Sanity prevails on climate change policy
OPENING SALVO: Choosing Tim Groser and Simon Bridges as his new climate change ministers creates hope that sanity will prevail over the emissions-trading-scheme (ETS) fanatics who have controlled policy for six years.
The new team combines National’s most worldly minister, given Mr Groser’s 30 years as a top trade negotiator, with perhaps its brightest, given Mr Bridges’ background at Oxford University and the London School of Economics.
They will need all their wits to outmanoeuvre zealous climate change officials displaying the worst traits of different departments – the environment ministry’s belief that the end is nigh, the Treasury’s religious faith in its general equilibrium model and the foreign ministry’s conviction New Zealand must provide global leadership, whether or not anyone follows.
Officials can be trusted to propose complex technical changes to the ETS, apparently reflecting ministers’ wishes but in practice having no effect.
Mr Key has made clear that, given Mr Groser’s travel commitments, Mr Bridges must be all over the detail and able to step up whenever required.
Make no mistake, both ministers believe climate change is real and that humans contribute to it. But both are more level-headed than their predecessors.
First, they know that claims of 22-metre sea rises are warmist nonsense, not supported even by the UN’s alarmist Intergovernmental Panel on Climate Change (IPCC), which at the peak of climate change hysteria suggested maximum sea rises this century of just 59 centimetres. IPCC forecasts keep falling.
Second, both understand that the extent of climate change is entirely independent of anything New Zealand does. If human-induced climate change is real, the world’s future depends on China, India and the US. We will freeze, fry, drown or carry on just as we are regardless of our policies.
Most importantly, both ministers understand that their personal views on such matters are irrelevant – climate change policy is about the nexus of international diplomacy, domestic politics and, to a limited extent, export branding opportunities.
Policy must benefit us in these spheres, or at least reduce risks, and preferably deliver wider gains.
ETS now irrelevant
The ETS fails these tests entirely. As Mr Groser advised Mr Key before the fateful decision to confirm Labour’s ETS just before the UN’s Copenhagen fiasco, there was never any prospect of a Kyoto-type international carbon-trading agreement when current arrangements expire on January 1, 2013.
That, along with domestic politics, means Australia will never implement an ETS. Nor will China, the US, Japan or Korea.
The EU’s ETS may stumble on but it is much narrower than New Zealand’s. Over 70% of the EU economy is services, for which its ETS is largely irrelevant, 28% is manufacturing and 2% is agriculture. Less than half of the EU’s electricity sources are covered by its scheme and agriculture is completely excluded.
Prices reaching zero
Despite New Zealand’s ETS being a global anomaly, of which both new ministers were sceptical, both accept it has created too many property rights to be abandoned in the foreseeable future – which is why it was so reckless to launch it in the first place.
They are also unlikely to expand it but it now barely matters anyway. From around $20 in 2011, New Zealand carbon units, following international trends, have reached $7. With the Kyoto system set to expire, they will continue their march to zero, perhaps not quite making it depending on policy decisions in the EU.
Which businesses care if they are part of the ETS, if the carbon price is close to zero?
Consequently, neither minister sees the ETS as the priority.
More important is the Global Research Alliance that Mr Groser launched at Copenhagen against Nick Smith’s wishes but with Mr Key’s support. Over 30 countries are now involved in developing technologies to reduce agricultural emissions. Not only would that reduce global emissions 70 times more than the ETS ever could, it would also provide New Zealand with intellectual property for export.
A former conservation minister, Mr Groser may also look to low-value conversation scrub land that could be used to plant native trees, helping meet climate change goals as well as promoting biodiversity and tourism.
Businesspeople or environmentalists expecting immediate policy reversals will be disappointed or relieved. But both will find the new ministers respond to reasoned arguments. The days of relying on histrionic claims of environmental or economic catastrophe are over.