7 Things Paula Bennett Must Do to Become Climate Change Credible

Geoff SimmonsEnvironment

Over the weekend Paula Bennett admitted that when New Zealand handed over 97m fraudulent carbon credits it wasn’t “the right thing to do”. But in defense of the Government she maintains that “we haven’t broken any rules”. She certainly hasn’t considered making reparations by replacing the 97m with bona fide credits. Her government belies the children’s saying that ‘cheats never prosper’.

Meanwhile the Minister is in the midst of reviewing the Emissions Trading Scheme. This is supposed to be our main tool to reduce emissions, but the official evaluation says the scheme has been a complete flop. All it has delivered so far is a plentiful supply of cheap, dodgy carbon credits that we are using to claim we are meeting our international commitments.

The credibility of the Emissions Trading Scheme is hanging by a thread. Minister Bennett may not be solely to blame – she must share that honour with her predecessor Tim Groser – but she has a real job in restoring it. Can it be done? Here’s six ideas to get started. 

1. Stop Making Excuses

At the moment the Minister’s response to the challenge of reducing emissions is crying poor and claiming this task is really hard. New Zealand’s task is partly more difficult because of the size of our agriculture industry. However, the rising cost of change is chiefly due to past inaction – even excluding agriculture we have gone backwards in the past seven years.

The truth is that it would have been a lot cheaper and easier if we had started weaning ourselves off fossil fuels years ago. Now we are playing ‘catch-up’. Sorry Minister but you have nobody but your colleagues to blame for New Zealand falling behind. The longer we stuff about, the more expensive this whole process will be.

2. Own up to past mistakes

The Minister has claimed that the dodgy credits are not news. If that is the case why did she hand them over to the United Nations late in 2015, claiming that we had met our international emissions reductions targets? We pride ourselves as being a nation of good sports, now the rest of the world is shaking their heads over our climate change antics.

Former Minister Tim Groser stood by while New Zealand bought millions of fraudulent credits, mainly from the Ukraine. We were the only country to allow unlimited trade in these credits, and for 2 years we were the only ones buying them at all. No wonder then that we bought four times more than any other country as a proportion of our emissions.

The flood of foreign credits was a complete disaster for our economy in the long term. It was like buying a cheap car that breaks down after a week – short term thinking. Taxpayers – especially the young ones that will foot the bill – would be outraged if they understood the stunt the Government has pulled here.

Instead of facing the task ahead by reducing New Zealand’s emissions, the Government allowed $200m to end up in the pockets of foreign criminals. Not only have we cheated, cavorted with criminals, helped polluters profit, we have made our own job of reducing emissions harder in the long term.

3. Dump the junk credits

Minister Bennett needs to make good on past mistakes, and hand over real credits instead of the fraudulent ones. Otherwise we risk becoming ‘those guys’ that cheated – we can’t let that happen to New Zealand’s clean, green, corruption-free international reputation.

Minister Groser may have caused the problem, but putting it right is now up to Minister Bennett. She is showing no signs of doing so – she has only said that “we will not do it again”. Even that weasel-like statement isn’t credible when she has no plan to back it up?

It’s this Minister who handed over the fraudulent credits to the United Nations last year. In doing so she kept hold of ‘good quality’ credits to see us through to 2020 and beyond. In fact on current projections we will have a surplus of 94 million credits in 2020. She’s not even considering handing those over now as a mea culpa for our knowing participation in fraud – meaning the proceeds of crime will still be being used by our government as we move on to the 2030 target.

4. Limit future trade in international credits

The Government still claims it needs international trade in credits to meet existing targets. What would it cost to meet our 2030 target without trade? We don’t know because the work hasn’t been done. More on this below.

In the meantime, our credibility is in tatters when it comes to international trade in carbon credits. It would be astounding if any credible nation wanted to engage with us.

To restore our integrity we need to make sure any future trade in credits actually reduces emissions. This is only realistic if we work closely with a small group of countries (for example some of our Pacific Island neighbours), and we limit international trade to a certain percentage of emissions (ironically what the ‘supplementarity principle of Kyoto always stipulated).

That means we need a plan to reduce domestic emissions – in other words we need to start weaning ourselves off fossil fuels.

5. Develop a plan to wean us off fossil fuels

Currently our plan for reducing emissions is simply having a price on carbon through the Emissions Trading Scheme. Cap and trade schemes like the ETS are great in theory. However for the ‘trade’ bit to work there needs to be a ‘cap’ on emissions – hence the name. When there is no cap, the trade bit is pointless – we’ve seen that with the fraudulent credits where the price fell from over $20 to as low as 15c per tonne.

Now the Minister is consulting on the idea of ‘auctioning’ credits – without a mention of what the cap should be. To have a credible cap New Zealand needs to work out how much of our target we will meet domestically.

Any discussion on domestic reductions needs to be informed by the answers to this question – what is the least cost way to wean ourselves off fossil fuels over time? Sadly, officials can’t answer this or other basic questions, as shown by the Royal Society report released yesterday. Without that information the current consultation is a sham.

Such analysis needs to revisit the exclusion of agriculture and protection of trade intensive industries under the ETS. The Ministry for the Environment’s own analysis suggests that agriculture plus existing handouts of free units to big businesses will exceed our entire national emissions allowance by 2030. We have to challenge the assertion that environmental controls hurt export competitiveness. And we need to review the way we use land, so that we can consider climate change, water quality and biodiversity in a holistic way.

For seven years this Government has quashed any work in the public sector on how we might wean ourselves off fossil fuels. Now the Minister has a lot to do to make up for lost time. But there is no point in consulting on this stuff yet – it takes research. She needs to go away and do the ground work, and come back when it is done.

6. Set up an independent committee to oversee the plan

Given the lack of Government credibility on climate change, we should look at the UK’s model for progress. Under the Climate Change Act the UK has an independent Committee that sets emission reduction goals, pathways, recommended policy tools and does the monitoring.

This is different to a collaborative process ala Land and Water Forum. This group needs to be resourced to do independent expert research and analysis on the ideal pathway to a low carbon economy.

7. Explore other tools than the Emissions Trading Scheme

Finally, we can help save the Emissions Trading Scheme by not expecting it to deliver everything. In the UK and Europe they have had more success reducing emissions using regulation and contracts than through putting a price on carbon. The Emissions Trading Scheme is a good idea in theory, but to achieve the impacts needed the price on carbon will have to be hundreds of dollars per tonne. Being a politically created scheme, it is unlikely politicians will ever let the price go that high. The temptation will always be to interfere and fiddle with the rules, as this Government has perfected.

Ultimately what businesses need to transition to a low carbon economy is certainty. Taxes and cap and trade schemes don’t deliver that as they can be fiddled by politicians – other policies will be needed. Here’s a few examples of ideas to investigate:

  • New Zealand is one of the few developed countries without fuel efficiency standards for vehicles.
  • Why do public transport passes attract fringe benefit tax but car parks don’t?
  • Why are local authorities obsessed with minimum parking requirements which encourage car dependence?
  • Public sector fleets should be converted to hybrid and electric cars over time.
  • Regulation and incentives to stop new coal boilers being built and shift to woodchip boilers instead.

The Government’s ETS consultation closes Saturday 30 April at 5pm. We encourage you to make a submission – it can be as simple as typing a Word document and sending it to this email address: nzetsreview@mfe.govt.nz

Here’s a few basic points you could cut and paste to help you get started

The credibility of the Emissions Trading Scheme hangs by a thread. To restore it we need to:

  1. Replacing the 97m fraudulent credits we have handed over to honour international commitments with bona fide ones;
  2. Limit future trade in international credits to a finite percentage of units surrendered under the Emissions Trading Scheme
  3. Set domestic emissions reduction targets
  4. Develop a plan to meet those emissions reduction targets
  5. Use tools other than the ETS to achieve those targets
  6. Ideally the targets, plan, tools and monitoring should be overseen by an independent Committee reporting to Parliament as per the UK Climate Change Act.
7 Things Paula Bennett Must Do to Become Climate Change Credible was last modified: April 28th, 2016 by Geoff Simmons
About the Author

Geoff Simmons

Facebook Twitter

Geoff Simmons is an economist working for the Morgan Foundation. Geoff has an Honours degree from Auckland University and over ten years experience working for NZ Treasury and as a manager in the UK civil service. Geoff has co-authored three books alongside Gareth.