At the beginning of the month, the New Zealand Climate Change Research Institute released a commentary on the (then) new report from the Parliamentary Select Committee about the ETS. In it, the authors argue that a robust ETS is necessary if New Zealand is to adapt to the future, and its business not to lose ground to overseas counterparts.
The commentary highlights that the Select Committee’s report, while containing many conflicting views, had a couple of good points: namely, that sheltering business slows down the inevitably-necessary process of acclimatising to a lower-carbon world, and that agricultural emissions should be included in the ETS.
However, the commentary also highlights what it feels are a number of flaws in the report’s conclusions: conclusions which would weaken the ETS. These include pushing back an agricultural inclusion into the ETS, adopting intensity targets, and a cap on the price of carbon.
An excerpt: (read in full here)
“Many of the Committee’s recommendations would weaken the ETS. Pushing back the timeframes for sector entry (with no date for agriculture) would weaken New Zealand’s incentives to innovate in agriculture, invest in renewable energy, or change personal consumption patterns to cut emissions.
“The ETS would also be severely weakened by adopting intensity targets Allowing producers to emit more, as long as their emissions grow less fast than their output, is a recipe for emissions growth and administrative complexity. Taxpayers would have to pick up the tab for international credit purchases, effectively subsidising polluting businesses. An intensity target approach has been rejected in both the EU and the US (the WaxmanMarkey
“Introducing a cap on the price of carbon would be also negatively affect the incentives for the forestry sector to plant trees.. It would reduce the value the forestry sector receives for carbon and thus be a disincentive for carbon sequestration. Rapid forest planting is vital if New Zealand is to be able to meet targets coming out of Copenhagen, to give us some breathing space to reduce agricultural emissions at low cost and decarbonise our energy sector.
“New Zealand on its own will of course not prevent dangerous global climate change. But there are also vital business reasons for cutting emissions. Our business sector is at risk of falling further behind other countries if we adopt a ‘slow follower’ stance, and investors don’t face the right price incentives to adapt to a lowcarbon
More on the subject can also be read in the Climate Change Research Institute’s September edition of its ‘What’s Hot Newsletter‘.