NZETS – Hot Topic

Did NZ Steel make windfall arbitrage profits from the ETS?

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”.

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How fast over the cliff? More tinkering with the train-wreck NZ Emissions Trading Scheme

How fast shall we drive over the cliff Simon Johnson aka Mr February looks at the Government’s latest token consultation about tinkering with the train-wreck New Zealand Emissions Trading Scheme. We are still driving fast towards a cliff but the argument has moved from which gear to air-con versus heater. The Government has kindly given us the opportunity to make a submission about how hot or cold we should be as we go over the emissions cliff.

Back in September 2012, when Tim Groser and the National Government were last watering down the New Zealand Emissions Trading Scheme (NZETS), I wrote a post that used an excellent metaphor for amending the NZETS, tinkering with the gears while driving a car fast towards a cliff.

All credit should go to former Greens co-leader Jeanette Fitzsimons who had absolutely nailed her answer to questions from TVNZ about the relevance of amendments to the NZETS.

“Look, its like we are in a very fast car, we are heading towards a cliff, which is getting really close, and we are arguing whether to change from fifth to fourth gear”.

Now we roll forward and there is another review of the woeful NZETS.

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Carbon offsets from a permanent forest sink project – keep it real

In which I guest-post as myself and describe a carbon forest sink project I am involved in and our debate about whether we should provide carbon offsets to anyone as part of the project. I originally wrote this for the Greens Frogblog

Simon Johnson is a conservationist, tramper, accountant, former DOC worker and resource management consultant. Simon also blogs periodically at Hot-Topic.co.nz. In this guest post he writes about carbon offsetting from the point of view of a carbon forest.

I am one of the trustees of a small 47-hectare carbon forest sink and native re-vegetation project and mountain bike park; “Project Rameka” in the east Takaka hills in Golden Bay.

It’s really a response to climate change made by two of my old friends, Bronwen Wall and Jonathan Kennett, who bought the land in 2008. Bronwen and Jonathan decided to apply their experience organising native planting projects in Wellington to climate change after reading the 2007 fourth report of the International Panel on Climate Change (IPCC).

It’s been embraced enthusiastically by the Golden Bay community who do the planting, pest control and track work through Project Rameka Inc.

The land is owned by a trust and I am one of the trustees. I did the early accounting for the trust and prepared the application to get the land into the Permanent Forest Sinks Iniative (PFSI).

In return for a 50-year covenant restricting the land use to forest, we receive about 800 carbon credits (specifically assigned amount units) per year for Project Rameka. These units started life as part of New Zealand’s 1990 baseline amount of ‘Kyoto’ units under the Kyoto Protocol.

How many units we get is based on the amount of carbon withdrawn from the atmosphere by the trees. Thanks to the Golden Bay weather, plants grow really quickly. So we really are storing carbon. We have seen 3cm annual growth rings in the few pines we have removed.

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Tim Groser shuts the stable door after the Mickey Mouse carbon credits have bolted

Mickey explains over supply in the offsets market

This week the Ministry for the Environment is consulting and seeking submissions on a proposal to ban some of the more ‘Mickey Mouse’ international carbon credits from the New Zealand Emissions Trading Scheme. Apparently this is because Climate Change Minister Tim Groser “wants to maintain the integrity of the ETS” (New Zealand Emissions Trading Scheme).

Thats really too much brazen and intentional cognitive dissonance, especially since Groser said that only five days after he indefinitely excluded agriculture from the ETS and only four days after he announced New Zealand would not sign up for a second commitment period under the Kyoto Protocol of binding greenhouse gas reductions.

I apologise if you had an extreme reaction to the close conjunction of the terms “Tim Groser”, “emissions trading scheme” and “integrity”. My apologies if you just coughed your coffee/beer/tea over your laptop or punched out your PC monitor.

Assuming you have cleaned up, I should provide the context for Tim Groser’s unintentional irony in claiming to be concerned about the integrity of an emissions trading scheme where emission units trade for less than $3 per tonne of carbon dioxide equivalent gas.

Here is the quote from Groser about the consultation.

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Will the last business lobbyist to leave please turn out the light at the end of the ETS tunnel

turn out the light at the end of the tunnel In this post Simon Johnson aka Mr February channels his inner General Westmoreland and his Vietnam flashbacks to look at National’s latest change to the New Zealand Emissions Trading Scheme (NZETS). Parliament has just (8 November) passed amendments that indefinitely defer any greenhouse gas obligations for agriculture and indefinitely discount obligations to industries.This is a ‘last helicopters off the Saigon hotel roof’ point in the sad history of the always-doomed-to-fail New Zealand Emissions Trading Scheme.

According to cultural folklore the humiliating end of American engagement in the Vietnam war was foreshadowed by graffiti;

Will the last person out of the tunnel please turn out the light?

Or perhaps:

Would the last Marine to leave Vietnam please turn out the light at the end of the tunnel?

This was in frank contrast to the early (with hindsight, unjustified) optimism of General Westmoreland, who had said in 1968 that he could see the light at the end of the tunnel of the war in Vietnam.

So why am I writing about graffiti from a war that ended 37 years ago? Well, to make a ‘bonkers’ analogy with the New Zealand Emissions Trading Scheme, of course! Getting the NZETS established was of course more or less a civil war, and when the Labour Government in its final days in office in late 2008 finally coalesced a coalition of compromise to pass the Climate Change Response (Emissions Trading) Amendment Act 2008, it seemed there was ‘light at the end of the tunnel’ in terms of reducing GHG emissions.

However, with the adoption last Thursday afternoon (8 November) of National’s latest emitter-inspired fiddle; the Climate Change Response (Emissions Trading and Other Matters) Amendment Act, I believe we can now just be honest with ourselves and see the latest amendments to the NZETS as the last helicopter off the hotel roof and the last act of the NZ emissions trading approach, which was futile from the beginning.

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