By Brian Fallow
The National Party has opted to go to the electorate as the climate’s fair weather friend.
Last year it looked as though at last we had the kind of cross-party consensus which climate change, more than any other issue, requires. National voted for the Climate Change Response (Zero Carbon) Amendment Bill which became law last November.
But two weeks ago it voted against the Climate Change Response (Emissions Trading Reform) Amendment Bill. It passed nonetheless.
National’s stance is that now is not the time to be imposing costs on consumers and (eventually) farmers.
The Government’s stance is that time is running out and the costs of decarbonising the economy and of adapting to the effects of a global failure to do so will only compound, the longer we keep procrastinating.
National’s climate change spokesman Scott Simpson described the ETS legislation as the “doing” piece of the Government’s climate change reform package. While the Zero Carbon Act provides a framework for setting emissions reduction goals and monitoring progress towards them, the ETS legislation “actually provides the minister of the day with the levers to have an impact on the day-to-day lives of New Zealanders through a pricing mechanism, he said.
“It’s a piece of legislation designed to, effectively, reward good behaviour and, effectively, punish poor behaviour in terms of carbon emissions.”
National did not support the bill at this time, he said, “Not because we don’t agree with the broad principles, because we do, but it’s a question of timing.”
National’s critics are bound to see this as the party reverting to type.
The unhappy history of the ETS goes briefly like this:
It made it into the statute book in 2008 in the last few weeks of the Clark Government’s ninth year in power. So Labour can hardly claim mana whenua rights to the moral high ground here.
Then National was elected, pointed to the Global Financial Crisis recession and promptly gutted the scheme.
Since then it has been a cap-and-trade scheme with, on the supply side of the market, no cap, while on the demand side the majority of national emissions have been exempted from any exposure to a carbon price.
The ETS Reform Act attempts to address both of those shortcomings, which have rendered the scheme, the main policy response to climate change, entirely ineffectual.
The legislation is the outcome of years of review and consultation initiated late in National’s term when Tim Groser was Climate Change Minster.
The current minister, James Shaw, put it like this during the committee stage debate: “Every time there is an economic downturn, when they’re in government the National Party says, ‘Great. Let’s defer action on climate change. Let’s put it off until things get better.’ And then things get better and you kind of think ‘OK, well, we probably need to review those settings, right’… Then that whole process, because it’s so complicated, takes a few years and then you say ‘Look, great, here’s some reforms we need to do,’ and then boom, there’s another economic downturns and ‘Let’s kick the can down the road’.”
As for the costs to be heaped on consumers in these times of peril and pestilence, Shaw told Parliament that if the carbon price were to double from its previous cap of $25 a tonne, the impact on middle-income families would be about $3.40 a week.
“For households in the lowest 20% of income levels the weekly costs would increase by about $2 a week and that….assumes that everything ticks along and nobody changes anything, so a return to the status quo.”
National could, however, argue that its “now is not the time” stance is at least consistent with its policy of no new taxes in its first term. The ETS Reform Act sets up a mechanism for the Government to auction units into the supply side of the carbon market, consistent with its cap, which would render the scheme more tax-like.
The counter-argument would be that it is a bit rich for National to criticise the extent of Covid-related debt the Government is running up on inter-generational grounds, while it is indifferent to a mounting legacy of climate costs on the same future New Zealanders.
The other main concern National has raised with the Act is its impact on pastoral farming.
Last September the Government concluded an agreement with the primary sector’s peak representative bodies called “He Waka Eke Noa”, aka the Joint Action Plan on Primary Sector Emissions.
Among the things it provides that the sector develop or refine farm environment plans which would credibly account for farm-level emissions, and offsets, and provide the basis for emissions pricing “only on emissions in excess of emission targets and to the extent necessary to incentivise the uptake of economically viable opportunities that translate to lower global emissions”.
When? By 2025.
So vicarious shroud-waving about this, on the grounds that now is not the time to be heaping costs on a sector that earns so much of country’s living as a trading nation, is stretching the word “now” beyond its semantic breaking point.
True, the ETS legislation does introduce a requirement for the Climate Change Commission to report on progress towards the primary sector’s climate change commitments two years from now. If insufficient progress is evident by then the Government could introduce agriculture into the ETS at the processor level (dairy factories and meat works).
Everyone agrees that would be a sub-optimal outcome, involving rough justice for those farmers making genuine progress on emissions. It is preferable that the price signal in transmitted in a granular way to those who can, and need to, respond to it, that is, individual livestock farmers.
Arguably as it is the policy penalises farmers who have already acted to reduce emissions, while benefiting their laggard neighbours, inasmuch as it would not be applied retrospectively.
And the provisions for offsetting sequestration are widely drawn to including native vegetation, riparian planting, shelter belts, orchards and vines.
The threat of a processor-level price seems to be intended to ensure that the task of developing farm-level emissions accounting does not become an exercise in playing for time, in hopes of a change of government. The timetable was agreed with the sector, Shaw points out, as challenging but do-able.
Ultimately the policy of eventually exposing pastoral farmers to a price on some of the emissions arising from ruminants is justified by the fact that the status quo is one where those who are responsible for, and profit from, nearly half of the country’s emissions get a free ride or subsidy at the expense of the rest of the country.
Worse still, the expectation that that would last indefinitely would continue to be capitalised into land prices, benefiting incumbents at the expense of their successors.
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