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Getting My Head Around The Emissions Trading Scheme

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Chris Ford
Chris Ford

I am still trying to get my head around the Emissions Trading Scheme (ETS). The politics of it are complicated. However, from what I can discern, an emissions trading scheme is not the answer to our environmental crisis.

In essence, from all the research I've been doing, it is a scheme whereby government sets a maximum limit on the amount of  pollutants that can be emitted. This is determined on an industry-by-industry basis. Any business which seeks to increase its pollution output must first purchase credits from a business that has polluted less. These transfers are referred to as a trade. Therefore, credit buyers are being charged for polluting while sellers are rewarded for polluting less. Ideally, this should reduce pollution at the lowest overall cost to society and the economy.

The ETS, as it is currently set up in New Zealand, applies to all greenhouse producing gases. The six gases covered by our scheme are: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfleurocarbons (PFCs) and sulphur hexaflouride (SF6). We are required to place these gases under our ETS due to the terms of the Kyoto Protocol.

Nearly all sectors of the economy are currently covered by the ETS. They include the forestry, transport fuels, electricity production, synthetic gas, industrial processes and waste industries. Other sectors including transport, industry, agriculture and fishing are scheduled to come under the ETS's umbrella within the next few years.

The governing legislation is the Climate Change Response Act 2002 and this was substantially amended last year by the previous government to bring in the ETS machinery. Now National is courting controversy through its plans to further amend the law in order to make the ETS, as Climate Change Minister Nick Smith said in a recent media release more  "....workable and affordable and ensure (that) the New Zealand economy and jobs are not put at risk."

What Dr Smith proposes in National's amendment is that, amongst other things, the entry dates for transport, energy and industry be moved to 1 July 2010 and agriculture to 1 January 2015; that unit price options will be lowered for the transport, energy and industrial sectors leading to lower fuel and electricity prices for consumers; a two-tier system of emission allocations with 90% applying for high intensive trade and 60% for medium intensive trade industries; and greater incentives for afforestation.

However, the politics of the ETS are interesting and complicated.

These earlier changes had been agreed to with the Maori Party and United Future. But recently things have begun to unravel slightly for the government. 

The Maori Party are concerned, after lobbying by iwi such as Ngai Tahu, that the afforestation measures may depreciate the value of iwi-owned forests. Given the need to reafforest rather than cut down timber, this will delay any economic return from the forests to iwi. Maori Party MPs are also calling for Treaty of Waitangi clauses to be inserted into the amended legislation.

Maori Party support has indeed been vital for National in the case of the ETS. This is so as the government's other support party, Act, is sceptical on climate change. They parrot the neoliberal line that climate change is not occurring and, if it is, it is a natural and not human-induced phonomenon. The Labour Party, who were courted by National to produce a bi-partisan deal early on, decided not to go any further on the basis that the government's changes would dilute the ETS. The Green Party is also fearful of a diluted ETS but only conditionally supported the Labour Government's emissions scheme on the basis that it was better than doing nothing. In fact, they want an even stronger emissions scheme than either Labour or National.

So who could win out of these proposed changes?

It will be big business who are substantial contributors to pollution. The lowering of unit prices for carbon emitters will particularly favour the coal, oil and other resource extraction industries. Electricity companies will benefit too from not having to pay higher unit prices in the medium term. Nick Smith has dressed this up as a win for ordinary motorists and electricity users. While it is true that the ETS, in its present form, will mean higher energy and power prices in the longer-term, it must still be noted that energy companies continue to overcharge consumers regardless. Therefore, their having to be fully ETS compliant will just provide them with another excuse to rort consumers.

From a socialist perspective, any emissions trading scheme will actually reward polluters through paying them to do so. You might then be asking as to what is the alternative to an emissions scheme? I believe that it lies in the imposition of carbon taxes and pollution levies that will seriously penalise big business for their environmentally destructive behaviour. Ordinary people should still play their part in bringing about a decrease in carbon emissions but not at the price of having to pay higher electricity prices. Environmental awareness and public education programmes should be instituted from the school to community level. Reafforestation should be actively encouraged and ecologically friendly farming practises extended. Public transport and environmentally friendly vehicles should be welcomed onto our roads. New Zealand should strengthen its existing pollution laws and, furthermore, encourage the development of new, hi-tech, government, worker, private sector and consumer owned green industries. These new green industries would gradually replace traditional smoke stack industries. At the same time, driven by community input, we should call for an international people's conference on environmental change to be convened by the United Nations. I believe that this should happen as all of the politicians, diplomats and officials who will make up the bulk of delegates to the Copenhagen Conference will, in all likelihood, not come up with a negotiated agreement. Call me an idealist but if you have ordinary citizen representatives from around the world and non governmental organisations leading the charge, then governments will have to follow instead of it being the other way around.

After all, it is ordinary people who will (and are) being impacted by climate change. Amongst the world's people there is concern about the climate change crisis and its ramifications. Meanwhile, just like Nero, governments and big business continue to fiddle while the globe slowly burns.

Here in New Zealand, it is time to stop messing about with emissions schemes that may not work. It's time to make the big polluters pay. It's time for ordinary people to be encouraged to step up to the mark and not be penalised in the process. It's time for our elected representatives to stop messing around and introduce real measures to combat climate change!

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