ETS reaction #2

 Wp-Content Uploads 2007 09 Nzets1Two very perceptive pieces of analysis over the last few days,and one deeply misguided one. Rod Oram in the Sunday Star Times takes a look at how nitrification inhibitors could be a major incentive for dairy farmers to get involved in emissions reductions sooner rather than later, and Colin James in the Herald rather gloomily acknowledges the realpolitik of international negotiations:

The odds are that humanity doesn’t think it matters, at least not enough to forgo significant amounts of its material gains or prospects. The odds are that humanity won’t really change its mind until (or if) climate change starts to have effects that cut significantly into material gains and prospects, the necessaries and luxuries of life, and people see it as the cause: that is, when it ceases to be a moral issue and becomes an economic one. That point has not been reached. So world politicians are likely to come up with a suboptimal arrangement to apply when the Kyoto Protocol ends in 2012 and to implement it suboptimally. And so, if the climate change high priests’ measurements and predictions are right and warming isn’t offset by radical new technologies, there is a rough ride ahead.

On the other hand, Roger Kerr of the Business Roundtable in the Dominion Post, grudgingly admits that the ETS looks “responsible and moderate

Biofuels to fly, and other stories

747Air New Zealand is carefully positioning itself as a climate-friendly airline with its latest announcement that it is to trial biofuels in a 747 flight from Auckland in the next couple of years. Working with Boeing, Air NZ will be part of the first commercial trial of biofuel, in a Rolls-Royce-powered jumbo in the next 18 months . The flight will only use biofuel in one engine, and will not carry customers. [Stuff, Herald, BBC, June HT blog on aviation biofuels].

Home grown electrics

Electric vehicles are becoming more newsworthy, following the government’s announcement that EVs are likely to be part of NZ’s answer to reducing vehicle emissions. The Dominion Post dealt with the subject over the weekend, but the online version is considerably shorter than the print version – at least the one that appeared in Saturday’s Press – and it’s much more positive about the potential for EVs. The print version gave Toyota NZ MD Bob Field the chance to plug hybrids as the answer, and to assert that the future lies with hydrogen as fuel – something that I’m resolutely sceptical about. It also quoted my least-favourite motoring journalist, Jeremy Clarkson, who recently slammed the Reva G-Wiz as a “stupid little car

Friday roundup

PolarbearThe Arctic sea ice has begun its autumn freeze after setting a new record for a summer low – a million square kilometres less than the previous record, set in 2005. The NSIDC updates are very interesting, while scientists working in the field described the summer as “remarkable

The business of climate change

New York-based merchant bank Lehman Brothers have produced an excellent overview of the business and economics of climate change (PDF). If you have any interest in the economics of dealing with climate change, and want an informed overview of the drivers of political and commercial change, this is a very good place to start. I don’t agree with everything they have to say (they’re far too dismissive of electric vehicles, for instance – I reckon EVs have the potential be a disruptive technology), but the sectoral and country by country analysis of investment opportunities is fascinating, and their general take on the issue is very close to my own. From the conclusions:

The size of the carbon market globally, as measured by the value of permits issued, could, on a conservative estimate, be over $100bn by 2020 or thereabouts. This assumes that the United States, Japan, and China join the EU in moving to an emissions trading scheme covering around 50% of their total emissions. Annual turnover would be a multiple of that figure. This compares with the US Treasury market which currently stands around $2 trillion.

They put the chances of an international deal including China and India at 75% (up from 50% in an earlier report), and expect share prices to begin to track relative carbon intensity – with carbon-light companies doing better. Recommended reading.