ETS is useless, scrap it

Written By: - Date published: 9:11 am, October 4th, 2017 - 25 comments
Categories: act, climate change, ETS, farming, global warming, greens, International, labour, national, nz first, same old national, science - Tags: ,

I just finished reading an article by Richard Harman at Politik on “How climate change could derail the government formation talks”. Amongst other things it outlines the political positions of the major parties who are going to be involved in coalition talks and the way that the so-called Productivity Commission are dealing with the issue of climate change. Frankly I think that all of them are just deluded and haven’t got the vaguest idea about any constructive way to deal with it.

At the heart of the Commission’s study are two huge issues – the future role that agriculture will be required to play in emissions control and the future role (if any) of the Emissions Trading Scheme.

These issues cut across current party policies.

The discussion paper is critical of the Emissions Trading Scheme.

That is hardly surprising. The original Emissions Trading Scheme (ETS) was a valiant but deeply flawed political compromise trying to bring a market driven solution to long term issue. At the time it was an innovative attempt to develop a market capable of causing economic changes in the long term interests of everyone.

The problem was that the horsetrading by special interest groups removed or delayed significiant emitting groups entering into the ETS. This was  aided by the characteristic National Party scare tactics of a “fart tax”.  Those kinds of scare tactics seem to be National’s only way to engage in our countries policy generation, as was demonstrated by the almost complete lack of any significiant policy this election and their similar use of blatant lying to mobilise their voting community.

In particular the horsetrading resulting from the scare tactics employed made the ETS ineffective from the start by removing the most polluting industry in NZ, farming, from it. Excluding farming from the ETS effectively meant that farmers avoided having to put the full input costs of their methane emissions, carbon emissions, and any carbon sink depletion into their cost of production making their goods cheaper and enabling higher profit margins by foisting any costs directly on to taxpayers.

National continued their avoidance of applying user pays to the farming community and other preferred contributors after they came into office. Instead, they fostered the most extensive increase in greenhouse gas emissions in our history by massively increasing the largest single greenhouse emitter industry, dairy.

This caused a massive land displacement of less polluting farming and forestry industries into dairying.

At the same time they steadily reduced the effective amount of research being done on ways to ameliorate greenhouse gas emissions while doing a few token PR exercises to talk up their remaining show R&D programs. They also allowed the use of some of the worlds most dodgy carbon credits in our ETS, which devalued the whole things.

In effect they demonstrated that a carbon credit market could be successfully destroyed by a stupid governing

Needless to say the Productivity Commission had this to say…

It says OECD modelling work (based on a carbon price of $5 per tonne of CO2 over the next 15 years) suggests that the NZ ETS will only contribute towards a 0.4% reduction of gross domestic emissions and a 4.1% reduction of net domestic emissions by 2030 as compared to business-as-usual activities.

“Two-thirds of emitters in the NZ ETS considered it has did not affect reducing their emissions,” it says.

“The Ministry for the Environment’s own evaluation of the NZ ETS found it has “not significantly influenced domestic emissions or business decisions.”

Of course in typical National hypocritical style, they also effectively increased the future costs to the rest of the economy as they signed up to global initiatives like the Paris accord to limit the emissions.

I’ve deliberately not been involved in producing any significiant greenhouse gases for decades. Those that I am responsible for, I try to pay as much as I can of the full cost for – including the climate change costs. I expect that everyone else should do so as well.

That was because I got exposed to theories about human induced climate change when I was doing an BSc in earth science back in the late 1970s. It became obvious from the actual evidence by the early 1990s that it wasn’t a theory, but something that we were imposing on ourselves and for many generations to come.

More importantly I have a very clear knowledge of the types of climates that we’re rapidly and probably irreversibly modifying our world into. It is the normal climate of earth without the millions of years of the Quaternary ice age that our species and all of our client species evolved for

So I have a car that is lucky if it drives 5000kms per year. It is a highly maintained 20 year old car that I will replace or supplement when I can see something new that offsets the carbon cost of manufacture. Probably an electric bike. I try to purchase goods and services that have reduced or minimal carbon footprints. This is the pattern of all of my purchases. I try to buy good quality and I keep it for a long time.

Recently work occasionally sends me around the world for our overseas trade. So I organise offsets whenever available.

It also means that I’m highly intolerant of greenhouse gas freeloaders, especially ones who don’t make any effort, and even more so for those who want to stick me and my relatives with their bill. I’m also completely uninterested in ineffective facesaving measures.

This colours my opinions criteria below.

Needless to say the only political parties in parliament that support continuing the ETS in anything like its current form are the freeloader party National and their sock puppet Act – ironically the two parties who were most opposed to the scheme in the first place.

The nett effect is that over the near future, the current ETS under National will be giving NZ about an additional $1.4 billion uncovered annual costs to buy offshore emission units to meet their international commitments. This means that every taxpayer in NZ will be facing a bill of more than $400 per year. This will steadily increase over time if our emissions do not fall.

To not do this will mean that it is likely that over time the tariffs and taxes will instead be imposed on agricultural goods by countries who are living up to their commitments. Not to mention that harmful effects on industries like tourism (larger than the dairy industry) that rely on our clean green image.

National in their usual fiscally irresponsible style hasn’t budgeted for any significiant part of this oncoming financial burden. I guess that they would prefer that it comes as a surprise to the taxpayers of the future.

As Richard Harmon documents, National’s specialised interest groups of Federated Farmers and DairyNZ prefer this policy. It means that they can push their production costs on to the rest of us.

But I suspect that there are no possible coalition partners who agree with National and them. Neither NZ First nor the remote and highly unlikely possibility of Greens are likely to bind support for the ETS in any form into a coalition agreement.

 

NZ First wants to scrap the ETS and override it using parliament’s powers to have a UK style Climate Change  act.

Essentially the Act requires the Government to have a “whole of Government approach to carbon emissions which would require it to set carbon budgets which would be met through a number of measures ranging from subsidies and government purchasing through to taxes and penalties.

This would leave the discretion of how much to include agriculture with the Government of the day.

Now this has some merits because it quite clearly makes the government of the day directly responsible for funding climate change commitments and actively involved in directly trying to reduce the general taxpayers bill. In particular it means that it no longer becomes possible for the government of the day to hide away from their responsibilities behind a inefficient and ineffective fake marketplace whilst foisting the uncovered bill on to general taxpayers.

The Greens essentially want something legislatively quite similar to NZ First (curiously Richard Harmon was rather silent of their actual policies – so I added a link). Just another commonality between these two parties.

The Greens have less research and with more of other bells and whistles like the addition of a policy commitment to plant trees, lots of trees – apparently as a carbon sink, and an adaption fund.

While the tree-hugging idea may play well to some of the green and conservationist audience. It is an appalling stupid idea if they are thinking of it as a carbon sequestering policy. Even if the forests didn’t get cut like the logging and biofuel industries would push to happen. Forests don’t sequester virtually any significiant carbon over the long term. About the only thing that they are effective at doing is to reduce the methane emissions  by taking land away from dairy.

BTW: If the Greens were serious about sequestering. Then they need more productive carbon sinks like swamps close to rising sea shores. They are the world’s most productive bio environments at fixing carbon because of the anaerobic environs and they sequester a lot of carbon as they slip under the rising water of the climate change that will already occur. As importantly they make a more productive use of all of NZ’s deltas and drained swamps which will disappear underwater over the next few centuries anyway.

Meanwhile Labour’s policy is to keep the ETS but to bring agriculture and some other freeloader industries into it. In other words to patch the existing system.

Frankly I can’t see that working politically. I can’t see that the Labour caucus will be able to withstand the shit storm of embedded special interests, lobby groups and their court cases claiming damage to existing interests. It is likely to simply to continue propping up a deeply flawed and increasingly ineffective system that simply doesn’t change economic behaviour.

More importantly I can’t see keeping the ETS as being something that either possible coalition partner is likely to agree with.

I suspect that ETS has become a political football in the next parliament, but probably not part of a coalition agreement with either National or Labour. My guess is that both NZ First and the Greens will want it off the table unless it is agreed that it will go. That leaves them able to vote against further stupid patches being added to it.

That is because the actions of Labour in its construction and National in its effective destruction have made it completely unfit for purpose.

It was an interesting idea at the time when it was new and innovative. But now just one of many similar failures that demonstrates that faux market solutions interfered in by government responding to special interests aren’t useful for solving long term issues. All they do is to throw the tax burden and costs on to others.

For the remaining simple minded climate change deniers out there, this is not a post for you.  You need to go and learn some science and indulge less in childish fantasies. In the meantime just let the adults talk and you can listen. Otherwise I will spank you and send you to the corner for a year.

 

25 comments on “ETS is useless, scrap it ”

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  1. cleangreen 1
    4 October 2017 at 9:31 am

    Yes ageed Iprent,

    ETS is simply a rort, while allowing the cost of carbon credits to drop as low as $2 a tonne now most companies just all carry on regardless using dirty transport like trucks instead of rail and coal instead of recycable energgy sources.

    Even NZ Government agencies like MBIE were caught using cheap phony Ukrane credits to prop up their carbon emissions to stay within their guidelines like the lying sods they were.

  2. Stuart Munro 2
    4 October 2017 at 9:39 am

    The problem with an ETS was always that the scum who cheat on their taxes will cheat on their ETS costs. It’s surprising that we got a government so overtly corrupt as to endorse the practice though.

  3. ianmac 3
    4 October 2017 at 9:41 am

    Remember those sandwich boards? “The End is Nigh!”
    So prophetic and unless the warning is heeded there won’t be anywhere for my grandchildren to live.
    Out with ETS. Bring in a scheme where users pay and if that hurts dairy hard luck.

  4. Andre 4
    4 October 2017 at 9:44 am

    My problem with emissions “trading” is it inherently implies some sort of right to pollute. So I much prefer a simple greenhouse gas tax that sends the message “if you want to dump your waste into the commons and trash it, you have to pay for it”.

    • weka 4.1
      4 October 2017 at 9:52 am

      I’d prefer we used both regulation and market tools. If you pollute you pay, but also there are limits on how much you can pollute.

  5. red-blooded 5
    4 October 2017 at 9:45 am

    I’m not going to claim particular expertise in this area, but it seems to me that the British approach is better for a highly populated, densely urbanised country like theirs. It forces them to look at issues like building standards (energy efficiency), sustainable power production, mass transport solutions etc. Of course, all of those things are necessary here, too, but the fact is that our greatest carbon emitters are our farmers and we do have to find a way to limit their emissions. If a rejuvenated ETS can have that effect, then that’s a good step – not the only step we should take, but a good step. If not, then I’m fine with dumping it, so long as there’s a more effective solution that can gain majority support and has demonstrably better outcomes.

    All credit to the Clark government who at least tried to do something and who were forced to back off their original idea of a straight carbon tax and came up with this as a compromise. If the Nats had kept their hands off it and not exempted all their buddies from it, the ETS may have made more difference than it has. That doesn’t make it the only way to go, though, and I certainly think we should be open to other options.

    One final word – it looks like all the Brexit bullshit is endangering the British approach, which is sad but not surprising:
    https://www.theguardian.com/environment/2017/jun/26/uk-on-track-to-miss-carbon-emissions-target-due-to-stalled-energy-policy

  6. eco maori 6
    4 October 2017 at 10:29 am

    Yes throw out this piece of bullshit legislation out and start with a fresh canvas and design the new law solely for the purpose of mitigating climate change and keep it simple so everyone understands the principles of OUR new law and if some one comes along and try’s to change it they will be stopped in there tracks I do back down on some things
    as that is wise especially if one is wrong But i wont back down on the fight for MOTHER EARTH

  7. geoff 7
    4 October 2017 at 11:04 am

    I can only see NZ adopting a comprehensive climate change policy if the National party is on board with everyone else.

    Without that it’ll be too difficult for any other governing party, or group of parties, to pass a law with teeth because National will always be the the divisive mouthpiece for federated farmers, fonterra etc.

    Examples like the fart-tax protest and the Morrinsville protest show how effective our ag-industry is at bringing political parties to heel.

    You could say that Labour is just being spineless but because the ag-industry political campaigns are so good at swaying public opinion it’s understandable that political parties with a sense of self-preservation shy away from them.

    This situation will only change if all parties are in agreement and then there won’t be any comparative political downside for any particular party that attempts to legislate against the interests of agriculture.

    So basically it wont ever happen 😛

    • lprent 7.1
      4 October 2017 at 3:36 pm

      In which case scrapping the ETS is still a good idea.

      The big problem with ETS is that it has allowed the hidden cross subsidy from other industries and taxpayers to the farming community to be concealed.

      I’m aware that wasn’t what was intended. However it will always happen. Instead a better way would be to extend the Fiscal Responsibility Act to bring in the forward liabilities into the current budgets.

      • Ad 7.1.1
        4 October 2017 at 3:52 pm

        Extending Geoff’s point, you would only scrap it if the threat of implementing it was so great that the agricultural lobby was so incensed and so outrageously effective on tv that a Labour-Greens government felt forced to pick up the phone to National.

        That is the scenario Helen Clark got into with the ant-smacking bill in 2007.

        At that point in a properly orchestrated political cycle, you would have an alternative sketched out that a great majority of the House could accept as binding for future generations.

        That would put the issue in the same kind of policy strata as ACC, NZSuper, Superfund Guardians, the Gold Card, the Auckland reforms legislation, and others that have withstood the test of time.

        Doing anything else without getting National’s buy-in is pointless.

      • CoroDale 7.1.2
        4 October 2017 at 8:58 pm

        Your article above was very good, but be fair, the ETS could be fixed, as dairy grazing is competitive, and incentives around organic could be strategically played toward medium term goals and international norms, especially if milk prices fall faster than the NZD exchange rate. I’m putting hope on these and many other positive signs of transition, which would bring favour back toward ETS. (Though your points around special interest groups are the most significant and immediate factors against ETS, agreed)

  8. Sparky 8
    4 October 2017 at 12:39 pm

    In my view climate reform is something for people to collectively demand from organisations, which is already happening with fossil fuel divestment in banks and uni’s amongst others.

    I’d say hanging our collective hat on politicians doing anything constructive about it ever is the worst kind of folly. Most of them are a lost cause and the few that aren’t are a rational voice in a choir of idiocy, self delusion and greed.

    In the US for example green solutions are coming to the fore because people are demanding them and this is in spite of the lack of climate policy on the part of the Dems and Republicans.

    Perhaps the only country who has a firm grasp of the problems and is doing something about them right now is China who have a plan in place to move to electric cars and are actively replacing fossil fuels with other solutions such as nuclear (yes not perfect but still less impact on climate change). Wonder what that tells us about democracy….

  9. Eco maori 9
    4 October 2017 at 12:42 pm

    Never say never because we won’t give up the fight as we cannot give up on OUR children future

  10. Draco T Bastard 10
    4 October 2017 at 2:50 pm

    Needless to say the only political parties in parliament that support continuing the ETS in anything like its current form are the freeloader party National and their sock puppet Act – ironically the two parties who were most opposed to the scheme in the first place.

    And the two parties that go on most about personal responsibility and user pays. Seems that they only apply those policy criteria to poor people.

    Forests don’t sequester virtually any significiant carbon over the long term.

    But they’re really good at producing fertiliser that can run down from the forested hills onto the farms.

    When put in place around waterways they’re great at filtering out excess fertiliser and thus keep the waterways clean.

    Meanwhile Labour’s policy is to keep the ETS but to bring agriculture and some other freeloader industries into it. In other words to patch the existing system.

    Frankly I can’t see that working politically. I can’t see that the Labour caucus will be able to withstand the shit storm of embedded special interests, lobby groups and their court cases claiming damage to existing interests.

    QFT

    It was an interesting idea at the time when it was new and innovative. But now just one of many similar failures that demonstrates that faux market solutions interfered in by government responding to special interests aren’t useful for solving long term issues.

    1. It proves that the market doesn’t work.
    2. It proves that the market is defined by its regulations. Lack of regulation effectively removes the market.

    • lprent 10.1
      4 October 2017 at 3:51 pm

      When put in place around waterways they’re great at filtering out excess fertiliser and thus keep the waterways clean.

      Yep. And for preventing wind erosion of soils, stopping hillsides dropping into creeks and a host of other reasons. For those kinds of purposes I’m a tree-hugger.

      They’re just pretty useless for sequestering fossil carbon.

      1. It proves that the market doesn’t work.

      Markets are very efficient in the right time frames. Unfortunately that is less than 5 year time horizons. Frequently less than 2 years.

      Generally reducing in horizon as the information flood speeds up. It used to be in the 20th century that investors looked at results annually, then 6 monthly, then quarterly. These days investors are often looking at monthly or even near real time results – mostly because they can. Because the reporting is getting that fast and cheap. You don’t need telegraph lines or telex lines or costly T1 connections. You need the net, the ever reducing costs of getting a reporting system that you computer talks to, and off the shelf basic AI.

      Lack of regulation effectively removes the market.

      Yep – same reason. Short term profit seeking will usually produce completely perverse results over longer terms than the now ‘normal’ market horizons. Regulation has always been there in any orderly markets to give societal direction past the short-term.

      You can see that happening all of the way back to the societies of the ancients all the way back to Ur.

      • Steve 10.1.1
        5 October 2017 at 10:14 am

        “They’re just pretty useless for sequestering fossil carbon.”

        As others here have already asked as well, can you please point out what research that you base this claim on?.I’d be most interested to read through it myself

        • lprent 10.1.1.1
          5 October 2017 at 11:36 am

          I would have thought it was quite obvious. I’d emphasize that my training is in earth sciences, and I typically think on a geological timescale rather than some teeny short term measure like decades.

          But this is BASIC science. You should find all you need in wikipedia. I’d be surprised if anyone had done any research papers on it.

          So lets make this an exercise for the logic of anyone with a basic understanding of the biosphere… Besides I’m at work and don’t have time to explain basic earth science 101 or basic biology 102. YOU can look all of this up.

          0. Look at the half life of fossil carbon as CO2 in the atmosphere and water before it drops into a carbon sink. Try the Skeptical Science website for a primer on the carbon cycle including the geological sinks. Roughly a hundred years right? Now think about how long that before given volume of CO2 drops to say 6.25% level.. Hundreds of years right..

          1. Now look at the usual age of trees when they are harvested or die. In NZ this is probably between 20 and 30 years. Even if you let it go to a climax forest, at best this will have a median age of something like 40-50 years. Essentially larger trees will block the light and shutdown accretion of carbon. Whatever way it goes, when a tree dies, from this point they are shedding carbon back into the atmosphere as CO2 as they decay. Swamps are way better because once the debris drops into the anaerobic layers, then very little decay gets out as oxides or even as methanes.

          2. Also look at how often do widespread events like fire or outbreaks of beetles happen in forests? These cause massive widespread releases back into the atmosphere, and thereby back into circulation. Same with desertification or changes to savannah. Large flood events and god knows what else. Forests are pretty transient on any kind of geological time scale, in fact on any historic scale when humans are around.

          3. Now figure out the amount of carbon you can possibly grow into trees annually and you will find it is a VERY small percentage of what is currently being released from long-term storage. And as pointed out above it is all transient anyway on any kind of realistic timescale.

          4. Figure out the amount of fossil carbon that has already been released and you will find that there simply isn’t nearly enough land surface area on the world to grow it into trees. And as pointed out above it is all transient anyway on any kind of realistic timescale.

          5. Now research how long the fossil carbon has been building up for. That is measured in hundreds of millions of years of dead trees and swamps. Trying to hold the extracted hundreds of millions of years of fossil carbon in the present as trees is just impossible.

          The effect of putting carbon into forestry is merely to DELAY the flow of fossil carbon into long-term carbon sinks like carbonate sediments and eventually into limestones, coal, oil, etc. It does nothing to sequester more than a tiny fraction of the fossil carbon released, and even less if you use those trees for things like houses, fires, biofuels, furniture, etc.

          In other words while you may be able to reduce the short term peaks of fossil carbon climate change by a few percentage at best, the nett effect is that all it achieves to spread the pain of climate change damage over a longer time period.

          That should give you enough to find the basics. Maybe I will look for a post about this. If I can’t see one I should write a post with some volumes and time spans.

  11. In Vino 11
    4 October 2017 at 6:06 pm

    Best thread today – glad I read it. Even the unpalatable carbon tax seems ineffective to me.
    In this case it is more serious than cigarettes, which are now highly taxed.
    The Ozone hole was stopped by a direct ban on the fluoro-carbons used in fridges and aerosols.
    Direct bans are necessary here too – but I can hear Captain Mainwaring telling me that I am in the realms of fantasy. Politicians are controlled by big business, and it will take major catastrophes to convince the Trumps of this world…
    So we have to make more individual effort, and keep trying to agitate, supporting Greenpeace, etc I guess.
    But here in NZ, a Labour-based coalition in government may be a microscopic start.
    Why do I have the nasty feeling that Winston will go with National again?

  12. JC 12
    4 October 2017 at 7:50 pm

    A poisoned chalice perhaps….

    Lets hope for an answer regardless, and a real Change of Government!!

    As clearly “faux market solutions interfered in by government responding to special interests aren’t useful for solving long term issues”

    https://www.newsroom.co.nz/@environment/2017/09/21/49165/ets-or-carbon-tax-nz-needs-a-strategy

  13. Roy 13
    4 October 2017 at 8:22 pm

    Can you point to the research that informs your opinion on trees being useless for carbon sequestration? Thanks.

    Also, even if logging, or better, building, was to happen with the wood, wouldn’t that mean the carbon is extracted from the atmosphere and stored?

    • CoroDale 13.1
      4 October 2017 at 8:44 pm

      Good question. I would assume significant benefits for forest conversion from marginal sheep and beef country.

  14. CoroDale 14
    4 October 2017 at 8:39 pm

    Excellent article from Iprnt. I’ll just add two things;
    1) Innovations in digital block-chain and crypto-token technology might favour a revival in carbon-trading.
    2) Don’t panic, go organic!

  15. Once was Tim 15
    5 October 2017 at 8:38 am

    @lprent. I could never understand the value of ETS if only because it seemed to me to be susceptible to “the market the market” – which as we know is always open to various forms of manipulation.

    You paragraph:
    “While the tree-hugging idea may play well to some of the green and conservationist audience. It is an appalling stupid idea if they are thinking of it as a carbon sequestering policy. Even if the forests didn’t get cut like the logging and biofuel industries would push to happen. Forests don’t sequester virtually any significiant carbon over the long term. About the only thing that they are effective at doing is to reduce the methane emissions by taking land away from dairy.” was interesting although looking at the actual meaning of sequester (i.e. isolate or hide away, or confiscate, etc.), you could be correct.

    However perhaps your partner witnessed something similar to me (I understand she spent time in the whops near the Himalayas not that long ago):
    Over several weeks of long hot days with absolutely NO wind, the thick pollution generated by brick factories and diesel engines could be seen being drawn towards the thick forest/jungle at dusk – literally before ones eyes. By morning, even by midnight), the air was as clean and crisp as I’d ever experienced.
    I’m left wondering what actually happens with all this pollutant atmospheric shit once attracted into the jungle.
    Being the Doubting Thomas I am, and despite wind measuring devices verifying there was no wind, I watched this from different vantage points along the perimeter, and no matter what the direction the same thing was happening.

    They did seem to know how to deal with cow shit a lot better as well, such that although the various man made water channels could become bunged up with everything from shitty disposable nappies to other forms of plastics imposed on them, 50 feet down and beyond the water table remained unpolluted.
    (No official rubbish collection [yet] – but generations of experience in dealing with crap as best they can. Often the likes of shitty nappies would be burned – but like the brick factory and diesel pollution, it also ended up in the jungle.)

    Do we know what actually happens to all that crap in the jungle if it is sequestered but not ‘absorbed’?