Dialogue: Signing the Kyoto Protocol blind not the way to go

By CHRIS BAKER*

For New Zealand, the key Kyoto question is the timing and quality of policy work that must precede the decision to ratify. What is in the best interests of this country and how do we best fit these interests into the international response to global warming?

So far the Government has largely been flying blind - determined to reach the end point (ie, ratify) but not aware of the costs. It may make good politics, but it is not sound economic strategy or risk management.

The reality is that New Zealand has nothing to lose from deferring the decision until we know just what it means for jobs and the economy.

Like other countries, we have until near the end of 2006 to ratify Kyoto. In the meantime, we can take any positive initiatives on greenhouse gases we like, although business opposes anything that reduces competitiveness until Kyoto is truly international.

Business is willing to work with officials over a reasonable time frame. Rushing the exercise is bound to produce a poor-quality result, but that is where we are heading now.

Australia is taking its time over Kyoto, an approach strongly supported by its business community. The New Zealand business community looks to Australia with envy because of its Government's leadership.

To be an effective response to global warming, the Kyoto Protocol must be a global treaty. The US, China and India must join, and all developed countries must seriously commit themselves to greenhouse gas reductions for it to be effective.

This is not the case at present. The US, China and India will probably not commit themselves to emission reductions under the Kyoto Protocol until at least 2012, if at all.

Most of the countries that support Kyoto do so for economic as well as environmental reasons.

The European bloc is shifting to less carbon intensive energy regardless of Kyoto and sees Kyoto as a major trade advantage over the US. Convenient!

The Russian bloc has a lot of hot air to sell and may well be a lot less enthusiastic about Kyoto when the treaty brings pain rather than gain, after 2012.

The fact that the agreement is effectively not global, and our poor understanding of climate change science, are the main reasons US President George W. Bush withdrew.

We are unique among Annex 1 countries because 55 per cent of our greenhouse gas emissions are in the form of methane (mostly from cows and sheep). Also, 40 per cent of the remaining emissions (mostly COinf2) are from transport. This is important because emission reductions in both of these areas are hard, and costly, to achieve.

Technology has no simple answer for methane other than reducing output, stock numbers, wealth and jobs.

Excluding transport, our emissions from energy per head are otherwise very low, but our options for growth in a carbon-constrained economy are less than those of most countries.

Without fossil fuels, New Zealand has few viable energy options as our gas reserves decline and we strive to regain our wealth status in the OECD.

New Zealand is more like a developing country than other Annex 1 countries. These issues should be reflected in the Kyoto policies the Government adopts.

If we ratify this year we could be alone in the Southern Hemisphere, leaving our many competitors in Asia, South America and, for a period, possibly Australia free to compete without the costs of Kyoto.

This will slow our modest efforts to reduce the income gap between New Zealanders and Australians, which has widened in recent years, let alone climb the OECD ladder.

We know with certainty that if we ratify this year and create a price for carbon in the period to 2012 (through taxes or carbon trading, etc), our international competitiveness will suffer and this will translate directly to lower wages and fewer jobs.

How can it be otherwise with so few countries taking on similar pain?

What if we don't ratify this year? We will be able to conduct a careful and thorough assessment of policy options, and wait and see what our major trading partners do, Australia in particular. We can adjust our policies so we move with the Kyoto Protocol, as it becomes a global agreement, as our trading partners move, not before.

We can actively and vigorously take part in international negotiations to ensure New Zealand is well placed for the second commitment period starting in 2012 and to ensure Kyoto evolves to become an effective, global, response to a global problem.

Let's put jobs and the economy ahead of a political agenda.

* Chris Baker is a spokesman for the Climate Change Pan Industry Group, a coalition of business organisations.

Dialogue on business

nzherald.co.nz/climate

Intergovernmental Panel on Climate Change (IPCC)

United Nations Environment Program

World Meteorological Organisation

Framework Convention on Climate Change

Executive summary: Climate change impacts on NZ

IPCC Summary: Climate Change 2001