ETS fails fairness and impact tests: Sustainability Council

Wednesday 23rd June 2010

The emissions trading scheme achieves neither of its two most important aims - to be fair and to reduce emissions meaningfully at low-cost, says a newly published analysis from the New Zealand Sustainability Council.

Written and researched by the council's director, one-time investigative journalist Simon Terry, and Professor Geoff Bertram from the Institute of Policy Studies at Victoria University, "The Carbon Challenge" says the ETS "fails entirely on both those counts".

The damning analysis suggests nearly 20 years' ineffectual preparation for New Zealand's carbon reduction obligations in the First Commitment Period of the Kyoto Protocol, between 2008 and 2012. That’s led to the ETS being implemented half-way through that first period, and promising very little emissions reduction.

It details numerous changes, both announced and unannounced, to the way carbon obligations were measured and presented to the New Zealand public over that period, contributing to widespread confusion, including in political responses.

Fairness and "least-cost" options are the benchmarks for any approach to climate change policy, argue Terry and Bertram, who have collaborated for many years on energy and environmental research and writing projects.

"In its present form, the scheme fails entirely on both those counts. It relies on imposing emission charges on sectors with relatively high abatement costs and as a result can be expected to result in minimal abatement," they say.

It also imposes a "regressive quasi-tax burden on households and firms that are not major emitters, while largely exempting high-emitting vested interests with political strength," they say. “While making no serious inroads into gross emissions, the ETS potentially underlines public willingness to support emissions pricing in future."

The final nail in its coffin is that its complexity "will require continual regulatory fine-tuning," say Terry and Bertram.

The book notes that only now is New Zealand enacting its response to the commitments made first in the Rio Earth Summit in 1990, reaffirmed in Morocco in 1997 with a promise to reduce emissions to 1990 levels in the First Commitment Period, in the five years from 2008 to 2012.

The criticism comes just days before the ETS comes into effect, on July 1. Climate Change Minister Nick Smith is taking a roadshow to major centres this week to try to explain the ETS, while the Federated Farmers annual meeting in Invercargill at the end of this week is expected to deliver a strong anti-ETS message to Prime Minister John Key.

The New Zealand Business Rountable also this week called for the scheme's deferral, arguing like Federated Farmers that it imposes costs on businesses, including some exposed to export industries, that they will bear needlessly if the global impetus for climate change action based on carbon trading remains stalled.

Businesswire.co.nz

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