Fixing the NZ emissions trading scheme is just flogging a dead horse

I argue that trying to incrementally 'save' or 'fix' the NZ Emissions Trading Scheme will ensure it remains ineffective in reducing domestic emissions for decades. Politically, its just flogging the dead horse. We don't have time for a unending institutionalised cultural conflict over the 'fixing the NZETS' like the one we have had for 'fixing' the Resource Management Act.

Yes, following on from my last post I am still banging on about the latest review of the New Zealand Emissions Trading Scheme.

Elsewhere on the web I see that Brian Fallow, Generation Zero and Geoff Simmons are all accepting the “fix the NZETS” framing in their comments on the review. Geoff Simmons heads up his second post on the ETS review in two days How do we save the Emissions Trading Scheme?.

Brian Fallow starts his Herald column "Possible adjustments to the Emissions Trading Scheme aren’t much, but at least they’d be a start".

Geoff Simmons and Brian Fallow do a double act of analysis on the NZETS review. I totally respect both Geoff and Brian in their intentions and views and understanding of the NZETS, except that they are both accepting this inherently incremental "fix the NZETS" framing of the politics. Here's their discussion.

I think this framing, 'fixing the NZETS' is fundamentally wrong in it’s politics.

One key point from my last post was that this NZETS review has reversed the burden of proof. The allegedly temporary and allegedly transitional 'moderating features' are now the status quo or the default settings in the NZETS.

Policy analysis and assessment now has to be prepared and presented to show that each flawed 'moderating feature' of the NZETS won't harm business interests. Queue the technical report Economic impacts of removing NZ ETS transitional measures by New Zealand Institute of Economic Research.

We need to remember there are a lots of 'cost moderating' features (flaws) still in the NZETS: unlimited international linkage and importing of overseas units (which officials are trying to restore), overly generous free allocation of units, the hang-over of surplus units in the market, the lack of auctioning (well there is no point having an auction if there is a huge surplus of units).

And the ultimate flaw is that half of New Zealand's greenhouse gas emissions, those from pastoral agriculture, seem to have a permanent get-out-of jail card.

So we have an emissions trading scheme with multiple flaws. The politically selected burden of proof provides a high hurdle for change each time the hapless officials attempt to remove the flaws. All the lobbyists join in as they have all the dates in their calendars.

You need more convincing?. Let's look at one of Tim Groser’s last statements as Minister for Climate Change.

First Groser praises Labour for their shared consensus on having an emissions trading scheme.

We have an understanding that there are certain policy frameworks in New Zealand which take decades to put in place, and where you need a very high degree of consensus - particularly amongst the two major parties of Labour and National - on at least a structure of a policy response.

Labour have supped the kool-aid and bought into this framing. As shown by this statement to Forest and Bird during the 2014 election campaign.

Labour’s preferred means of pricing is to fix the the existing ETS. Using an ETS to price carbon is the only broad area of agreement in climate change policy, particularly particularly between the two largest parties (despite National’s lip service for an ETS). Labour would not throw that agreement away lightly to start again with a carbon tax.

In other words, Labour will flog the dead horse better than National. As I noted in 2014:

National and Labour in effect have the same policy narrative that explains the problem; 'THEY undermined the NZETS', and a narrative solution, 'WE will fix the NZETS'. This creates the on-going cycle of the 'horse is under performing' and the narrative solution (keep flogging the horse). But beneath the impenetrable detail and complexity of the arguments about fixing the NZETS, it will remain ineffective.

Groser saves his well-known invective for Russel Norman and the Greens and their carbon tax policy. And stretches a very long bow to equate that policy with the Rudd-Gillard-Rudd Australian Labor Prime Ministers' revolving door.

What I didn't appreciate was that Russel Norman - then leader of the Green Party - saying you want to throw the policy structure away and have a carbon tax... I can guarantee you what that would have done - it would have set us back on a cycle of internal political conflict, which would have repeated exactly the problem in Australia.

Groser concluded:

I do not believe there is anything fundamentally wrong with the emissions trading scheme'.

I rest my case that the best science-based and ethically based climate mitigation policy is the opposite of what Groser says!

I hope Geoff Simmons is ready to do another decade's worth of white board Fridays emissions trading for dummies.

A 'horse-flogging' process of 'fixing the NZETS' will last a very long time - if it ever concludes. It could just become a social and cultural institution like the never-ending debate over the Resource Management Act. In a previous post I used the metaphor of a flogging the dead horse after the snake swallows the elephant in the room to describe this possibility.

Applying the maths of our carbon budgets, Kevin Anderson's analysis and the Paris Agreement, we just don’t have enough time for a never-ending institutionalised horse flogging debate over the NZ emissions trading scheme. The political goal must be to remove the social licence of the NZETS, to de-legitimize it in the eyes of the public and then to scrap it so a simple carbon tax can be adopted instead.