The ETS: Passing the buck
The Emissions Trading Scheme (ETS) is a complex piece of work that constitutes our Government’s largest effort to reduce greenhouse gas emissions. In principle, an ETS could work very well by putting a price on emissions and creating incentives for initiatives to cut them. Unfortunately, the ETS originally passed by Labour in 2008 was already rather weak, and this was watered down further by National when it took power. It does not go anywhere near far enough to cause the emissions cuts required to meet the Government’s 2020 target.
The consequences of failing to meet a target aren’t just bad for the climate – they’re bad for our wallets. When we have made a commitment internationally to meet a certain emissions reduction, any shortfall will cost us financially. Most likely we will have to make up for the overshoot by buying emissions “offsets” from countries overseas. With the different offset schemes there are risks that, while things might look good on paper, they won’t actually amount to true cuts in emissions. Regardless, failing to meet our target means more New Zealand money going offshore.
Under the Kyoto Protocol signed in 1997, New Zealand committed to reduce emissions to 1990 levels for the period 2008-2012. We failed – emissions are roughly 20% above this. But the Government has been largely able to avoid the financial consequences by cashing up on domestic offsets, which arose thanks to a boom in commercial forestry plantations in the 1990s causing a huge amount of carbon to be removed from the atmosphere and stored in trees. Off the hook, right? Phew!
Not quite. These are commercial plantations, planted with the intention of being harvested. Using these offsets to cover our emissions overshoot is like putting the bill on credit card. It’s great for the taxpayer and the Government of today, because it allows them to pass on most of the cost and avoid drawing too much attention to the huge gap between commitments and actions. But ask the taxpayer and Government 10 years from now how they feel about it and the response will be quite different. According to analysis by the Sustainability Council, at least 84% of the “Kyoto bill” will be transferred to the future, starting to bite by 2020. The cost is estimated to be somewhere in the range of $1-6 billion.