As with any carbon pricing system, the point of the ETS is to put up the price of activities that produce greenhouse gases that cause climate change and, thereby, discourage those activities. Transport produces greenhouse gases by burning fossil fuels, hence its inclusion in the ETS. But the price of petrol and diesel has risen so much in the last year that the market, by luck not design, is already doing what the ETS was designed to do.
In fact, the increased cost of petrol (up 34 cents a litre in a year and projected to go higher still) due to peak oil is far in excess of the price increase that the ETS would have created (1 to 8 cents, depending on who you believe). This has caused the demand for petrol and diesel to start falling. So, the objectives of the ETS are starting to be met without the need, at present, for the Government to impose costs on kiwis.
That does not mean the Government should not push ahead with its climate change platform. Creating a price on carbon, via the ETS, is an essential part of bringing climate change impacts into commercial decisions. The government must also look at expanding its programmes to help people switch to lower-carbon lifestyles more public transport and low energy housing.
The fact that peak oil might just provide us with the cost motive to stop worsening climate change is an amazing coincidence, but that doesn’t mean the Government should stop taking proactive action to get us off our oil addiction.
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