KEY POINTS:
Business organisations have mounted a concerted assault on the Government's greenhouse gas emissions trading scheme in recent weeks. It would introduce a market in obligations that may not be easy to understand at first and the price at which carbon units may trade remains necessarily conjectural. It is,
or was, an ambitious plan, putting this country among the leaders in the global response to climate change. Clearly it has been too ambitious even for the Government.
Two days ago we suggested that a cost study commissioned by the business lobby should be taken with a grain of salt. The estimated growth reduction is not significant when the case is examined closely. The Prime Minister seemed to agree. Yet yesterday she postponed the scheme that was to start with an emissions cap and carbon trading in the transport sector next year.
As late as last week her Minister for Climate Change, David Parker, was refuting suggestions the scheme would be postponed and yesterday, even as his leader was announcing just that, Mr Parker was invoking the scheme in response to the Treasury's estimate that New Zealand's bill for exceeding emissions limits agreed in the Kyoto Protocol has already reached $1 billion.
Mr Parker said the Treasury calculation will be revised soon to take account of the trading scheme, the moratorium on further energy generation from fossil fuels, and the Government's energy efficiency drive. Will any of those go ahead now?
Helen Clark has clearly taken fright at the strain being placed on household budgets at present by rising fuel and food prices, not that the strain will be eased by postponing emissions trading, or the Auckland petrol levy that was also to come into force next year. By next year global commodity prices will be either easing or maintaining a trajectory that dwarfs the paltry costs now postponed.
Petrol emissions trading was reckoned to add 8c a litre at the pumps, and the Auckland regional transport levy would have added 5c a litre. Motorists have weathered increases of that order just about every month lately. The only difference between those price jumps and the Government's contributions to fuel costs would have been that consumers had somebody to blame. Helen Clark does not want to carry that blame into an election.
So much for courage, so much for "sustainability", the watchword of Labour's election plans this year. Policies that boast environmental sustainability are worthless without a credible political commitment to them. The Government's retreat on two fronts yesterday undermines confidence in itself and its climate change programme.
The emissions trading scheme has been effectively postponed a year to 2010 when it will start with the electricity sector, transport fuel having been postponed to 2011. The Auckland Regional Council has been told it cannot introduce a 5c levy from next year to help meet the cost of electrifying its commuter rail services. The Government says the tax will now be phased in over several years to ensure the impact on motorists is minimised.
But what now are the chances that the Government in office next year will make electricity face emissions trading as 2010 approaches, particularly if household budgets might struggle to meet the higher power price? And when will Auckland commuters get an electrified rail alternative to car travel?
The cost of climate damage has to be built into the prices of products that emit greenhouse gases in their production or their consumption, and the strain has to be taken in household budgets. There is no other way to change behaviour sustainably.