ETS Review Submission from Steve W

Submission Form

Submitter name (please insert):       Steve W

Consultation Questions

1. Do you agree/disagree with the Panel’s assessment of the current impact of the ETS? If not, why not?

      The panel claims “For the period up to 2012, the NZ economy is expected to grow”. Even before the Chch earthquake this was optimistic. In the wake of this massive hit to NZ, recovery will be even slower and more painful with the dead hand of the ETS. That the panel saw fit to publish such a thing weeks after the Chch earthquake reveals a troubled relationship with reality.

 

1. What impacts of the ETS have you experienced to date?

In your response we would be interested in:

1. financial impacts you have experienced and how you have managed these (eg, passed them on to consumers)
2. how significant the impact of the ETS has been relative to other changes, such as GST increase, consumer demand changes and oil price increases
3. whether the ETS has yet influenced your investment decisions (eg, on low-carbon technologies, and land development)
4. whether the ETS has yet influenced your operating decisions (eg, input sourcing, supply chain, choice of energy supply)
5. other impacts of the ETS (eg, social, environmental).

The ETS has raised my gas, electricity and petrol prices by tens of dollars per month, and contributed to inflation of everything else, as it is intended to do. Social impacts have included cutting back on participation in voluntary organisations, especially those requiring vehicular participation, and increased provision of advice for persons to consider residency in Australia.

Environmental impacts remain undetectable, and will remain so, even if all Schedule 1 countries implement all GHG reduction targets for the next century. 

 

1. What are your views on the administrative efficiency of the ETS?

In your response we would be interested in comments on:

1. compliance costs associated with the ETS (including brokerage fees)
2. complexities of ETS reporting requirements (such as accounting methodologies)
3. penalties for breaching ETS obligations
4. the organisation of this administration across government, including the role of the Environmental Protection Authority.

      Even accepting the absurd notion that New Zealand should impose a huge restriction on our wealth-generating capacity, unmatched by countries much richer than us, an emissions trading scheme is the most bureaucratic, and expensive method possible, and is designed for fraud.

In 2010 European Taxpayers lost 5 billion euros in carbon trading fraud (Guardian, 2010).

1. In your opinion, are the modelling results in paragraph 62 of the Issues statement (page 21) likely to reflect the actual macroeconomic impacts of the ETS? If not, in your opinion, how will the ETS affect New Zealand in overall economic terms?

      If the effect of the ETS is slight, then it is pointless. Climate alarmists insist that “If we can't get below [350 ppm CO₂], scientists say, the damage we're already seeing from global warming will continue and accelerate” (350.org, 2011). Therefore an ETS only makes sense if it raises the cost of everything requiring GHG emissions (basically everything), to the point where the world’s consumers are forced to desist from actions that the alarmists disapprove of, and if such massive cuts are matched globally.

The “macroeconomic impact” of this would be to reduce billions to subsistence level.

 

1. Do you agree/disagree with the Panel’s assessment of the impact of the ETS after 2012? If not, why not?

      The scenarios which admit that the ETS may knock several percentage points off NZ’s wealth, make the goal of closing the income gap with Australia (a goal all political parties apparently still support) all the harder. Such wealth destruction, of course will, if the climate alarmists are right, have to be only the baby steps.

 

 

Submitter name (please insert):      

 

1. What impacts do you expect to experience after 2012 (given the current design settings of the ETS)?

In your response we would be interested in:

1. how impacts will change once the transitional phase ends
2. whether any significant business risks are created by uncertain carbon prices, and if so, how these risks could be mitigated
3. any competitiveness risks and therefore risks of carbon leakage
4. any business opportunities and benefits that may arise
5. how you expect abatement technologies to develop by 2015 and beyond
6. comparison between carbon prices and abatement costs
7. how you expect the ETS to affect New Zealand socially and environmentally in the long term.

     e. Abatement technologies:

The panel admits (para 17-20) that “NZ faces particular challenges in meeting targets”, our high emissions from agriculture mean options are “more limited”, and our already high % renewable electricity means NZ “lacks abatement options”.

 

Despite generous research funding for options to abate mammalian methane emissions, results are marginal, expensive and restrictive (special feed types, etc). In short, such efforts are up against fundamentals of mammalian biology. Meaningful reductions would require wholesale, probably genetic, re-engineering of biological pathways. Even if such miraculous breakthroughs were achieved, whether such “Franken-products” would find market acceptance amongst sustainability-conscious consumers is questionable.

 

The lack of any credible plan to achieve the “50% by 2050” target, other than shrinking NZ’s economy by half (and even more per capita), make talk of “business opportunities and benefits”, rather inopportune.

 

The “50% by 2050” target should not be gazetted. It should be abandoned.

 

 

g.Social effects

 

In 2010 Fonterra warned the government that the ETS would raise dairy food processing costs to over $100 million yearly by 2015. Meat processors forecast cost increases to $20 million yearly by 2013. Federated Farmers forecast the costs to farmers of the power and fuel price increases from July would be approximately $87 million, but indirect sector-wide costs of $200 million (Broome, 2010).  And yet, political parties that are calling for the ETS to be implemented even faster and to a greater extent, are trying to make a political issue of the price of food.

 

1. As forestry is New Zealand’s largest source of carbon credits and has a significant influence on emissions reduction in New Zealand, do you think the ETS provides enough incentive for forestry investments? If not, why not.

      The question of whether there is “enough incentive for forestry investments” is meaningless. It implies that there is some “correct” amount of NZ land that should be covered by tree farms. There is not. Land use should be determined by market demand for the products produced. This flexibility has been one of NZ’s competitive advantages. The ETS reduces this flexibility.

 

1. Do you agree with the Panel’s assessment of the impacts of the ETS on Māori? If not, why not?

     You note that Maori whanau will be “more impacted” than non-Maori. This is correct. Restricting access to affordable energy means the poor will get poorer.

 

1. In your opinion, what impacts of the ETS have Māori experienced to date?

      They have got poorer.

 

1. In your opinion, how will the ETS affect Māori in the longer term?

      They will get poorer.

 

1. Do the scenarios in table 4.1 in the Issues statement (page 28) capture the most likely outcomes for the international framework after 2012? If you answered no, what other scenario(s) do you suggest the Panel should consider?

      Scenarios 1 and 2 are well-nigh impossible. 3 is overly optimistic. You should have considered a scenario 4: that the international crusade to reduce GHG emissions collapses completely. This is more likely by the day as:

 

The global recession drags on, and restricting access to reliable energy becomes even less of a priority for debt-drowned US and EU, and earthquake-ravaged NZ and Japan.

 

Any massively expensive GHG reductions achieved are more than offset by China et. al.

 

The peaking of fossil fuel extraction, make impossible the continual acceleration of CO₂ concentrations on which the catastrophic climate predictions are based.

 

More and more scientific institutions are being forced to admit the lack of certainty surrounding the catastrophic climate projections. For example, even the once uniformly-alarmist Royal Society now concedes: “Observations of surface temperature change before 1850 are...scarce”, understanding of particulate effect “is poor”, “uptake of CO2 by the land and oceans ...is very poorly understood”, there is “insufficient understanding of ... ice sheets on Greenland and West Antarctica”, “ability of ... models to simulate some aspects of regional climate change is limited” (Royal Society, 2010. Climate Change: A Summary of the Science).

1. How might the objective(s) of the ETS change under each of these scenarios? In particular:

1. what do the different scenarios imply about the costs New Zealand should be imposing on its economy through the ETS in the short term?
2. what considerations should influence how the costs of any international obligation New Zealand faces should be shared between different sectors of the economy such as the split between emitters and taxpayers and the relative abilities of different sectors to reduce emissions?
3. what is the role of the ETS in preparing New Zealand for the international obligations and other drivers for action it may face in the long term?
4. should the ETS design be changed in order to strengthen the incentives for domestic abatement? If so, how?
5. how important is continuing access to international carbon markets?
6. how do you see domestic and international carbon markets developing beyond 2012?

     The collapse of the Chicago Climate Exchange show that “international carbon markets” are not “developing”. They are unravelling.

1. Under what conditions should the ETS scale up to a full obligation? In particular:

1. Should the fixed price option of $25 continue beyond the current transition phase (ie, after 2012)?
2. Should the one-for-two obligation continue beyond the current transition phase?

      Under no conditions should the ETS scale up in any way, shape or form. John Key promised before the election that we would be fast followers, not leaders. Now we are leading the world with burdening every sector with costs, and no-one is following.

1. To what extent, if any, should abatement options be relevant in determining the extent of a sector’s participation in the ETS?

      To no extent

1. Under what conditions should new sectors enter the scheme and incur surrender obligations?

      They should not. All our major trading partners are adopting a wait-and-see approach. So should we.

1. Should allocation of NZUs continue as planned under current design settings after 2012?

In your response we would be particularly interested in:

1. the effectiveness of allocation in reducing competitiveness risks
2. the impact of allocation on incentives to reduce emissions
3. whether the allocation thresholds should be amended
4. whether the process to determine allocative baselines should be changed
5. whether the allocation of units to small and medium sized enterprises (SMEs) is the most administratively efficient way for protecting impacted sectors either for SMEs or government.

      No

1. Should the ETS cover synthetic greenhouse gases (SGG) from 2013, as currently legislated?

1. if no, what other policy tools or what combination of policy tools should be used to encourage reduction in SGG emissions?
2. if yes, are there supporting measures or amendments to the ETS that could support implementation and reduce administrative and compliance costs?
3. if the ETS should be amended to cover only some SGG-using sectors: which ones, why, and what policies should be developed for the others?

In your response we would be interested in

4. estimated impacts of the ETS coverage of SGGs (such as compliance costs for direct participants, on rates of gas recovery and recycling or destruction, and on management of leakage)
5. arguments for or against alternative policy tools
6. estimated impacts, including behavioural impacts in terms of incentives to reduce emissions, of alternative policy tools.

      No

1. Are there are any other issues, in particular any related to the matters set out in section 160(5) of the Act as summarised in Chapter 1, you think the Panel should consider? If so, please provide details of your view on them.

      Yes, the ones you refuse to consider: Whether there is a human-induced climate crisis, and whether an ETS is an appropriate solution to a non-problem.

 

 

References:

 

350.org (2011). http://www.350.org/en/mission

 

Broome, D. (2010). ETS or bust? http://nzclimatescience.net/index.php?option=com_content&task=view&id=63...

 

 

Guardian. (2010). http://www.guardian.co.uk/business/2009/dec/14/eu-carbon-trading-fraud