Brian Fallow on the economy

Brian Fallow is the Herald's Economics Editor

Brian Fallow: Dire response to climate change

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Climate Change Minister Tim Groser. Photo / NZPA
Climate Change Minister Tim Groser. Photo / NZPA

The Government's refusal to do much of anything to curb New Zealand's emissions is as economically myopic as it is morally contemptible.

If man's activities are what is warming the planet - and according to the Intergovernmental Panel on Climate Change there is very little "if" about it - the good news is that we can do something about it.

The bad news is that so far what we are doing about it is five-eighths of not very much at all.

Nothing that politicians do, or fail to do, can change the laws of physics, the laws of mathematics or the passage of time.

And beneath all the forbidding jargon of the latest IPCC report the message is clear - time is running out.

Governments, including ours, have adopted a 2C increase in global mean temperature as the boundary between what is just about tolerable and what is downright dangerous climate change.

The IPCC report concludes that to give us a decent (66 per cent) chance of keeping below 2C we need to keep within a budget of 1 trillion tonnes of carbon over the entire industrial era.

Put another way, mankind can only dump a cumulative 3670 billion tonnes of carbon dioxide into the climate system as a result of our activities.

It sounds like a lot but since the industrial revolution we have already spent about half of that budget.

We are spending the rest at a rate of 48 billion tonnes of CO2 a year and rising.

On a business-as-usual track we will have blown the carbon budget within about 30 years.

And that does not include an allowance for other greenhouses gases like methane, whether from melting permafrost or the digestive tracts of ruminants. Accounting for them or requiring a higher likelihood of temperatures remaining below 2C would both imply lower cumulative CO2 emissions, the IPCC says.

For its view on what can be done to haul the emissions curve down we will have to wait for the third tranche of its assessment report in April next year.

It is essential to get policymakers to think of the challenge in terms of a finite cumulative carbon budget rather than in terms of some target for annual emissions at some future date.

It is the area under the curve that matters, not the shape of the curve or the end point.

It is simple mathematics that the higher and later the peak in global emissions is, the steeper the subsequent decline will have to be.

And that is why the Government's refusal to do much of anything to curb New Zealand's emissions is as economically myopic as it is morally contemptible.

It means a greater risk of stranded assets and a larger bite out of future incomes.

Climate Change Minister Tim Groser, in a statement which welcomed the IPCC report, said: "New Zealand is committed to doing our fair share without imposing excess costs on households and businesses, while the Government focuses on jobs and strengthening our recovery."

This is his way of saying that if the global response to climate change is woefully inadequate it is only fair that ours is woefully inadequate, too.

The Government recently made an unconditional commitment to reducing greenhouse gas emissions to 5 per cent below 1990 levels by 2020, Groser reminded us.

"We have implemented the Emissions Trading Scheme [ETS], we are making progress towards our 90 per cent renewable electricity target, and have launched the Global Research Alliance, committing $45 million to research ways to grow more food without growing greenhouse gas emissions."

Let's examine these claims.

If the target of 5 per cent below 1990 were a commitment to reduce New Zealand's gross emissions to that level it would be a substantial cut, given that they are running at more than 20 per cent above 1990 levels.

But it is a target for net emissions, which includes the offset for carbon dioxide removed from the atmosphere by "Kyoto" forests (those planted since 1989 on land not previously forested).

Net emissions are roughly where they were in 1990 and it will be the 2020s before most of those trees get harvested and the forests flip from being a carbon sink to a carbon source.

Then our national carbon accounts will get dramatically worse, but that is clearly beyond the timeframe of interest to this Government.

When he announced the 5 per cent target Groser admitted that it would not require any changes to the settings of the ETS.

But the ETS, supposedly the flagship climate change policy, has been so weakened that it is a sham, a facade that fools no one.

The carbon prices it delivers are so low as to provide no incentive to reduce emissions and no disincentive against deforestation - even though an expanding plantation forest estate is one of the best things New Zealand can do to reduce its contribution to atmospheric CO2 levels over the crucial next few decades.

The president of the New Zealand Institute of Forestry, Andrew McEwen, points to data from the Ministry for Primary Industries' longstanding annual National Exotic Forest Description which record a pattern of net deforestation over the past 10 years.

The maximum stocked area - the land which actually has trees on it - of 1.8 million hectares was achieved in 2003.

For the 83 years up to 2003 the area increased every year apart from three when there was no change.

But since 2003 the stocked area has decreased each year until the March 2012 year when the area increased by just 100ha.

That period includes the years of the so-called chainsaw massacre, when the owners of pre-Kyoto forests had an incentive to fell their trees before deforestation liabilities under the ETS came into force.

But of the total 107,000ha reduction in the size of the plantation forest estate between 2003 and 2012, 41,000ha has occurred since 2008, that is, while forestry has been in the ETS.

It is worth pointing out that while the National-led Government has weakened the scheme, Labour, which designed it, only managed to get it into the statute books in the dying days of its ninth year in power. Its claim to the high ground is shaky.

As for the objective of a power system which is 90 per cent renewable, that is not a stretch target for a country as well endowed with renewable energy resources, including geothermal steam, as New Zealand is. The electricity sector in any case accounts for a relatively small share of national emissions.

Where the Government can claim some credit is its role in setting up the Global Research Alliance and putting resources into the search for ways of reducing emissions form the agriculture sector. But that is about it.

- NZ Herald

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