More Argument Against Emissions Trading -Heather Roy

Heather Roy's Diary

Hon Heather Roy, ACT Deputy Leader 
Saturday, November 8 2009

This week another compelling argument was raised against the need for an Emissions Trading Scheme (ETS), this time in a New Zealand Institute of Economic Research Inc (NZIER) report titled 'Sustainable Development: Have We Got Our Priorities Right?'

The report looked at our current sustainable development policy "in light of international approaches to sustainability which focus on maintaining stocks of natural, physical, institutional and human capital" and examines our environmental priorities against:

* Scale of the value at risk

* Immediacy of threat

* Coverage

* Uniqueness

* Controllability

The report found current policies to be too focussed on combating climate change by reducing greenhouse gas emissions.  New Zealand accounts for only 0.3 percent of global emissions, meaning climate change is beyond our control.  Reducing emissions should not be our top priority, especially as any action we take will have a high cost to the economy and to each of us individually.

The report also pointed out that resources available for use in improving the environment are scarce and many are being wasted on initiatives that provide little benefit.  These should instead be re-directed toward addressing air and water pollution rather than inappropriately used on minimising carbon emissions and waste.

Only ACT has consistently opposed an Emissions Trading Scheme.  National opposed Labour's scheme in the previous parliament, but has gone on to try to produce one of its own.  Debate rages, but without thorough examination of the science behind claims that cutting greenhouse gas emissions is the best way to combat climate change.

While the UN Intergovernmental Panel on Climate Change (IPCC) claims the matter has been proven beyond reasonable doubt, it is neither impartial nor authoritative and works to a charter obliging it to focus on human actions as a source of climate change. But IPCC reports freely acknowledge in places, that there are major scientific uncertainties - such as those relating to clouds, convection, solar activity, aerosols and the chaotic nature of some climatic processes.  The surface of the earth has warmed sporadically since the 19th Century - for millions of years, in fact - but daily headlines conveying evidence of warmth, floods or storms tell us nothing about whether humans are causing climate change.

Those scientists most closely associated with the IPCC's assertions about climate change attribution rely heavily on simulations conducted by climate change models.  Models, however, are simplifications of a more complex reality.  They embody many parameters whose values are highly problematic and cannot usefully model what is unknown. I f the climate is driven by large natural but ill-understood forces global governmental action to reduce emissions growth might prove unnecessary or ineffective.

Added to this is the effect that an ETS would have on the economy, with NZIER having previously pointed out that the ETS would:

* Cut GDP by $900 million by 2012; by 2025 it would be $5.9 billion less than without an ETS

* Leave the average household with $600 less spending - $3,000 less by 2025

* Cause a reduction in employment equivalent to 22,000 jobs

* Mean hourly wages would be $2.30 less by 2025 than they would be without an ETS.

* Cut dairy farming 12.9 percent, dairy land prices 41 percent and sheep and beef farming 6.6 percent by 2025.

This cost would come with no benefit: there would be no effect on global emissions or climate change, the very purpose of establishing an Emissions Trading Scheme.

ACT's Position was supported this year when the Australian Government delayed its ETS for 12 months while a Parliamentary committee considered the effectiveness of emissions trading as a means to reduce carbon pollution. 

The aim of the Australian investigation was to determine whether an ETS could reduce carbon pollution at the lowest economic cost - a sensible stance given the global economic situation.

Despite this, and the very plausible arguments against the need for an ETS, the Government is pushing ahead despite the fact that it makes no sense to burden New Zealanders with extra costs for no environmental gain. If it is agreed we must do something, the best option would be a low level carbon tax from which trade-exposed industries such as Agriculture are exempt.  Taxing agriculture does little to facilitate a sustainable low-emission economy and a carbon tax excluding agriculture would still provide incentives toward new technology without harming the economy.

A low carbon tax places the incentives in the right place, requiring polluters to pay and large polluters to pay more.  It would also have the added benefit of generating Government revenue.  Linking climate change policy to tax cuts - a possibility which should be considered - will ensure it does not significantly damage the economy.

The NZIER is right when it advises that addressing climate change should be a low priority for New Zealand. But if it remains on the agenda we must at least ensure that any policy adopted causes the least possible harm.