Alasdair Thompson: The costly fallout of Kyoto Protocol

COMMENT

Mixed messages are drowning out reason and understanding over climate change and global warming, for businesses and the public alike.

The Government is leading the charge with its confusing messages: on the one hand, it has praised Solid Energy, appropriately, with a Trade and Enterprise Export Award for increasing sales of coal overseas; on the other, it signals that the local use of coal will soon be subject to a carbon tax.

This, despite forecast shortages of energy, which electricity from coal generation could do much to assuage. Also, a number of of Solid Energy's exports go to China, which won't face carbon regulations.

The anomalies arising from the Kyoto Protocol, the treaty New Zealand has signed obliging us to reduce our carbon emissions below 1990 levels before 2008 or suffer financial consequences, do not end there.

In fact, the Kyoto process is vastly wasteful of the resources globally that its proponents want to conserve.

Botanist David Bellamy says "the world's economy may be about to divert billions, nay trillions of pounds, dollars and roubles into solving a problem that actually doesn't exist. The waste of economic resources is incalculable and tragic".

Bellamy cites a petition signed by 18,000 scientists organised by the Oregon Institute of Science and Medicine, which states: "Predictions of harmful effects due to future increases in minor greenhouse gases like carbon dioxide are in error and do not conform to experimental knowledge."

He argues that climate change is brought about mostly through natural causes such as the warping of the Earth's crust, and the tilt of the Earth's axis and its oscillating orbit around the sun.

The Institute for International Economics at the Washington Center for Global Development has concluded the costs of an effective assault on global warming and reducing it aggressively would amount to an extraordinary 3.5 per cent of the world's total economic output each year for the next 100 years: $458 trillion.

On the local front, emissions from animals are to be excluded, although their methane is held responsible for climate effects seven times worse than carbon dioxide, if the science is upheld.

But, as Bellamy points out, the greenhouse gas mainly responsible for land temperature is water vapour, 99 per cent of which is entirely natural.

Under the climate mitigation measures proposed, some of our major industries will be able to negotiate agreements directly with the Government. This appears reasonable, since they operate at the level of world best practice, and we can hardly afford to see them close.

But the upshot is that all our smaller enterprises will be left to pay the carbon tax on behalf of the entire New Zealand economy, a true opposite of picking winners.

The Government says the carbon tax will be recycled through the economy, once officials have gathered it and decided it must be spent on subsidies to foster otherwise suspect industry development.

Potential investors are no doubt scratching their heads. They might be asking: "What's it to be, Kiwis? Are you keen on rising education and health standards and the economic growth that delivers them? Or would you be satisfied with a slower rate of growth, with Australia and other OECD countries taking away our youngest, most skilled and brightest people?"

Resources directed efficiently to solve serious public health and education problems would certainly achieve better economic and environmental outcomes than tilting at the global warming windmill.

If we were to have any success at all with it, certainly the rich countries would have to do a lot more than reduce emissions by 5 per cent below their 1990 levels, and impose carbon taxes. But the costs would exceed the benefits 3.8 times over. What a waste.

Along with evidence of Kyoto's impotence, we could also suffer a greater loss: respect and care for the environment would likely diminish as misrepresentation surrounding climate change increased our levels of cynicism.

* Alasdair Thompson is chief executive of the Employers and Manufacturers Association (Northern).