The carbon emission circus is coming to town

Late last week the Government announced that they were running a public consultation on the emissions target for 2020.

The Government already have a long term goal of reducing carbon emissions to 50% of 1990 levels by 2050. Long term goals tend to work quite well for Governments as it gives the public the idea that they are proactively doing something but realistically they will never be held to account if and when they don’t meet the target, as they don’t align all that well with the three year election cycle. But I digress.

This consultation process is part of setting the ‘interim’ goal for the year 2020. Environment Minister Nick Smith has quite correctly identified that setting this target requires a trade-off between our economy, our international reputation and, obviously, the environment.

Ultimately this 2020 goal will be presented in international climate change conferences at the end of the year, including the post-Kyoto Copenhagen Conference. I’m sure we will all be waiting with bated breath to see what the outcome of this Conference will be.

Of far more interest are recent ‘cap and trade’ developments around the world. Obama *just* got his bill passed by the House of Representatives while in Australia the proposed Carbon Pollution Reduction Scheme (CPRS) is very much struggling to gain legs.

New Zealand’s version of cap and trade, which will aim to reduce emissions to the 2020 (and subsequently 2050) goal looks set to be determined sometime later this year, although early indications are that it will be somewhat like the Aussie model. To blatantly oversimplify things, the Aussie model is a more politically palatable version of cap and trade, with lots of pressure-group exemptions and handouts to favoured sectors, as compared with the version NZ originally had planned for under the previous Government, which was more of an economically pure ‘you pollute, you pay’ model.

The final design of New Zealand’s scheme will be very interesting indeed…

17 replies
  1. steve
    steve says:

    they are both essentially the same cap n trade model. however the forms of “assistance” in each country currently vary rather than the EMS. THe assistance scheme doesn’t impact the carbon reduction results of the scheme, but will influence the impact upon the costs for certain industries (which are trade exposed) and the cost to the taxpayer.

    i.e. the assistance is to prevent “carbon leakage” and therefore make sure the EMS achieves its purpose

  2. steve
    steve says:

    I would say so, at least for now. If we want different targets we should aim for these in the Kyoto negotiations and apply it to everyone, and the local scheme should simply be a tool for meeting our obligations to the overall protocol.

  3. goonix
    goonix says:


    That’s what I was attempting to get at – CPRS and the NZETS are both cap and trade systems but they have important differences w.r.t coverage. I think the ‘politically palatable’/’economically pure’ distinction is nonetheless a useful one, at the broad level. Arguments can be made from an economic perspective that certain industries need protection but I think it’s pretty clear that most of these decisions are made on a political basis as opposed to being steeped in economic theory. 😉

    Nobody knows! Although I’m sure we’ll find out at the end of the year…

  4. DanT
    DanT says:

    Domestic policy is quite separate to what we committ in terms of emission reductions (or taking responsibility for emission reducitons overseas) internationally. With a given domestic policy the key difference for different targets for New Zealand in an international context is the allocation of units NZ gets. 1990 levels means we get allocated units to cover our emissions up until 1990 levels, then we have to buy emission units form offshore to cover the balance. Less than 1990 means we get less units and pay for more of our emissions.

    Other countries are committing to reductions on 1990. What should NZ do?

  5. steve
    steve says:

    well 1990 levels are fine, the prob is for developing countries because for them to commit to 1990 levels is a huge drop in emissions whereas for us it is not much of a drop at all. perhaps it should be developed countries committing to lower than 1990 levels and developing countries committing to not growing emissions by more than a certain ammount, and linking it to achieving levels of economic growth. i.e. no increase in allocation without increase in output also.

  6. DanT
    DanT says:

    Sounds good Steve.

    Current announced targets for Annex 1 countries like NZ are for maintaining emissions at 1990 levels to cuts of 30%. The average is a reduction of around 15%. In contrast the IPCC recommends aggregage Annex 1 reductions of between 25% and 40% by 2020 to prevent dangerous climate change.

    The question is what contribution NZ makes, as different Annex 1 countries will face different targets and different obligations under international agreements.

  7. steve
    steve says:

    goonix :
    Arguments can be made from an economic perspective that certain industries need protection but I think it’s pretty clear that most of these decisions are made on a political basis as opposed to being steeped in economic theory.

    well the assistance is for trade-exposed and emissions intensive industries. i.e. the industries that are affected greatly by cost (due to being emissions intensive) AND compete with firms who don’t have the same cost increases (i.e. those firms from countries with no ETS).

    This sounds like reasonable economic theory to come up with rules about what makes a company sufficiently trade exposed or emissions intensive

  8. Hansen
    Hansen says:

    Reducing carbon emissions starts with the people. If each and everyone of us take part, we will help save our world 🙂

  9. umag
    umag says:

    Global Warming is such a FALSE PREMISE – yet our grandchildren are being lied to daily in schools. My granddaughter is scared to death the polar bears are going to die… LOL ! Yes, we can all be good stewards of the earth but NOTHING we do will ever offset what China and India refuse to do – all Global Warming is good for is to fatten the wallets of Al Gore and his like-minded buddies.

  10. Joe Cigarettes
    Joe Cigarettes says:

    Global Warming is very real, and it’s here to stay. To say that it doesn’t exist is to live in a state of denial. Our planet has undergone a dramatic change over the last five decades, and it’s accelerating.

    Look, put it to the common sense test. The atmosphere is a very thin layer, like a skin, around the earth. We’ve been pumping CO2 into it for decades, at a tremendous rate. Do you really think we can do that forever without changing anything? If you do, then you’re pretty stupid.

  11. Technology Zone
    Technology Zone says:

    This whole thing about trading carbon emissions should be put to a stop. otherwise countries who are responsible for cutting down their emissions will never take a serious step towards it as long as they can buy from some third world poor countries.

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