto] $30 per tonne 75% of NZ’s emission reductions will be offset. And now we get a ridiculous ETS at home too 🙁

    Camp for Climate Action Aotearoa on emissions trading…
    http://www.climatecamp.org.nz/node/30

    How much longer will we beg these clowns to do the right thing when they’re clearly incapable of putting our futures before economic growth?? Is it time to get to work on dismantling and disrupting the operations and machinery of these companies ourselves or what???

  5. I’m interested and puzzled as to why National ignored the proposal put forward by Labour to reward voluntary behaviour changes in agriculture where the amended scheme would have awarded NZU’s to the industry who made transparent reductions before 2015. The only requirement here was the uptake of “pre-regulatory” reporting of emissions – but why not get the industry reporting and potentially earning NZU’s and shift the consensus attitude to one that sees the scheme as an opportunity and a real chance for reducing emissions on farm (where the reductions need to occur).

    1. Why? That’s easy enough – National is still hoping against hope that the cranks are right, and that AGW is going to be proven wrong if we just wait long enough. Roger Dewhurst and his cronies have been battering them with denialism for so long that National just cannot convince themselves that AGW is real. Therefore, National simply will not do anything that will commit the country to really doing something about AGW, on the off chance that the cranks turn out by some miracle to be right.

      1. I think National has its sceptics, and being in bed with ACT doesn’t help, but the problem is not that they don’t believe in the reality of warming, rather that they don’t really “get” the issue. From a politicians viewpoint, there are “warmists” and “deniers”, and therefore the truth is probably somewhere inbetween — and the natural political assumption is that the middle, “balanced” view is it’s happening, but not as bad as many make out. That means that they don’t have to go hard at solving the problem. It’s not an existential threat.

        Seems reasonable, but isn’t. It’s a mindset, not a valid assessment of the balance of evidence. We need to change their minds. For some, surgery may be necessary, but I think the majority of the Nats would respond to a loud message from the mainstream they love to imagine they swim in.

      2. CTG: I think the difference is that although both parties see climate change as a global problem that can not be solved by New Zealand alone, Labour took the position that New Zealand could lead the world where as National is more content to keep New Zealand somewhere in the middle of the pack (some people may argue we are at the back of the pack, I’m not arguing we are not).

        I think the fast following position is more justified, there is no evidence that if we implement an aggressive all sectors all gases capped emissions trading scheme a bunch of nations will quickly follow.

        1. I don’t think there is any way you can characterise the current ETS as “fast following”. If we go to Copenhagen with the ETS the way it is at the moment, we are going to be very firmly at the back of the pack (of developed nations, that is).

          I think that poses a greater threat to our economy than if we were to adopt even a middle-of-the-road ETS, let alone an aggressive one.

  6. As a piece of PR the Nats are selling the safe cautious road well, however the policy presented as a result is worse than useless. In effect it does *nothing* to address what it seemingly imports. It is nothing more than a fop response.

    What pains me most of all is that New Zealand is in a golden position to actually profit economically from investing in reducing emissions, even without external pricing. What we are stuck with unfortuantly is a generation of people who are willfully or not ignorant of the consequences of climate change, and it seems are happy to let future generations deal with their mistakes.

    1. What puzzles me most is just what were the Maori Party Thinking? Did they actually think that this amended ETS will have any effect on CO2 emissions? And were the supposed 2000 insulated homes worth the cost of $1.2+ Billion PER YEAR to the taxpayer? And what incentives/initiatives are there for farmers to reduce GGE? A 90% subsidy by the taxpayer to farmers for ever? What were they thinking???

  7. I don’t know that the Maori Party leadership were thinking at all. The
    thinking they had done on climate change was simply put aside.

    Nandor Tanczos’ column in the Waikato Times on Friday points out that the change looked like a political back-stab for their climate change spokesperson Rahui Katene, whose comments for the ETS review he described as insightful. He remarks that it seems that it was during leader-to-leader discussions that the party agreed to support an ETS “full of everything they had opposed in the past.” The question is “whether the leaders were unaware of the positions she (Ms Katene) had staked out in the report and in media interviews, or whether they just didn’t care.”

    The gains they claim to have won for poor people are specious. Tanczos points out they would be better paid for by fully charging polluters and using that money. “A potential win-win has been turned into another loss for the Earth.”

  8. “The gains they claim to have won for poor people are specious. Tanczos points out they would be better paid for by fully charging polluters and using that money. “A potential win-win has been turned into another loss for the Earth.””
    Exactly.
    At $1.2 + Billion per year that insulation didn’t come cheap.

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