Pure Advantage: green growth is bigger than just carbon

by Gareth on June 15, 2012

Duncan Stewart manages the Pure Advantage programme and in this personal guest post addresses Simon Johnson’s criticism earlier this week that the new green growth report, New Zealand’s Position in the Green Race, fails to take carbon emissions reductions as seriously as necessary. Duncan is a director of investment and advisory firm The Greenhouse, an executive director of environmental compliance software company CS-VUE, and a board member of New Zealand’s electric vehicle association APEV.

The report is “good in parts” eh…? Well partly thank you. The headline provides some insight into your analytical approach; focus on carbon and dismiss the other environmental issues. OK, but in doing so you may have missed the point. NZ’s environmental performance is characterised by many different metrics — greenhouse gas emissions are just one of them. It’s certainly an important one, but no one is going to argue that the loss of native biodiversity is less important, or that methane trumps water quality.

These issues are all interconnected and need to be dealt with through a systemic change in the way we value and manage our natural capital.

Will the ETS fix declining water quality? I doubt it.

Will it provide healthier homes for kiwis? Probably not.

Therefore if clean/green New Zealand is an aggregate of a range of environmental performance metrics, it makes sense for Pure Advantage to identify and focus upon all of the key problem areas. The appropriate green growth solutions may be quite different for each, which is why it makes sense to use a cluster model to deliver these (or butterflies emerging from a chrysalis — whatever is easier to understand). Crosscutting issues such as education also need to be applied to address problems collectively.

What the Green Race document has done is highlight multiple performance failures, rather than do what so much of what the historic green debate in NZ has done, which is default to using a single environmental issue as a proxy for a range of environmental issues. The historic approach enables the government to point to a single initiative like the ETS and say, ‘see we care about the environment, we built a shiny new emissions trading scheme’. The fact the ETS doesn’t work is beside the point.

So, Point 1: green growth is bigger than just carbon. 

A Market Ornament

The role of a market instrument is to change economic behaviour. In our public submission to the ETS review, we said:

“If the NZ ETS is meant to materially alter behaviour in New Zealand by encouraging the development of alternative energy, greater energy efficiency and a significant and demonstrable reduction in emissions, then it is not clear that it will succeed. If, on the other hand, the NZ ETS is meant to be largely symbolic and part of New Zealand’s superficial green branding, then it is largely fulfilling that goal.”

This statement alone makes our position on the performance of the ETS clear. Your argument that Pure Advantage is not being transparent on carbon pricing is unfounded. 

Will dialling up the price of carbon and including all sector scheme participants change behaviour? Absolutely.

Will government do this? No.

Will Pure Advantage repeating our ETS position make a difference to government’s lack of willingness to act? No.

But what would happen if Pure Advantage were to encourage industry to take the initiative and change their behaviour in the absence of a strong carbon price (i.e. ‘reality’)?

Well, for one thing you get a win by actually decreasing emissions rather than talking about it, and, secondly, you’ve then got a marketplace which is actually more capable and willing to accept said carbon price and a government that feels more comfortable about dictating that price. I guess this underlines the very practical approach Pure Advantage is taking.

Last week I chaired a meeting in Rotorua, which included key players in the woody mass biofuel and bio-products industries. It was the first time the value chain from forestry, technology, distribution and end use had got in the same room for a korero. Hallelujah they even agreed to play nicely with one another, share information and have a formal workshop with a view to strategy development. Is this example of Pure Advantage practically supporting low-carbon industry coordination an equally valid approach to putting a price on carbon? I argue yes. 

Does it need to happen anyway? Yes. 

So Point 2: Yes, absolutely put an effective price on carbon. But don’t dismiss the requirement for industry to also develop and coordinate its own solutions, especially as this will further serve to politically de-risk effective pricing.

Answers to your direct questions
  • Do they recognise the economic point that decarbonising must involve carbon pricing? Yes. Do you realise industry coordination is also part of effective decarbonisation?
  • Do they accept that the NZETS is an ineffective carbon price scheme? Yes, as publicly stated.
  • If yes to both these questions, why don’t they show leadership and stand publicly for what they believe in? OK, we’ll personally fund and launch a charitable green growth campaign, then undertake world-leading low carbon research, develop a detailed strategy and issue a partly good report to tell businesses and politicians about it… 

And yes, Pure Advantage is well aware of Hansen’s advice. We helped to arrange and fund his visit to New Zealand. I sat on the steering group that offered The Climate Show an opportunity to interview him. He stayed at my house.

Perhaps Pure Advantage is guilty of not explaining itself clearly enough in the document in relation to the NZ ETS. But there is no shadowy carbon agenda — if you don’t believe me then talk to NZ’s largest environmental watchdogs — it’s no picnic convincing Greenpeace and WWF that a group of business people are genuinely working to address a suite of green issues. Then talk to industry groups like HERA and NERI — they support us too. Even Labour said they would be prepared to work on a bipartisan basis for green growth.

Finally sounds like a season of change, Mr. February.

{ 9 comments… read them below or add one }

Thomas June 15, 2012 at 8:08 pm

Good reply Duncan! And I agree. Sitting around and waiting for politics to deliver a carbon price that really bytes is not an option. Pro-active engagement to grasp the enormous business opportunities of developing the sustainable economy of the future is the key. What matters is ingenuity to make real differences and the will to take the economic momentum of our time (or what is left of it…) to bridge us there. Solutions are found in the engineering side of things – the legislative landscape may push us towards it but we can not afford to wait for that to happen.

Tony June 16, 2012 at 9:46 am

“Pro-active engagement to grasp the enormous business opportunities of developing the sustainable economy of the future is the key.”

I would agree also had we started the process 50 years ago. The problem is that we are driving with a fogged up windscreen to the cliff edge with our foot firmly on the accelerator. We don’t knoiw where the cliff edge is, for all we know we may already be in free fall.

A price on carbon that bites is the only tool I know of that could potentially induce the rapid behavioural change required to tackle GHG emissions. The other option is be prepared to take whatever the consequences of GHG emissions at 400-500ppm+ which I predict will become more costly for businesses in the long term.

Thomas June 16, 2012 at 12:28 pm

I would agree also had we started the process 50 years ago. The problem is that we are driving with a fogged up windscreen to the cliff edge with our foot firmly on the accelerator. We don’t knoiw where the cliff edge is, for all we know we may already be in free fall.

I agree completely. This is indeed the predicament we are in.
And most people have little understanding how vulnerable our “just in time” production society with its global interdependence of materials, services, food production and finance is to disruptions causing massive and sudden shocks to the system as a whole. The margins of safety between our current path and the proverbial cliff are very small and the already pre-programmed disruptions to the system based on our current overshoot trajectory are huge and growing by the day….

andyS June 16, 2012 at 9:42 pm

If we had started the process 50 years ago

Which process are you referring to?

Your people started The Process earlier than that Thomas. Did you forget?

Whoops June 15, 2012 at 10:12 pm

Thanks Duncan – interesting read. I didn’t think Mr February’s post was anti-PA , more of a critical friend kind of thing… but good to read your thoughts.

At the risk of continuing the (light hearted?) bickering amongst those who are on the same side of the argument (world = in trouble, let’s fix it VS she’ll be right, carry on as before)… I’ll throw my two cents in.

While I’m sure I know far less than half as much about ETS/PA as the both of you I have been involved in projects related to both… so am not wholly ignorant (or innocent). That’s more or less full disclosure.

In my humble opinion…

At the outset of the ETS process there were genuine hopes (oh the naivety!) that it would send a signal that rational businesses would notice and react to. As the diluting effects of various election campaigns took hold, it became fairly obvious to most that the ETS was not going to really hit that target. It continues to wander around like some sort of zombie, hoping for a cure of proper (higher) pricing and more rigorous policy. Neither of these are likely in the near to medium term. It has more or less disappeared from political discussion, and certainly from public view.

This is possibly a good thing – NZ has built a system that, despite the undermining, is still in place and functioning. It’s become a background issue (even for farmers), which might imply some level of acceptance. Adjustments later (once that elusive next Grosser’s Global Agreement arrives) will be easier to implement because of that. Hooray! Effort not wasted.

__

PA was (to my understanding, and reading DS’s email more or less confirms it) set up with the point of view that Govt was unable/unwilling to ‘fix’ things – whereby ‘things’ means anything remotely related to environment, global warming or NZ’s brand risk.

PA recognized the govt/bus/public triangle of interrelated paralysis – Govt relies on votes, and on business. Business is constrained by govt, and relies on customers (= people = votes) and is made up of people. People rely on businesses and Govt to guide thoughts/behaviours (plus some modicum of free will). 20 Goto 10. Run.

Govt – too hard to change at outset (obstinate, constrained by votes)
Public – too hard to reach in large enough numbers to move obstinate govt at outset (too much noise, cow farts, wishart/talkback, economy gloom, RWC blaa blaa).
Business – some lost causes, some already moving in right direction, some aware but not yet moving. Easier to achieve critical mass and publicly visible activity (= influence of voters = influence of govt AND ‘market’s ready to move’ signal to govt)

Logical to focus on businesses, especially when one looks at the list of trustees. It’s their domain.

So… I assume PA looked for a way to move those more aware/rational businesses (highlighting market opportunity/risk compared to dry and weak ‘economic price signal’ of willtheywontthey ETS) and developed a three stage plan… 1. Statement of leadership (previous PR work), 2. development of strategy (this report, based on macro econ work soon forthcoming – possibly a little backwards, but meh), 3. execution tactics (?no idea… perhaps they’re developing these?)

When it comes to moving out economic agents, a purist environmental approach didn’t work (hair shirt tree huggers and their precious snails/whales), and a purist economic approach didn’t work (bean counters and their ETS’s

Perhaps B2B leadership (identification of risk), hand holding (macro econ, strategic framework), priming (PR, peer pressure, exemplars) might work?

At least in part – one piece of a fiendishly challenging jig-saw. No edges found yet.

Crikey – long post. Sorry.

tl:dr Give them a chance. Might work, and probably can’t hurt.

Mr February June 17, 2012 at 3:21 pm

Dear Whoops,
Yes I am glad you see my post is intended as a
constructive comment from a critical friend or ally. I think Pure Advantage are 75% there in their message. But. They are like Churchill’s aphorism on the Americans as allies. “Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.”

Whoops June 19, 2012 at 3:01 pm

Hmmm. Backhanded complement again. :-)

Quote war!

“Insanity: doing the same thing over and over again and expecting different results.” Einstein I think.

IMHO banging on and on about Carbon Pricing will fix exactly nothing in the near term. Nick Smith (only Nat MP with a shred of pro-ETS stance) is on the bench and unlikely to get that portfolio back, the general public have moved on.

Longer term… maybe, but only as mindsets change. Hence PA.

Mr February June 17, 2012 at 3:33 pm

Dear Duncan,

Thank you for writing your post to explain your position. As I noted to Whoops, my post is intended as a constructive comment from a friend. I think you are 75% there in your Green Growth message. I appreciate your efforts for and commitment to New Zealand, the environment and sustainable development.

I very much welcome your confirmation that you agree that de-carbonising the economy must involve carbon pricing and that you agree the NZETS as designed is an ineffective carbon price scheme.

These two points are none-the-less missing from ‘New Zealand’s Position in the Green Growth Race’ and much of your other public messages.

You and your colleagues are obviously far too intelligent and strategic for that to be an oversight. The omission seems intentional.

You still seem to see carbon pricing as something the Government is not listening to and something that needs to be “politically de-risked”.

So I am afraid I still think you are downplaying the need for a carbon price within the broader “Green Growth” message.

I am still left with the impression that what you understand about carbon pricing is sometimes not what you say about carbon pricing.

kind regards

Mr February June 19, 2012 at 5:53 pm

Dear Whoops,
Good Einstein quote!
I really liked your first longish comment and felt it explained how Pure Advantage got to where they are at these days. It was certainly good enough as a post in its own right.

In light of the Einstein comment, you seem at my reading (which may just be me) to be staking out a third position, that is different from both my post and Duncan’s post. Which is great, as we at Hot Topic are a very “broad church”.
The positions seem to be:
1. Me; Pure Advantage are back-pedalling on Carbon pricing in the good Green Growth message. I don’ think they should
2. Duncan; We paid for Hansen. We are NOT back-pedalling on Carbon pricing in the good Green Growth message.
3. Whoops; Pure Advantage are back-pedalling on Carbon pricing in the good Green Growth message. And its the right thing to do now.

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