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Climate change – ETS or Carbon tax?

Written By: - Date published: 12:43 pm, June 4th, 2014 - 71 comments
Categories: climate change, david cunliffe, Environment, ETS, global warming, greens, labour - Tags:

Climate change global warming

Rather predictably the media is starting to imply that the difference in policy between Labour and the Greens concerning which system is best to address climate change is a sign that they cannot work together.  A recent Fairfax article titled “Labour opposes Green’s Carbon Tax plan” contains the following passage:

Labour opposes the Green Party’s new carbon tax policy, saying the Emissions Trading Scheme (ETS) was its preferred option.

Labour leader David Cunliffe said today his party would negotiate with the Greens on the policy, but did not favour it.

“That’s the Green’s position, not ours,” he said on Firstline.

“Our position is in favour of an Emissions Trading Scheme, which is well managed – not one that’s been gutted by the current government policy.

“An ETS is probably slightly more complex, but slightly more effective in terms of allocating the costs and benefits of a carbon price across the board.”

The language in the article and the heading is rather strong.  I do not read Cunliffe’s statements as opposition to a carbon tax, just that Labour’s preference for an ETS is based on it being slightly more effective even though it is slightly more complex.  And a carbon tax was the party’s previously preferred method of complying with the country’s Kyoto obligations as I noted in a previous post.

To those claiming that Labour has shown some sort of weakness by not being able to change its policy in the three days since the Green’s Carbon tax announcement they do not understand how policy is adopted in the Labour Party.  There is a full constitutional process where the party’s policy council has an ongoing role to prepare and refine the party’s policy platform and Annual Conference reigns supreme.  Currently the Policy Platform says:

4.12  Labour wants New Zealand to honour its international commitment to reduce our gross greenhouse gas emissions through good science and responsible behaviour by companies and individuals. We will encourage the development of mitigation technologies and industries, such as forestry. We will make sure our Emissions Trading Scheme has environmental credibility as an ‘all gases all sectors’ scheme, ultimately free from subsidies to greenhouse gas polluters.

Cunliffe is correct in respecting the party’s constitution.  He would be pilloried if he was to unilaterally change party policy.

The differing policies create an interesting debate.  Which is better?  A carbon tax or an emissions trading scheme?

Both systems put a price on the production of greenhouse gasses.  Basically an ETS is more complex and attempts to drive up the price of polluting depending on how much over a set cap GHGs are being produced whereas a Carbon Tax is a more straight forward tax on GHG production.  If you want a more detailed primer on the differences between the two systems this Guardian Article is helpful.

The Green’s proposal is simpler.  A straight forward $25 a tonne of GHG equivalent will be paid by major polluters.  Foresters will receive a credit of $12.50 for every tonne of CO2 sequestered.

And it is clear that Labour’s ETS has been effectively guttered by National’s changes and needs to be strengthened.  Not only is agriculture not in the scheme but major polluters have no incentive to do anything.  Things are that bad that the petrol companies have discovered that they are able to profit from the scheme by receiving locally sourced credits and then purchasing much cheaper overseas credits to cover their obligations.  The incentive to do something to address climate change is effectively nil.

Hopefully Labour and the Greens will gain power at this year’s election and can then have a robust discussion on what system is best.  But current differences of opinion should be regarded as being nothing more than the pursuit of the best possible means of addressing what both parties agree is one of humanity’s most pressing problems.

71 comments on “Climate change – ETS or Carbon tax?”

  1. Tracey 1

    Yes. Apparently wanting to beat your children and drive homosexuals back into crminiality doesnt mean key and craig cant work together butThe left must agree on everything with each other or be declated in chaos.

  2. Lefty 2

    The current disagreement between Labour and the Greens is over which of two methods of pretending to reduce carbon emissions while allowing business as usual will fool the most people.

    It is true though that such disagreements should not be blown out of proportion and certainly it doesn’t mean they can’t work very effectively together as a government.

  3. Ad 3

    If one policy is slightly more effective and slightly more complex, is it necessary to have two different policies between the Green Party and the Labour Party? Why can’t we just all get along, so to speak?

    In fact is is time for Labour and the Greens to agree in specific areas which have the stronger policies, and adopt them? Wholesale pre-election coalitions have already been ruled out. But pick just a few areas such as this one, and simply saying to the other: take the running on this one will you?

    • Colonial Viper 3.1

      Good idea – it would give the Left across the country confidence that LAB and GP are definitely talking and co-ordinating productively ahead of the election.

    • ghostwhowalksnz 3.2

      Thats what coalition agreements are about . When you are in government.

      The Greens just spend their time in opposition drawing up purge lists of list Mps to be dumped.

      • Colonial Viper 3.2.1

        The Greens just spend their time in opposition drawing up purge lists of list Mps to be dumped.

        Yeah but there’s a corollary of this for Labour to do with keeping everyone on even if they have proven bloody useless and a liability over and over again. So which do you prefer?

  4. Macro 4

    Emission Trading Schemes have been show around the world to not work because they are far too open to scams from unscrupulous players in the market. Furthermore they are far too easy to trash by succeeding and unthinking governments – as we have seen to our cost here.
    One might say that Carbon Taxes suffer the same weakness – e.g. Aussies Carbon Tax and the Abbott idiocy. But just the other day Australia’s Emissions reduction target increased from 5% to 18% – courtesy of their Carbon Tax! Hidden in the detail which Abbott and co failed to notice :)
    http://www.smh.com.au/environment/climate-change/australias-emissions-cut-target-triples-overnight-thanks-to-failure-to-repeal-carbon-tax-20140602-39esv.html
    The good thing about a Carbon Tax is that a Fixed Price can be set. This gives Business and consumers knowledge of just what the burning of fossil fuels by them will cost – varying prices means people may not actively attempt to reduce their emissions but rather chase the cheapest price.
    Furthermore this proposal by the greens includes the establishment of a independent commission to advise govt on setting the continued carbon price.If the price is too low then the tax can be adjusted so that people return to seeking alternatives to burning carbon.
    The dividend part of the Proposal is also a must and more difficult to implement with an ETS. The dividend needs to be directed at those who can least afford change – The $2000 tax threshold is a good start. and the drop in company tax rates also a sweetener to smaller companies who do not have the facility to offshore their profits.

  5. Lanthanide 5

    China is considering to put a cap on greenhouse emissions starting in 2016.

    http://www.scmp.com/news/china/article/1524872/china-considering-cap-greenhouse-gas-pollution

    National are looking like dinosaurs more and more, and their feeble fig-leaf of “others have to do it first” is fast slipping away.

  6. Bill 6

    And there you have an excellent example of how not to write fucking policy. Here’s the basics.

    If there is a direction you wish to go in, then you choose language that leaves the door open for possibilities that might develop in the chosen direction. You don’t fucking well hem yourself in as Labour have done here.

    On the other side of the coin, if you identify a direction you do not want to go in, then you slam the door shut by being very specific and tight in the language used…as Labour have done here.

    Rocket science, it ain’t.

    edit We will for example make sure our Emissions Trading Scheme has environmental credibility as an ‘all gases all sectors’ scheme, ultimately free from subsidies to greenhouse gas polluters.…should have been obvious as an ‘open door’ progressive policy clause.

    • ghostwhowalksnz 6.1

      What a load of nonsense.

      The ETS framework is the current LAW. So what part of a majority does the Green party have expect to have in parliament that can throw out the existing law in total AND introduce a whole new version.
      Even if Labour were to reverse its existing policy ( which takes some doing as Mickey pointed out) do the Greens have ALL the other minor parties lined up in support ?

      I dont think so. Green around the ears is definitely showing in some peoples minds in their rush to have a seat at the cabinet table. Its MMP stupid !

      • It’s perfectly reasonable to negotiate that the Government support a carbon tax as part of a coalition agreement. That would mean that all parties entering the coalition need to support it as well. Then you form a government that has a majority of seats in parliament, et voila, you have your carbon tax.

        I think you should brush up on your MMP. ;)

        • ghostwhowalksnz 6.1.1.1

          Doesnt happen that way. National currently have NO coalition arrangements with its parties. Only a confidence and supply.

          Same as when Labour was in power only a few parties were full coalition, Greens were only C&S partners, so there was arrangements on any legislation as it occurred.

          Your assumptions about “coalitions” hasnt been based on facts

      • Bill 6.1.2

        You’ve missed my point so fucking completely, haven’t you ‘ghost’? So I’ll make it real simple. The way the policy is worded means that Labour can’t say jack-shit that would overtly favour a carbon tax. Had they worded their fucking policy with an eye to possible developments and half a fucking brain, they could have publicly said they favoured a carbon tax while remaining within their own policy’s written parameters.

        • Colonial Viper 6.1.2.1

          This is more evidence that Labour intrinsically do not have the hang of this MMP business and are missing (avoiding) a lot of strategic subtleties/opportunities with which to take the nation Left.

          Also they have a self perception problem – they seem to honestly view themselves as the major and natural party of the NZ left – when in fact they long ago gave up any such role. Firstly in favour of major right wing neoliberalism, and more recently as a proponent of pragmatic, pro-capitalist centrism. Instead of fulfilling its historical mission, which the country needs more badly than ever, the Labour Party has become the Centrist-Moderates Party. And people are waking up to that.

          • Macro 6.1.2.1.1

            Well said.
            One had hoped that there was a movement back to the true roots of the Labour movement a few months ago – but not to be. Labour is afraid to really stand up for the people it supposedly represents, and that is why we have a proliferation of Parties on the Left because the powerless are no longer being represented by Labour.

            • Colonial Viper 6.1.2.1.1.1

              And are now more willing than ever to do something about it. Which appears to be pissing some Labour MPs off no end.

        • ghostwhowalksnz 6.1.2.2

          Their policy was written in 2008 when the legislation was passed ( with Greens support)

          Just because the Greens have changed their minds about which tree to hug this month doesnt mean Labour should throw the baby out with the bathwater.

          This is how parties that have been in government work Not that you would know anything about that

          • Macro 6.1.2.2.1

            I’m not sure there is any baby left it has pretty much been dissolved. But Brian Fallow says it much better than I.
            http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11267674

            Here he is commenting on the World Bank’s opinion of our ETS ranked 26th out of 26 world wide.

            “In the measured language of such organisations, the World Bank is scathing about New Zealand’s scheme. It notes that last year in the international negotiations we adopted an unconditional target of a 5 per cent reduction from 1990 levels by 2020.

            But it says – as the Government’s own forecasts admit – that current measures and policies are not sufficient to meet this target domestically.

            “The unlimited use of international credits in the New Zealand ETS, combined with the record low price for these international credits, has resulted in insufficient domestic reductions.”

            That is putting it mildly.”

            Frankly not one Cap and Trade scheme around the world is doing what it is supposed to do – reduce the use of Carbon. All countries that have such a scheme and have brought down their emissions are doing so by regulation rather than incentivisng throughout Carbon Pricing. There is really only one way to put a price of the burning of Carbon – and that is to TAX it.

  7. Johnm 7

    ETS or Carbon Tax, either are just smoke screens to cover our dire predicament:

    “Keeping in mind that humans of industrial civilization have thus far warmed the planet by 0.85˚C in the last couple hundred years, the extreme weather events that have occurred just in the last decade, let alone in the last year, are clear evidence of an increasingly destabilized climate system. Catastrophic changes in the glacial zones of the Arctic and Antarctic have been set into motion, altering global jet streams and weather patterns as well as locking in a sea level rise that will make most coastal cities uninhabitable within a couple of generations. Thus we can see that the target of 2˚C is a totally fraudulent upper limit for anything safe; industrial civilization has already passed the point of no return into climate chaos.”

    http://collapseofindustrialcivilization.com/2014/06/03/no-dice-too-little-too-late/#comments

    • Lanthanide 7.1

      Is this one of the websites that claims 95% of life on earth is going to go extinct because of anthropogenic climate change?

      • Johnm 7.1.1

        Hi Lanthanide
        We are currently living through the 6th great extinction over 200 species are going extinct every day. This is reality not feel good political posturing irony and hypocrisy. This is actually happening, it’s not a status game! And catastrophic climate change is really, really happening and will impact you and your descendents. The ETS and Carbon Tax are BS distractions from reality!

      • Colonial Viper 7.1.2

        Is this one of the websites that claims 95% of life on earth is going to go extinct because of anthropogenic climate change?

        Well, I’m picking the number at around 75%, but the odds will distinctly improve for most of the planet once human civilisation (and population) degrades a century or so.

        After all, several global mass extinction events have occurred over the geological history of the Earth

        http://www.bbc.co.uk/nature/extinction_events

  8. George 8

    Certainty of price (and thus the ability to make investment decisions) has not been delivered. Because of NZ’s small size, an international market will always be necessary, and that brings with it its own sets of challenges and risks. Those problems will remain, and are not easily bridged.

    I have always been in favour of a tax and dividend approach, as advocated by James Hansen, and this is pretty close. Once you give the population something, especially something that is both universal and financial, it is difficult to take it back. WFF and interest-free student loans are prime examples. Had Labour gone with their original plans, and not been beaten back by braying from business, such a thing would have been firmly established by the late 2000s.

  9. Tracey 9

    The govt is paying corporate polluters with taxpayer money but wont tell us who has been getting our money.

    http://www.scoop.co.nz/stories/PA1405/S00531/taxpayers-subsidising-millions-in-pollution-under-ets.htm

  10. blue leopard (Get Lost GCSB Bill) 10

    Yeah look, from my perspective it is sheer lunacy to introduce any more systems of speculation into our world– after what we have just witnesses with the GFC.

    Do I really need to explain my reasoning further?

    I shall assume it is as blatantly obvious to the reader of this comment as it is to me on this occasion.

    Therefore Labour has now fallen into the ‘sheer lunatics’ category in my mind and the Greens get approx. 1000**1000 more brownie points.

    Get your act together Labour.

    • Colonial Viper 10.1

      The strategy of the power elite – ‘pretend and extend’

      Time for people to become familiar with the Kübler-Ross hierarchy of grief vis a vis a depleted and difficult future which is not going to be far less shiny than promised, at least for the bottom 95%

      1) Denial
      2) Anger
      3) Bargaining
      4) Depression
      5) Acceptance

    • ghostwhowalksnz 10.2

      Youre dreaming !

      You dont have a majority in parliament to introduce a wish list ( well thought out maybe) that is the policy of a 10-12% tops minor party

      • Macro 10.2.1

        No ghost your the one who’s dreaming. Labour will not be able to form a government without the support of the Greens end of story. They will need to find accommodation or there is no deal. The ETS trial has shown itself to be a complete waste of time and the planet cannot afford this useless experiment any longer. The Greens will loose huge support if they continue to support ETS. That’s 10+% of the voting public pissed off there and then.
        Frankly with the current “broad church” that Labour run at the moment there is no way they will improve much beyond 30% – People have had enough of their wish wash flannel.
        So either Labour get their act together and begin to run with some Policy that inspires and work with others, or the country can look towards the reality of another 3 years of misery.

        • ghostwhowalksnz 10.2.1.1

          Labour and Greens still doesnt get you over 50% of the MPs !

          Its the smaller parties that will decide.

          Im all for the Greens becoming Climate Change Minister and doing all the writing of legislation- no bumper sticker platitudes- and getting the required numbers through the house.

          Do you have Winston all lined up ?. Good luck on that.

          Of course the Greens were all in favour in 2008.

          “On 10 September 2008, the Climate Change Response (Emissions Trading) Amendment Act 2008 had its third reading in Parliament and was adopted 63 votes to 57 with support from the Green Party and New Zealand First.”

          Conversely the existing ETS scheme can have the stuffing put back in that National has taken out much more easily

          • Macro 10.2.1.1.1

            The support the Greens gave the ETS (as it was then) was solely because there was no other option – Peters had sunk the possibility of a carbon tax and anything is better than nothing. You can rewrite history as much as you like – but Labour and the Greens both initially wanted a Carbon Tax – The ETS was the only alternative – and as it proved not a very good one . Time it was gotten rid of. I would be surprised if Mana and Internet did not support a Carbon Tax – Minto campaigned for the Auckland Mayoralty on a ticket of Public Transport and is well aware of the issues and the dividend part of the Policy will appeal to their supporters.

            • ghostwhowalksnz 10.2.1.1.1.1

              So the Greens voted for the labour governments previous ETS scheme, no they have had a group hug and now want it scrapped and start over with a carbon tax. And criticise labour for not instantly agreeing ?

              And since Minto, might be a supporter and might be an MP means its all easy peasy to pass the legislation ( which isnt even written). hello ?

              If Winston Peters scuppered the carbon tax last time he will do so again.

              Back to square one. Greens support Labour putting teeth back into ETS.

              Deja Vue its called

      • Colonial Viper 10.2.2

        You dont have a majority in parliament to introduce a wish list ( well thought out maybe) that is the policy of a 10-12% tops minor party

        Sigh.

        National are just so much better at this than Labourites are. What the NATs do is use 2% ACT as the excuse to introduce radical right wing policies. “We have to do it,” they explain, “it’s in our coalition agreement.” Therefore a NACT government swings heavily right with ACT as the camouflage.

        Labour on the other hand use their position to completely block the implementation of more Left wing policies from their 11% coalition partner. “Too radical,” is the catchcry,”NZ is not ready”…which exactly repeats the messaging of the MSM. So instead of taking the opportunity to move Left and respect their coalition partner, Labour takes the super centrist view and acts as the major barrier against the nation moving Left.

        Ridiculous.

        Labour and Greens still doesnt get you over 50% of the MPs !

        And it’s Labour which has not been pulling its weight in the polling.

      • blue leopard 10.2.3

        @ Ghostwhowalksnz,

        I don’t really understand how your comment is relevant to the opinion I expressed. Do you think that an alcoholic that gets drunk on whiskey is o.k if they drink vodka?

        I think a speculative approach toward environment matters (or anything for that matter) in the current culture of ‘if I can get away with it anything goes’ is an idiotic approach to take. Simple.

        What is all this about ‘majority’ and ‘wishlist’. You are writing as though you think I am a political party – I am simply one out of approx 2, 300,000 people, expressing my opinion on the matter.

        I sincerely do hope that a majority of the approx 2, 300,000 have noted and not forgotten the causes of the recent and myriad financial disasters and vote in a manner that ensures that the next government take the negative effects of speculation into account when considering approaches on how they address pressing issues. i.e that they don’t address pressing issues by employing devices that have caused extremely serious issues only a few years back and continue to do so.

        Are you aware that some people, got suckered into believing Fred Singer’s nonsense re climate change denial due to the dodgy, dodgy method that was suggested to fix it; it made the science look like there were ulterior motives driving it. Look who are making the most money, who are also becoming seriously disengaged with ordinary folk and causing extreme damage. Never mind oil and gas, take a look at the financial sector throughout the world.

        Speculation is causing a great deal of harm across the board in our society world-wide. No more speculative systems please, they are utter nonsense.

  11. Enough is Enough 11

    It is fantastic that the Green party continues to lead in almost every policy area. There are not really any progressive policies in mainstream politics that do not have their roots in the Green Party.

    The main differences with Labour are their idiotic policies like austerity measures against the pensioners.

    Labour will do what they always do. Have meeting after meeting for the next 6 weeks. Argue, annoy each other, leak some dirt to the media, and then release their “new” carbon emissions policy (with the name “kiwi” in there somewhere) with great fan fare.

    And guess what that new policy will look almost identical to the Greens policy.

    • Pasupial 11.1

      Gordon Campbell has a good summary of the BC experience with instituting a carbon tax – though I’m yet to read through all the links:

      http://gordoncampbell.scoop.co.nz/2014/06/04/gordon-campbell-on-the-greens-carbon-tax-setbacks-in-syria-and-arcade-fires-gender-politics/

    • ghostwhowalksnz 11.2

      They allready have a carbon policy ! Its in the story.

      “Labour opposes the Green Party’s new carbon tax policy, saying the Emissions Trading Scheme (ETS) was its preferred option”

      • Tracey 11.2.1

        do you think it is effectively reducing nz emissions?

      • Macro 11.2.2

        “They allready have a carbon policy ! Its in the story.”

        And that is why anyone who is serious about reducing Carbon Emissions (which is perhaps the greatest challenge facing humanity at this time) will NOT be voting Labour.

        • Colonial Viper 11.2.2.1

          Fossil fuel energy depletion is the greatest challenge facing humanity at this time; the effects have been biting the global economy for about 10 years now and it will get really ugly within the next 20 years. You are seeing a madness take over the capitalists now in their chase to extract every last bit of resource available. I reckon in the 2020′s people are going to start talking seriously about oil extraction out of Antarctica.

          Climate change will be nasty too but on a 50 year timeframe.

          The clincher is this: just as the worst effects of climate change hits us, we will have the least free energy available to power technology and solutions to deal with it.

          I’m picking 2050-2060 and 2060-2070 as really really bad decades.

          If climate change is severe by that time and sea levels around NZ rise by 1m-2m, most of the suburbs around me here in Dunedin will be a wading pool.

  12. dimebag russell 12

    LETS FACE IT. The whole industrial system based on cheap energy and to hell with the consequences is going to come to grinding halt in 25 years because of its own internal contradictions that have nothing to do with karl marx or capitalist theory. when its gone its all gone and no focus group or parliamentary party is going to be able to do a damn thing about it.

    • Macro 12.1

      more than likely – but don’t you think that it might be a good idea to prepare for that day by working seriously towards implementing alternative energy strategies?

  13. The Chairman 13

    Labour are concerned about speculation and market failures (housing, the NZ dollar) yet prefer a carbon market?

  14. Jim 14

    Since labour changed its constitution to give members more say in policy and electing the leader membership has more than doubled. You can’t have it both ways, so policy on the hoof because of media dictating the agenda or to react to other parties is now a lot harder to do. Also any lurch to the left or right becomes member driven over time. All the talk of labour moving to the centre in election year and not having a unified view with the greens is just a media beat up. The parties of the left do not have to have the same policies, and we should be celebrating that. It gives people different flavours to identify with. When phoning for labour in the last few months, and number of people have said that because of the sell out of the Lange/ Douglas era that the can’t bring them selves to vote for Labour. They now have the Greens or IMP as alternatives which is wonderful.

  15. Tanz 15

    Carbon tax is just a tax for breathing the free air. No such thing as climate change, have you not read Air Con yet?

  16. fisiani 16

    Labour don’t like the fart tax. The Greens don’t like the ETS.
    On 20th September you can vote for a stable government or a collection of second, third, fourth and fifth place getters who will never be able to agree on the crucial aspects of life.

  17. Mike the Savage One 17

    Clearly on this Labour are sitting on the fence again, like on so many issues. It is time for Labour to come clean and take a clearer stand on what they want, and what they do not support. All this half hearted stuff in comments and media statements is not helping.

    And what the bloody hell are they doing in other policy areas, like also welfare, some clearer messages may be welcome, but I fear that Cunliffe and Labour (ABC dominated) will not commit to anything much, until one or two days before 20 September.

    Maybe they are hoping a big scandal will hit Key? Mallard’s rather idiotic allegations in Select Committee today are certainly not helping Labour, he does more harm than good with such side shows.

    • ghostwhowalksnz 17.1

      What you are saying isnt supported by Cunliffes comments .

      What fence sitting ?

      Labour opposes the Green Party’s new carbon tax policy, saying the Emissions Trading Scheme (ETS) was its preferred option.

      “Our position is in favour of an Emissions Trading Scheme, which is well managed – not one that’s been gutted by the current government policy.

      They support what they DID in government. How simple is that !

  18. philj 18

    xox
    The Banks and the financial system must be reformed simultaneously with the carbon tax if the game is to fundamentally change. lol

  19. Ennui 19

    ETS or Carbon Tax? Who gives a flying proverbial? Either way the implication is that we burn the fossil fuels which drive climate change.

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