Labour’s Climate Announcement is Economically and Scientifically Illiterate

Responding to the release of Labour’s Climate Manifesto, Taxpayers’ Union Deputy Campaigns Manager, Connor Molloy, said:

"Yet again, we are seeing a swathe of policies that fail to recognise the genius and effectiveness of our existing Emissions Trading Scheme. If we want to become world leaders in the climate change space, we must demonstrate to other countries how we can reduce net emissions in a low-cost way that doesn't allow Ministers to pick and choose winners. 

Establishing a Minister of Just Transitions:

“This sounds like nothing more than a push for more bureaucracy and Ministerial intervention in how our emissions are reduced. The Emissions Trading Scheme is already capped and set to reduce over time. Ministers picking and choosing winners does not reduce the country’s net emissions, it simply frees up carbon credits to be used elsewhere in the economy.

“Given that Labour has refused to clarify what role the minister would have compared to the existing Climate Change minister, we can only assume that the role only exists to expand the Government Cabinet and create another source of wasteful spending. New Zealand doesn’t need more high-level bureaucrats to make climate change decisions, it needs policy that allows us to meet our climate targets at the lowest possible cost – a robust Emissions Trading Scheme (ETS).

More Corporate Welfare:

“Feel-good policies that won’t make one iota of difference to net carbon emissions are simply corporate welfare dressed up as climate action. Initiatives such as NZ Green Investment Finance and the GIDI fund do not reduce New Zealand’s net emissions. As we have repeatedly said, because net emissions are capped, if one of these initiatives manages to reduce emissions in a particular sector, that frees up those carbon credits to be used elsewhere and net emissions remain unchanged. The only way to reduce net emissions is by lowering the cap on the ETS to reduce the number of carbon credits available for sale.

“Furthermore, NZ Green Investment Finance is gambling with taxpayers’ money. Private investors carefully assess the viability of a project before stumping up the cash, what can NZGIF bring to the table except risking other people’s money on projects which are unlikely to be profitable – if they are profitable, they can be funded privately and the government does not need to duplicate the role of the private market in a way that is less efficient.

Removing Diesel Generators from all Schools:

“The cost of running a diesel generator already includes the cost of those emissions under the emissions trading scheme. Again, any reduction in emissions here will simply free up carbon credits to be used elsewhere and will not reduce net emissions.

“Schools should be free to judge for themselves whether, in light of the rising price of running diesel generators, it will be a prudent financial decision to phase out generators in favour of other forms of electricity generation. For some schools this will likely make sense, for others the benefit of reliability of diesel generators will be favoured.

Prioritising Gross Emissions Reductions over Net Emissions Reductions:

“This is ideologically driven madness. There is no difference as far as the climate is concerns as to whether emissions are reduced or offset through carbon sequestration. The role of the Government is to ensure a well functioning Emissions Trading Scheme that allows net emissions reductions at the lowest possible economic cost.

There is a better way:

“The Taxpayers’ Union has long supported a capped emissions trading scheme that, once in place, allows the market to respond to price signals so that net emissions can be reduced over time. The current system can be improved in a number of ways to mitigate the impact on consumers.

“Introducing a universal carbon dividend would distribute funds generated through the ETS back to consumers which will shield them from rising prices while still maintaining the incentives to consumer lower-carbon products which remain relatively cheaper.

“Allowing offshore offsets can help ensure that carbon offsets are done as cost-effectively as possible in the places where it makes the most economic sense to do so. This helps to avoid proliferation of forestry on productive land in New Zealand without arbitrary restrictions and also will prevent the carbon price from rising too high.

“As it stands, many politicians, climate activists and political commentators highlight the fact that the Government will have to offset some of New Zealand’s emissions through the purchase of carbon credits. We think those same international suppliers should be able to sell to New Zealand companies to mitigate their emissions so that more of the cost is borne by polluters rather than taxpayers.

“Agriculture should be incorporated into the ETS with a free industrial allocation of credits similar to other trade-exposed producers such as the steel and aluminium sectors. This free allocation should be reduced relative to how efficient overseas producers are – the purpose here is to prevent carbon leakage, if overseas farmers become more efficient than New Zealand producers the industrial allocation should be removed entirely."