This week it’s the turn of the Greenhouse Policy Coalition to trumpet a report urging a go-slow on emissions trading. The GPC, of course, are the nation’s big emitters (NZ Aluminium Smelters, Holcim, Solid Energy, Fonterra etc), and they are lobbying hard on behalf of their members. The usual suspects (Business Roundtable, Business NZ) weighed in behind the report, while Greenpeace and the Business Council For Sustainable Development took the opposite view. Brian Fallow at the Herald provides an overview – but not much in the way of substantive criticism.
The report, The New Zealand Emissions Trading Scheme: How do we make it work? [PDF], by Alex Sundakov at Castalia, is pretty obviously a bit of special pleading on behalf of big emitters – primarily agriculture – and in that respect its conclusions are hardly surprising. These are the key suggestions (from the press release):
- Adopt a more realistic timeframe for transitioning to a lower carbon economy, in keeping with our trading competitors
- Set within-scheme emission caps that reflect our emissions profile and limited abatement opportunities
- Introduce a price safety valve to avoid volatility and exposure to high carbon prices that would cause economic damage
- Use intensity based rather than absolute emissions targets for firms â€“ so that NZ firms are judged on worldâ€™s best practice benchmarks and can continue to grow as long as they are at worldâ€™s best practice.
- Retain a focus on protecting competitiveness and limiting carbon leakage.
- Establish a new entrant reserve of free allocation to industry; otherwise New Zealand will fail to get any new investment in our most important income earning sectors.
Also from the press release:
Sundakov doesnâ€™t think that any scheme posing such risks will be credible. â€New Zealanders wonâ€™t be willing to face real economic costs for the sake of arbitrary international targets and illusory environmental benefits.â€
Some glimmer of the underlying position here, perhaps? “Arbitrary” targets are all we’ve got, and they’re going to get stiffer if any post-Kyoto deal is to have a chance of working. And the environmental benefits of saving the world? It might be illusory to think we can save the world, but if we do the benefits are rather obvious.
The report is – however contentious its conclusions – clever and effective lobbying, because it makes some reasonable points. There’s much to be said for keeping some credits in reserve for new companies starting up here, or taking a flexible approach to phasing out free credits, and for some sectors these may be really important objectives that can be achieved in negotiation with government.
Ultimately, though, the report suffers from obvious shortcomings. It makes the sweeping assertion that there’s little that can be done to reduce agricultural or transport emissions cost-effectively. That’s a convenient assumption if you want to argue for a go-slow on emissions trading, but it’s hardly supported by the facts. Nitrification inhibitors alone could make a big dent in pastoral emissions, and land use change – swapping high emitting systems like dairying for more sustainable, but comparably profitable crops – could do a lot more. Not something that Fonterra wants to hear, perhaps… I think the report also completely misreads the international situation (as did the NZI “fast follower” effort of a couple of weeks ago). You have the strange dichotomy of Fonterra supporting a call for a go-slow on the ETS, while at the same time playing an active role in the Sustainable Food Exports Group (formerly the Food Miles Group), the working party looking at how to respond to climate issues in our export markets – at a time when the dairy industry may be losing some of its competitive advantage.
It might be a bit utopian of me, but I think there’s real merit in New Zealand following the French example: setting up a large scale, cross party, all sector effort to build consensus on action. Current government policy looks a good place to start, but if we can stop the to-and-fro of self-interested lobbying we might be able to start getting some work done.