When we turn on the tap and pour ourselves a glass of water, fill the jug, have a shower or whatever, we don’t pay for it. All of the infrastructure that delivers the water to our tap has been paid for and is maintained through rates. In times of drought, we might have by-laws enacted that mean we give up watering our lawns or washing our cars. Money does go towards providing a resource – water for households. But it’s not generally paid for on an individual ‘user pays’ basis, and in certain scenarios, regulations kick in to limit its use.
Why don’t we have a similar situation governing our use of fossil fuels?
If climate sensitivity is low (a very optimistic assumption) then we have about 20 years to make our energy system completely fossil free. That would give us an outside chance of holding any rise in the world’s average surface temperature below 2 degrees C, and ensure that only hundreds of millions of people in equatorial and the tropical regions died. That’s probably the best we can aim for now. We can price, tax, or trade in CO2 as much as we like for the next 20 years, and the result will be a world beyond 2 degrees. In the time we have available, there are no existing price mechanisms within our current economic paradigm that will reduce our fossil fuel use anything like fast enough.
But that’s okay – by taking some pointers from how we manage our water we can see possible ways forward.
In 2015, the IMF calculated that the NZ government subsidised the fossil industry to the tune of some $NZ 3.6 billion per year (up $NZ 0.43 billion from 2013).
Now we’re being told that the government intends to pay out another $NZ1 billion per year for 14 years, with the idea that those payments will somehow allow us to continue pouring ever increasing amounts of CO2 into the atmosphere. In some abstract world of economics, one where physics doesn’t exist, that might make some sense. But this is the real world. Physics exists.
So in recognition of reality, why doesn’t the government take that $NZ 1 billion, add on the other $NZ 3.6 billion identified by the IMF, and use the resultant $NZ4.6 billion to buy all of NZ’s gas and oil needs from the oil companies at current wholesale prices, and then, with a caveat that we’ll come to in just a second, provide liquid fossil to end users in much the same way we do water?
Last time I looked, NZ consumed about 2 billion litres of diesel and petrol every year. The wholesale cost of a litre of diesel or petrol is less than $NZ1. So if the government was to buy up the whole lot there’d still be some $NZ 2.6 billion left over in the first year. And with the introduction of a hard sinking cap (that’s the caveat), an increasing amount left over in every subsequent year.
Does anyone think that $2.6 billion wouldn’t be enough to cover gas purchases from the public purse and fit the 1500 petrol and diesel storage tanks in NZ with the hardware and software required to manage a hard sinking cap on fossil availability?
Confession.
I’ve cheated a wee bit on the figures. The $3.6 billion the IMF calculated was the total cost of both direct and indirect subsidies to fossil fuel. So maybe the government would need to introduce a new tax for high earners (who tend to be high fossil users) in order to cover any short term gap between on-going but shrinking indirect costs (eg – fossil related health expenditures) and the monies required to buy up the country’s fossil needs.
A hard sinking cap that reduces the availability of fossil fast enough, as per required by the best scientific information we have, gives us some time to adapt to fossil free living. The first year or so would likely be quite painless, and by the time it’s getting around to being difficult well, at least we’d be into the swing of things.
Our other option of course, is to keep on with the strategy from the past quarter of a century, of doing nothing useful in the hope that we (and everything around us) can adapt to all the effects that will come with an ever increasing rise in the world’s average surface temperature.
One of the above two options is complete madness.
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