13 February 2016

How fast over the cliff? tinkering with the train-wreck NZ Emissions Trading Scheme

How fast shall we drive over the cliff

I look at at the Government's latest token consultation about tinkering with the train-wreck New Zealand Emissions Trading Scheme. We are still driving fast towards a cliff but the argument has moved from which gear to air-con versus heater. The Government has kindly given us the opportunity to make a submission about how hot or cold we should be as we go over the emissions cliff.

Back in September 2012, when Tim Groser and the National Government were last watering down the New Zealand Emissions Trading Scheme (NZETS), I wrote a post that used an excellent metaphor for amending the NZETS, tinkering with the gears while driving a car fast towards a cliff.

All credit should go to former Greens co-leader Jeanette Fitzsimons who had absolutely nailed her answer to questions from TVNZ about amending the NZETS

"Look, its like we are in a very fast car, we are heading towards a cliff, which is getting really close, and we are arguing whether to change from fifth to fourth gear".

Now we roll forward and there is another review of the woeful NZETS. For all that has happened in the last three years, such as various COP meetings, NZ opting out of a binding second Kyoto commitment, NZ being excluded from the international carbon markets, the 2020 and 2030 targets and the recent Paris Agreement, the fast-car-over-the-cliff metaphor still nails the state of the NZETS; that it is so far from being an effective emissions mitigation policy that 'reviews' are merely futile tinkering in the face of the impending threat of climate change. Especially when the scope of the review deliberately excludes the option of including agriculture in the NZETS.

The first stage of the review is a perfect example of futile tinkering. It is very narrowly focused on just two of the many 'cost-moderating' measures inserted in the NZETS in 2009 and extended in 2012.

  1. Should we end the two tonnes-for-one unit deal, so that energy and industry emitters have to surrender one unit for every tonne of GHG emissions, rather than one unit for two tonne of emissions?
  2. Should we adjust the existing $25 price cap or fixed price surrender option?

Submissions on these two issues close at 5pm on 19 February 2016. Submissions can be made online, by emailing nzetsreview@mfe.govt.nz or writing to the Ministry for the Environment, PO Box 10362, Wellington 6143.

The discussion document describes the two-for-one deal as follows:

The one-for-two surrender obligation allows participants from the liquid fossil fuels, industrial processes, stationary energy and waste sectors to surrender one unit for every two tonnes of emissions (ie, a 50 per cent surrender obligation). This means that these participants do not face a full obligation for their emissions. As a result, the effective carbon price they pay is half the unit price. For example, with a New Zealand Unit (NZU) price of $7, these emitters pay an effective carbon price of $3.50 for each tonne of emissions, with a maximum effective carbon price set at $12.50 due to the $25 fixed price surrender option (page 12).

What to do with the two-for-one deal. This is just a no-brainer. Of course, the two-for-one deal should just end! It was meant to end in 2012, and the 2012 extension was flagged at the time as being temporary and ending in 2015. So why are we even consulting about this non-issue? Surely the policy default is that any well-designed transitional measure should simply end on the date specified in the original decision? Of course, from the point of view of political economy, such things as policy defaults and burdens of proof can be influenced by political interests.

So we can view the Ministry for the Environment's decision to have a consultation over the end of a transitional measure (such as the two-for-one deal) as changing the burden of proof. Instead of the transitional measures (of which there are many in the NZETS) simply expiring, a process must be held to arrive at that decision. This involves policy assessment and consultation. The proposed decision to end the two-for-one deal changes in character from that of an automatic expiry, to a "yes/no" decision where the default is the status quo. And so the burden of proof now falls on the advocates of change (to a tighter ETS) and is removed from the advocates of the status quo who want an eternal transition.

The discussion document even expands the unnecessary scope of the decision by presenting three options (page 13); maintain the 2-for-1 deal indefinitely, or extend the term then review it, or scrap it and make emitters pay for each tonne of greenhouse gases. The document at least states the real world implication of keeping the 2-for-1 deal indefinitely: NZ unit prices would remain less than $NZ12.50 per unit, i.e. half of the price cap of $NZD25.

The discussion document describes the the second issue about the $25 price cap/fixed price option as follows:

The $25 fixed price surrender option allows businesses to surrender an NZU by paying the Government $25 per unit. It was established as a transition measure in 2009 to protect firms and the economy from price spikes or excessive costs. It acts to cap the maximum carbon price in the NZ ETS, and in combination with the one-for-two surrender obligation, it currently ensures that the maximum effective carbon price any non-forestry participant will face is $12.50 per tonne (page 14).

Again it is a no-brainer that this price cap should be removed. It was always obvious that it in the longterm it would cap NZ unit prices at $12.50 per tonne. However, to the best of my recollection, this is the first time the Ministry for the Environment has explicitly said so. That in itself indicates a lack of real commitment to an emissions trading approach. If the Government was that concerned about upward volatility in emission unit prices, they should have chosen a carbon tax.

Rather than discouraging me, writing this post has made me more determined to make a submission. Perhaps even two, as the trustees of carbon forest project I am involved in, also want to make a submission. Both submissions will probably use the expression "no brainer" several times.

To end this post I give you this cultural mash-up by American performance artist Vin Diesel which blends car crashes, train wrecks, cliffs and even a bit of Butch Cassidy and the Sundance Kid.

09 February 2016

Kevin Anderson returns to the London School of Economics

Kevin Anderson has just given a talk at the London School of Economics (LSE) about climate change and the Paris Agreement. Audio download 44.3MB mp3

For me this this is almost a case of the wheel turning a full circle. I first got to really know about climate chnage from listening to Anderson's 2011 LSE talk Going Beyond Dangerous Climate Change: Exploring the void between rhetoric and reality in reducing carbon emissions. I would also recommend that podcast too.

LSE describes the event which took place last week on 4 February 2016 like this.

Speaker(s): Professor Kevin Anderson

Chair: Professor Tim Dyson

Recorded on 4 February 2016 at Old Theatre, Old Building

Despite high-level statements to the contrary, there is little to no chance of maintaining the global mean surface temperature increase at or below 2 degrees Celsius. Moreover, the impacts associated with 2°C have been revised upward sufficiently so that 2°C now more appropriately represents the threshold between 'dangerous' and 'extremely dangerous' climate change.

Kevin Anderson will address the endemic bias prevalent amongst many of those building emission scenarios to underplay the scale of the 2°C challenge. In several respects, the modeling community is actually self-censoring its research to conform to the dominant political and economic paradigm. However, even a slim chance of 'keeping below' a 2°C rise now demands a revolution in how we consume and produce energy. Such a rapid and deep transition will have profound implications for the framing of society, and is far removed from the rhetoric of green growth that increasingly dominates the climate change agenda.

Kevin Anderson (@KevinClimate) is Professor of Energy and Climate Change at the University of Manchester.

I am really looking forward to listening to the podcast. Audio download 44.3MB mp3

30 January 2016

New Zealands gross greenhouse gas emissions per capita compared

Update: 7 February 2016. There was a mistake in the chart. The labels for India and Africa were interposed. So I fixed that and uploaded a new version to Wikimedia Commons. I also changed the type of point used to mark the India data into an upside-down triangle.

I have made another chart and uploaded it to Wikimedia Commons. Today's chart is a comparison of gross greenhouse gas emissions 1990 to 2012 for seven entities: New Zealand, United Kingdom, the European Union, China, India, Africa (the whole continent) and also the world average.

Its my own work of course. So it's by Mrfebruary and following Wikimedia's practice, it's released under a Creative Commons Attribution-ShareAlike 4.0 International licence, via Wikimedia Commons.

Per capita greenhouse gas emissions

I have used some html mark-up from Wikimedia Commons here and not the Blogger tools.

The original source of the data is the CAIT Climate Data Explorer which is provided by the Washington-based World Resources Institute. I selected the countries/entities and the type of data and downloaded it. I have stashed the data I used on Google Sheets.

Look at China's trend in per capita emissions. In 1990 China had more-or-less the same per capita emissions as India or the average for Africa as a continent. Then from the late 1990s onwards, globalisation of trade and China's rapid economic growth, particularly of its export manufacturing, caused per capita emissions to grow until they are now similar to the emissions in the European Union. The two trends are of course linked; as China becomes the industrial manufacturer for the rest of the world, the developed OECD countries, including New Zealand, become importers of manufactured goods and exporters of the greenhouse gas emissions. The manufacturing industries decline and the developed economies become more reliant on low-emissions service industries.

As an experiment, I am going to insert a large .png of the graph, 1280 pixels wide. One feature of Wikimedia Commons is that once you have uploaded an image in scalable vector graphic format, you can then get portable network graphic (png) format images in different sizes. Blogger calls this 'medium' size. It doesn't reproduce crisply. The Wikimedia Commons html mark-up looks better. Still, double click on this and it looks crisper in it's glorious 1280 pixel width.

29 January 2016

NZU Price data is also on Google Fusion Tables

I have also uploaded the NZ Emission Unit (NZU) prices to Google Fusion Tables.

Fusion Tables allows you to make embeddable charts and maps from data stored on a table that looks like a cut-down version of a Google sheet.

That's not bad at all, is it?. Especially the ability to hover over the chart and to see the actual prices and dates.

27 January 2016

New Zealand emission unit NZU prices 2010 to 2015

I have made a new graph.

Actually its more accurate to say I have collated or perhaps compiled a data set of NZU (New Zealand emission unit) prices from 2010 to 2015.

Although private sector carbon brokers such as OMF and Carbon Forest Services display some current prices and a few historic prices, there is no openly available public data series of the New Zealand carbon price as represented by trading in the domestic New Zealand Unit.

So I decided to make a monthly data series by digitizing images of graphs via the programme G3Data and via the website Web Plot Digitizer. The values obtained in this way are best thought of as being similar (but certainly not identical) to a monthly mean. The accuracy is perhaps plus or minnus 20 cents NZD. The file is available from "NZU-price-data-2010-2015.csv".


The R script for the chart is also available at the Wikimedia Commons page for the graph.

17 January 2016

An intelligent and observant Martian would be entitled to believe the human race insane.

Australian Robert Manne has written an excellent long-form overview of the problem of climate change policy.

I have shamelessly abbreviated one sentence for the title of this post. The full sentence is.

An intelligent and observant Martian visiting the Earth and learning of our climate problem would be entitled to believe the human race insane

Manne has name-checked pretty much most of the key people we associate with the discourse on climate policy.

Its a really good read. I recommend it.

14 January 2016

Video Kevin Anderson on COP21 the Paris Agreement honesty hope

Marc Hudson is an Australian based in Manchester. He writes for the Manchester Climate Monthly. He has done another interview with Kevin Anderson and uploaded it to You tube. I appear to have been viewer number 479.

Anderson thinks that the Paris Agreement has a very strong headline message in endorsing the 1.5 Celsius warming temperature limit, but then turns out to be 31 pages of legal fluff that supports an implicit endorsement of a climate change techno-fix of bio-energy carbon capture and storage later in the 21st century instead of immediate deep reductions in emissions of greenhouse gases.