Home » Business » Matt Burgess: First tell us how your Climate plan works, Minister James Shaw
Matt Burgess: First tell us how your Climate plan works, Minister James Shaw
November 24, 2021
Call climate change a catastrophe. Worry about rising seas if you want. Complain all you like about the lack of international action.
Only one thing counts when it comes to avoiding global warming, theone part of this global problem within our control: reducing our greenhouse gas emissions.
Our targets are clear. They are specified down to the last tonne. Each target has a date. They are in law.
Under the Paris Climate Agreement, New Zealand has said it will limit emissions to 571 million tonnes in this decade.
And we have set a target of zero net emissions from 2050.
The key term is ‘net emissions’, which the Climate Change Response Act defines as:
• gross emissions from cars and factories
• minus removals, emissions captured by trees for example
• minus offshore mitigation, which means co-operation with other countries.
So, our task on climate could not be more clear. And that clarity makes for a simple way to hold officials and ministers to account for their policies.
Or it should.
Because over the last two years, climate change policies have become increasingly disconnected from emissions. There is a gap between what the legislation says and what policy makers are doing.
Actually, it is more of a gulf.
The change started shortly after the Zero Carbon Bill passed with almost unanimous support in November 2019. This landmark Bill put the 2030 and 2050 emissions targets into law and established the Climate Change Commission.
Officials and ministers banked their victory and almost immediately began to move the goal posts.
A concerted effort got underway to re-interpret the targets which Parliament had just agreed to. Parliament set targets based on net emissions. Officials decided they would target gross emissions instead.
If that sounds like a small shift, it is not. It is a profound misreading of arguably the most important part of the new law: the definition of the target which we will spend most of the next thirty years delivering.
To illustrate the difference between net and gross emissions, imagine you decide to offset the emissions from your car by planting trees. Your car emits two tonnes of CO2 each year. You plant 60 pine trees, enough to capture and store two tonnes of emissions per year for the life of the trees.
Your net emissions each year are zero. Your gross emissions remain two tonnes.
There are at least three reasons why the shift to gross emissions matters.
First, it will make emissions targets far more difficult to achieve. Trees and other carbon capture technologies are affordable and legitimate ways to lower net emissions. Gross emissions sidelines these technologies. That could easily make the 2050 target ten times more expensive.
Second, targeting gross emissions does not help the environment. It is net emissions, not gross, which matters for climate change. Climate change does not care whether fewer cars or more trees cut emissions. Parliament does not care, either. If it did, it would have said so. Legislation rightly gives equal weight to one less tonne of emissions from cars or factories as each more tonne captured by trees.
Third, and worst of all, gross emissions substantially expands the government’s mandate. Gross emissions puts officials in charge of everything.
Those trees which offset your car’s emissions might have eliminated your net carbon footprint. But they count for nothing when the goal is gross emissions.
Without exaggeration, a small army of officials are planning how you will live your life. Every part of it. Where you live. How you move. What you eat. How you heat your home.
This army is working at your expense, in every sense.
Here is a list of the plans officials are working on right now in the name of climate change: an Emissions Reduction Plan; a Treaty of Waitangi Strategy; National Energy Strategy; Circular Economy Strategy; Bioeconomy Strategy; Freight and Supply Chain Strategy; Industry Plans; Building Transformation Plan; Equitable Transitions Strategy; New Zealand Rail Plan; National EV Infrastructure Plan; Hydrogen Roadmap; and a Multisector Strategy.
These are just the plans we know about.
Officials meant to be working on climate change have decided they want to solve biodiversity, inequality, recycling, and historical Treaty grievances as well. (Yes, a senior official really said that.) A government which cannot run MIQ or immigration, could not order a vaccine on time, and which has given up on Kiwibuild, obviously cannot solve the vastly more difficult problem of how to run the economy. It is going to be a mess.
Officials have also ruled out cost and effectiveness as guiding principles for their policies.
Which makes climate change, quite literally, a free for all. It is a bonanza for officials: more money, more power, responsibility for everything with accountability for nothing. Public policy discipline in this space has collapsed in just two years.
The government is making promises of lower emissions and a “just transition” without the processes in place to deliver. The government has no idea whether its climate change policies are fair or just because it does not check. It has all-but abandoned good policy practices like cost-benefit analysis.
Some the government’s policies are egregiously unfair. Take Feebate, for example. The policy gives generous subsidies to buyers of new EVs with the most lavish payments reserved for buyers of brand new EVs like the Tesla Model 3s. They get more than $8,000. Who pays for those subsidies? Buyers of more affordable new and used petrol cars.
It is hard to imagine a more regressive policy.
But the worst part of the government’s climate change strategy is that it does not reduce emissions. Policies like Feebate and most other proposed interventions are not going to lower emissions. Not by one tonne.
That might sound like a strange claim. After all, how could getting people out of cars and onto bikes and onto walkways, and everything else the government wants to do, not result in lower emissions?
The answer is because the government has already capped greenhouse gas emissions and nearly all of its new policies are under the cap.
The cap is a recent addition to the Emissions Trading Scheme (“ETS”). Legislation only passed last year. The cap works like a sinking lid on emissions, falling over time in line with targets.
It seems nobody has yet worked out what the new cap means for other emissions policies. Authorities including the UN Intergovernmental Panel on Climate Change have long recognised that cap-and-trade schemes like the ETS neutralise other emissions policies. Almost all of the government’s plans will be caught.
Coal boiler retirement? In the cap. Green Investment Fund? In the cap. Clean Car Standard? In the cap. None will have any effect on New Zealand’s total emissions.
Fundamentally, the neutralising effect of an emissions cap is because the cap is already driving changes in behaviour and investment decisions that lower emissions.
The ETS price has doubled since the cap came into law last year. At $65, the ETS is biting hard for companies burning coal or, to a lesser extent, natural gas.
That pain is changing behaviours. It is causing companies to convert from fossil fuels to electricity. It supports investment in renewables. It is getting people out of their cars. If only officials would look.
This activity is why other emissions policies will not lower emissions under the cap. The cap is already driving efforts to lower emissions, so lumping more policies like EV subsidies on top will only displace one set of efforts to cut emissions with another. Emissions will come down in line with the cap with or without the extra policies.
Yet the climate change train has ploughed on as if nothing has changed. Officials have done sterling work on the ETS. As a result, ministries should be mostly downing tools on climate change mitigation everywhere except agriculture (which is outside the ETS). Instead, work on climate change has exploded as officials supported by their ministers refuse to accept what emissions caps do to other policies. Two years ago, the Ministry for the Environment (“MfE”) employed 372 staff. Now it is 648.
So, to the Climate Change Minister James Shaw: please explain. Before you roll out your vast plan likely to cost tens of billions of dollars over coming decades, show us how your plan will lower emissions.
It will take more than cliched assertions like the “ETS is not enough” (a claim flatly contradicted by evidence from the Climate Change Commission and MfE).
We need a step-by-step tutorial on how your policies will cut emissions under the ETS cap. Do it in writing. Do it rigorously. Use maths. Have it peer reviewed. And do it before rolling out your grand plan.
No Climate Change Minister should have trouble explaining how their emissions policies cut emissions.
As it stands, the government’s plans looks suspiciously close to an undemocratic, undisciplined, opportunistic takeover, a series of false promises with a huge price tag and no connection to the only thing that counts for the climate: lower emissions.
– Matt Burgess is Senior Economist at the New Zealand Initiative.