03 February 2010
Winners and losers in the ETS
No other government did as well in Copenhagen as New Zealand. Unlike Barack Obama and the leaders of Western Europe, our negotiators returned from the climate change summit with major policy trophies in their bags. Was this because we had an all gases, all sectors ETS in place? If so, maybe it's time for Federated Farmers, the Greenhouse Policy Coalition, Business Roundtable and Greenpeace to eat crow.
In the run-up to the Copenhagen Climate Change Summit, a welter of lobby groups was telling the government that no legislation was better than imperfect legislation. Given that our negotiators needed the credentials that only ETS legislation could provide, maybe it's time for some of these lobbyists to eat crow. No other government did as well in Copenhagen as New Zealand.
Barack Obama and other western leaders came back empty handed. In contrast, environment minister Nick Smith, trade minister Tim Groser and their officials returned with two major trophies: support from 30 other countries for the NZ-initiated Global Research Alliance on agriculture greenhouse gases and tacit support for an agreement on forestry which addresses major NZ Kyoto Protocol concerns. And they did this without having to sign a massive cheque to anybody.
These initiatives are hugely important to New Zealand as the only developed country with an economy that's heavily reliant on a primary export sector that is also the main source of its emissions. Reducing emissions from livestock, allowing land-use flexibility and maintaining a market for forestry offsets will save the country billions.
The Global Research Alliance was largely a Groser initiative. The minister has a very good understanding of how consumer perceptions impact on the ability of NZ products to gain access to upmarket retail shelves around the world.
He's also aware that even if the governments of the world can't agree on a legally binding protocol to replace Kyoto, the economic imperative to reduce emissions won't go away. Affluent consumers want to buy ethical products and they already expect the Tescos, Waitroses and Home Depots of this world to include low-carbon footprints in their criteria for sourcing food, textiles and forest products.
Without its own legislated ETS, without credible targets, the chances of New Zealand having a say in the shape of the world's climate change response post-2012 were zilch. Yet it was critical that we did. Not only are we uniquely reliant on our primary industries, no other country relies almost totally on plantation forests for its wood supply or on renewable energy for its electricity supplies.
Australia doesn't have the same worries. Unlike us, its main challenge - reducing its overwhelming reliance on fossil fuels for energy - is shared by most of the industrialised world.
The failure of many of our major lobby groups to recognise these fundamentals was reflected in their submissions to government, in some case right through until the final ETS legislation took shape. Some of these stances may have been based, like those of Federated Farmers, on sheer bloody-mindedness. Others appear to have been more cynical, dressing up vested interests with cloaks of hollow reason.
With an economy that relies on the 100% Pure image, either to attract tourists or as a platform for selling our food and fibre to high-end consumer markets, New Zealand has never had the option of being a slow adopter. National recognised this and since well before the 2008 election was saying, "we are committed to having a moderated ETS with realistic targets in place in time for Copenhagen".
Yet the Greenhouse Policy Coalition still felt it could credibly argue
that “it is highly unlikely that any foreign consumer buys on the basis
of a country’s domestic climate change policies rather than in respect
of their views about a particular product.”
The second argument, which was argued more eloquently – but not
necessarily more credibly – by Business NZ, is that the right to pollute
is a property right, “That compensation is generally owed to all
businesses who suffer a loss of value as a result of a new policy.”
Only when low profile becomes high profile, do the politicians sit up
and take notice. The Feds with their anti-fart tax campaign and the
forest industry with its campaign to allow owners of Kyoto forests
(planted post-1989) to participate in the ETS are the only cases where
Labour was willing to contemplate major changes to its version of the
Unlike other business groups, the NZ Business Council for Sustainable
Development (NZBCSD), supported an ETS involving all
gases and all sectors from the kick-off. As a result it has an impressive number of policy
wins to its credit.
The Sustainability Council has been pushing for farmers to take full
responsibility for their emissions. Its case has been based on a belief
that farming has a greater potential to reduce emissions than any other
sector, simply through applying nitrogen inhibitors to pasture.
In practice, many farmers have found these products do not live up to
the hype, a conclusion that has been confirmed by independent
fertiliser expert Dr Doug Edmeades. In a study released late last year
he says inhibitors have been over-promoted and that many claims made
about them are unsubstantiated.
The general public will also drive change. As ordinary Kiwis become
aware of the costs to them of free emission credits to industry, they
won’t tolerate feather-bedding where the technology exists to reduce
emissions. So if and when proven methane and nitrous oxide reduction
technologies come on stream, livestock farmers should expect to lose
their free emissions more quickly than the ETS now provides for.
The views expressed in this article are Trevor's own, not those of any of his clients
- Trevor Walton