New Zealand's double dealing and special pleading over the Kyoto Protocol second period and the Doha hooha Part 1

Is Tim Groser a Kyoto pariah? Or a Kyoto visonary? A global emissions reduction emissary or is he tar-sanded with a Canadian brush? I try to make sense of New Zealand's double dealing and special pleading over the Kyoto Protocol second commitment period and the Doha climate change talks hooha.

I am very confused about New Zealand's climate change policy since the Doha international climate change talks (COP18) and New Zealand opting out of a second period of the Kyoto Protocol back on 9 November 2012.

The Kyoto part two opt-out is described as a lose-lose decision that shuts New Zealand out of the Kyoto international carbon markets and is a shambles and a disgrace.

So I have a question for all you climate change blog readers.

If Minister of Climate Change Tim Groser is serious about New Zealand's 2020 greenhouse gas target, why would he forego formally lodging the 2020 target into the existing Kyoto Protocol framework (where the national institutions and arrangements are already up and running), in favour of pledging to meet the target on a voluntary basis?

Let me break that question down into several parts.

1. Imagine you are the Minister for Climate Change in the government of a small developed nation.
2. This nation has signed an international treaty with a few other nations which states a short-term national target for emissions of greenhouse gases (GHGs).
3. This nation enacts the treaty by creating some new institutions; a national register for emissions units, national inventories of GHG emissions, national surveys of afforestation, and public servants to report the predicted progress towards the national target.
4. The nation has adopted several policies relying on the treaty institutions; an emissions trading scheme, forest sink schemes, research alliances, and international trading of emissions units.
5. The nation has a second publicly stated medium-term target for GHGs for the years following the expiry of the first target.

If you are serious about that second GHG target, why would you pledge the target on a voluntary basis, when you could have formally lodged your target into the existing treaty (where the national institutions and arrangements already exist)?

Any answers? Anyone? Would you like to phone a friend?

Okay, here's a hint. The Parliamentary Commissioner for the Environment has said that we are on track to exceed the 1990 GHGs baseline by 30% rather than meet the 2020 target of reducing GHGs by 10 to 20% compared to 1990.

Now just because New Zealand's net emissions are likely to consistently increase through to 2020 doesn't automatically mean New Zealand would not meet the 2020 target if translated into a Kyoto second commitment period target. We could just buy extra emissions units from the international Kyoto carbon markets.

That is, if there was a sensibly designed emissions trading scheme. Such a scheme would be 100% "emitter pays", with emitters making their own market-based decisions to either reduce emissions or to buy the emissions units. Well we certainly don't have that.

So my conclusion is that it is not just that Tim Groser has absolutely no intention doing anything domestically to achieve the 2020 target of a 10 to 20% reduction in GHGs. Groser and National also have absolutely no intention of imposing any real carbon price on New Zealand's industrial and agricultural emitters.

Gerry Brownlee's anti-carbon tax

Gerry Brownlee, formerly a minister of energy and fossil fuel, and currently the Minister for Transport and for bulldozing democracy, heritage and social order in Christchurch, today announced that petrol duty will be increasing by 3 cents a litre annually for the next 3 years.

Specifically mentioned are the Rangiriri and Tamahere-Cambridge sections of the Waikato Expressway, the Mackays to Peka Peka section of the Wellington Northern Corridor and the four-laning of the Groynes to Sawyers Arms (Johns Road) section of the Western Corridor in Christchurch.

The reason given for this policy is that the funding is needed for the Roads of National Significance programme and some upper North Island transport projects. I guess that means more spaghetti motorway in Auckland.

This is crazy policy.

The first level of craziness of the petrol duty hike is that it will affect the benefit-cost analysis (BCA) of each Roads of National Significance (RONS) project. Projects like Transmission Gully Expressway, have already been justified to hearings before the Environment Protection Authority on very marginal benefit/cost ratios. Julie-Anne Genter of the Greens said the benefit/cost ratio of Transmission Gully was 0.6. The RONS don't even break even in BCA terms. Now with the added petrol duty, the marginal benefit/cost ratio would be even worse. However, I bet that won't make Gerry Brownlee or Steven Joyce any less obsessed with them.

The second level of craziness with the petrol duty increase is the Government's complete failure to understand carbon pricing (which is what a petrol duty is) and to anchor their transport, energy and infrastructure policy with effective carbon pricing.

I have no problem with the price of petrol or diesel increasing. Road transport has many externalities that are not priced. It is "elephant in the room" obvious that the most important unpriced externality of liquid fossil fuels is global warming. And not a lack of four-lane expressways.

"But we have an emissions trading scheme!" I hear some one say. "Surely, road transport fuels are included in the NZETS?"

Yes we sort of have an emissions trading scheme which sort of prices carbon. But NZ carbon prices have crashed 72% in 2012.

According to estimates by the Energy and Data part of Joyce's mega-ministry MoBIE, in the three months ended on 30 September 2012, the NZ emissions trading scheme accounted for 0.93 cents out of the regular petrol price of $209.

So we may describe New Zealand's petrol pricing policy as having two mutually conflicting parts. The price includes a component for revenue gathering for unneeded four-lane RONS expressways part (3 cents/litre). The price also includes the NZETS carbon price (0.93 cents/litre).

And the four-lane expressways part exceeds the carbon-pricing emissions reducing ETS part by a factor of 3.

This is the complete opposite of effective carbon pricing. Brownlees's petrol duty, to coin an expression, is an anti-carbon tax.

Keep it real - Carbon offsets from a permanent forest sink project

In this post, I guest-post as myself! This post describes a carbon forest sink project that I am involved in and our debate about whether we should provide carbon offsets to anyone as part of the project. I originally wrote this for the Greens Frogblog

I am one of the trustees of a small 47-hectare carbon forest sink and native re-vegetation project and mountain bike park; "Project Rameka" in the east Takaka hills in Golden Bay.

It's really a response to climate change made by two of my old friends, Bronwen Wall and Jonathan Kennett, who bought the land in 2008. Bronwen and Jonathan decided to apply their experience organising native planting projects in Wellington to climate change after reading the 2007 fourth report of the International Panel on Climate Change (IPCC).

It's been embraced enthusiastically by the Golden Bay community who do the planting, pest control and track work through Project Rameka Inc.

The land is owned by a trust and I am one of the trustees. I did the early accounting for the trust and prepared the application to get the land into the Permanent Forest Sinks Initiative (PFSI).

In return for a 50-year covenant restricting the land use to forest, we receive about 800 carbon credits (assigned amount units) per year for Project Rameka. These units started life as part of New Zealand's 1990 baseline amount of carbon credits under the Kyoto Protocol.

How many credits we get is based on the amount of carbon withdrawn from the atmosphere by the trees. Thanks to the Golden Bay weather, plants grow really quickly. So we really are storing carbon. We have seen 3cm annual growth rings in the few pines we have removed.

For a couple of years we didn't do anything with the units. They sat in our account at the NZ Emissions Unit Register (the 'bank' for carbon credits). We initially thought the units could be a revenue stream to fund more traps or native seedlings. However the many donations to the project have always kept ahead of the costs.

We also thought that if we owned these units then we would be keeping them out of the hands of emitters so possibly we might even be reducing New Zealand's emissions as well as sequestering carbon.

As we began to understand the New Zealand emissions trading scheme (NZETS), we realised that the good done by the Permanent Forest Sink Initiative couldn't make up for the design flaws in the NZETS, as they are joined at the hip. Both schemes create and use carbon credits that are bought, sold and have prices. We could say that the PFSI and the NZETS are both limbs connected by the blood flow of carbon credits to the body, the international carbon trading market.

So when we were approached by Green Party MP Kevin Hague, to offset his greenhouse gas emissions, we didn't say yes straight away. We had a bit of a discussion about it. Trying of course to avoid MEGO; "My Eyes Glaze Over", as we would rather be talking about this winter's planting plan than carbon trading. After much discussion we had two options.

One option was to say no we don't want a bar of carbon offsetting.

We were aware that the Tyndall Centre's Kevin Anderson has said that "offsets are worse than doing nothing".

Selling our units as "offsets" could imply that we accept that international Kyoto-style emissions trading and offsetting and schemes like the NZETS are sufficient responses to climate change. That clearly isn't the case. We would agree with James Hansen that the UNFCCC and Kyoto processes have not and will not achieve the magnitude of emissions reductions the science tells us is necessary.

We think the NZETS is a joke as it has no cap on the number of units given free to emitters and it allows unlimited use of cheap units from the much larger international carbon market.

The other option was acknowledge the problems with the NZETS, and come up with our own version of offsetting in negotiation with Kevin Hague. And that's what we did.

Why did we do this? Well, we know that Kevin's flying is not for a weekend of shopping in Melbourne, but part of the essential price of putting the Green message to the public. We support the Greens as the only party with good policy on climate change. The fact that the Green MPs offset their flying emissions does have real political value.

This struck home to me back in June this year when I went to a talk about the 'Rio+20' conference. Kennedy Graham described the conference's failure to address climate change as a double crisis, an environmental crisis and a crisis of international governance.

Neophyte Minister of the Environment Amy Adams defended business-as-usual and patronised Kennedy, saying he was too idealistic. Some one asked Adams if she offset her flying and what she did personally to reduce her emissions. She completely fluffed her answer. Moral victory to Kennedy who we know had offset his air travel to Rio.

What does this offsetting look like?

We cancel, not sell, our assigned amount units, in return for payment from Kevin. A sale means the unit can be resold many times before being used by an emitter in the NZETS to allow emissions. 'Cancelling' means the unit legally ceases to exist. It can never be used by an emitter. We could insist on a higher price per tonne of GHGs than the current NZ market price which has recently been less than the price of a cup of coffee. With Kevin we settled on $25 per tonne, which was the price discussed when the NZETS was being amended in 2009.

We also let our Golden Bay network know we are getting money for offsetting from Kevin Hague. The Project Rameka team had no problem and immediately came up with new trapping and planting projects for the money. As ever they exceeded expectations. They went out and bought the traps and installed them before any money had changed hands!

So far we have not agreed to provide any offsetting service to anyone but Kevin Hague. We have been asked a few times to offset discretionary personal overseas travel and we have said no. Flying that doesn't seem that essential doesn't tick all the boxes the same as our arrangement with Kevin Hague.

Since we started our offsetting arrangement with Kevin, the price of carbon has continued to decline and the NZETS has been made even more ineffective. The Government has permanently excluded agriculture from the NZETS and has extended the two-tonne-for-one-unit discount for emitters. Tim Groser remains welded to the idea of "lowest international cost".

As far as commercial carbon foresters are concerned, the NZETS has gone pear-shaped because of the price collapse.

Carbon foresters have seen the value of their forests decline by 90%. Pine seedling planting in nurseries has declined by millions and forest clearance for dairy conversions in the North Island looks like starting all over again.

Brian Fallow the Herald economics editor describes the NZETS and National's climate change policies as a shambles and a disgrace.

It appears the only people trading forest carbon in New Zealand that are happy at the moment are the Rameka Trustees and Kevin Hague.

We are happy as we are supporting the Greens, getting a realistic carbon price for our units and recycling the proceeds into more carbon-sequestering re-vegetation.

Kevin has said to us that he appreciates being able to go for a bike ride at Rameka where his flying is offset, and he also appreciates that we let him know what his money was spent on. He said to us "It felt real".

If only we could get the rest of New Zealand's climate change and emissions trading policies just as real in terms of being the right incentive at the right price to really reduce greenhouse gas emissions.

Facing the Truth About Global Warming a talk by James Hansen

I found another talk by James Hansen on the internet. Hansen gave the talk to the Center for Science Writings (CSW) at Stevens Institute of Technology after they had given him another award for his book Storms of my Grandchildren.

Facing the Truth About Global Warming

Will the last business lobbyist to leave please turn out the light at the end of the tunnel to an effective NZ emissions trading scheme?

Channel your inner General Westmoreland and your Vietnam flashbacks and look at National's latest change to the New Zealand Emissions Trading Scheme (NZETS). Parliament has just (8 November) passed amendments that indefinitely defer any greenhouse gas obligations for agriculture and indefinitely discount obligations to industries. This is a 'last helicopters off the Saigon hotel roof' point in the sad history of the always-doomed-to-fail New Zealand Emissions Trading Scheme.

According to cultural folklore the humiliating end of American engagement in the Vietnam war was foreshadowed by graffiti;

Will the last person out of the tunnel please turn out the light?

Or, alternatively

Would the last Marine to leave Vietnam please turn out the light at the end of the tunnel?

This was in frank contrast to the early (with hindsight, unjustified) optimism of General Westmoreland, who had said in 1968 that he could see the light at the end of the tunnel of the war in Vietnam.

So why am I writing about graffiti from a war that ended 37 years ago? Well, to make a 'bonkers' analogy with the New Zealand Emissions Trading Scheme, of course! Getting the NZETS established was of course more or less a civil war, and when the Labour Government in its final days in office in late 2008 finally coalesced a coalition of compromise to pass the Climate Change Response (Emissions Trading) Amendment Act 2008, it seemed there was 'light at the end of the tunnel' in terms of reducing GHG emissions in New Zealand.

However, with the adoption last night (8 November) of National's latest emitter-inspired fiddle; the Climate Change Response (Emissions Trading and Other Matters) Amendment Act, I believe we can now just be honest with ourselves and see the latest amendments to the NZETS as the last helicopter off the hotel roof and the last act of the NZ emissions trading approach, which was futile from the beginning.

I have posted before about the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill, noting that the amendments will;

1. indefinitely exclude emissions from pastoral agriculture from the NZETS, instead of including them from 2015, which was already a delay from 2013.
2. extend indefinitely the discount to industries, the 'surrender one unit for two tonnes' of emissions (half price!) that was to end this year (“maintain the 1-for-2 surrender obligation after 2012, without specifying an end date in legislation”)
3. extend indefinitely the price cap, (“maintain the $25-a-unit fixed price option after 2012, without specifying an end date in legislation”)

.

And I have previously posted that the worst aspect of the NZETS is not the corporate welfare in the form of excessive free allocation to industries.

For me the worst aspect of the NZETS is it's absolute exposure to the international carbon markets which has the effect of knee-capping the NZ carbon price down to the rock-bottom international carbon price. Today, the highest offer for a NZU for a tonne of CO2-e is $2.55 (See today's price record and the trend chart from OMF Ltd).

So I concluded I agree with Jeanette Fitzsimons that the NZETS is so bad at reducing GHG emissions, it no longer matters what amendments are made to it.

That is why I think that the light at the end of the NZETS tunnel was always going to be eventually turned out. The final bit of the Vietnam analogy is who was going to turn out the light. I give that role to the professional big emitter's lobby groups, led by Business New Zealand and its astro-turf subsidiary the Greenhouse Policy Coalition.

Nicky Hager in his Bruce Jesson lecture, describes how lobbyists such as Business NZ and the Greenhouse Gas Coalition have manipulated the under-resourced media to give prominence to ideas pushed by their clients;

"...the public spaces are cluttered with paid spokespeople and commercial agendas" whose technique is to establish "usefully biased ideas" by creating “some common lines that become the ‘mantra’” and then, 'keep repeating it endlessly' " so that "the angle, timing and quotes (in the media), do not come from journalists’ observations or journalists’ questions, but from the calculated efforts of PR and marketing people", and, as a consequence, the political debate is dominated by "endless hectoring from the business lobby groups"

The media 'mantra' pushed by the lobbyists is that if the NZETS establishes an effective carbon price on emitters, then jobs and exports and GDP will be lost (See GPCNZ 2008 and Business NZ 2012). Over the years of the debate over the NZETS, we have been endlessly hectored by business lobbyists that business trade competitiveness will be affected by the NZETS. Ministers Nick Smith and Tim Groser have long ago joined in and 'costs on businesses' is now routinely given as the reason for the lack of any real bite in the NZETS.

The endless hectoring that the "NZETS will affect exports and jobs" has been so successful that the big emitters wound up the the Greenhouse Policy Coalition back in March 2012. I guess they had a helicopter to catch, after they turned out that light in the tunnel.

New James Hansen talk from 10 October

Here is a new talk by James Hansen on climate change and tipping points. It has been uploaded by Cornell University.

Dr. James Hansen of NASA's Goddard Institute addresses 75 international union leaders about the urgency of the climate crisis. The presentation was given in NYC on 10/10/12, and was part of the Energy Emergency, Energy Transition round table convened by Cornell University's Global Labor Institute (GLI), a program of the Worker Institute at Cornell, and the Rosa Luxemburg Foundation.

I was alone the exporter had flown Norwegian Wood isn't it good

Norwegian wood and newsprint transnational Norske Skog Tasman (NZ) Ltd 'exports itself'. Mr February looks at the flight of another manufacturer and CO₂ emitter and exporter as it lays off staff and reduces production. Wasn't the very generous free allocation of units in the New Zealand Emissions Trading Scheme meant to keep exporters like Norske Skog Tasman in New Zealand? Or have we just removed the price signal from exporters for no valid reason and stuffed the NZETS?

The other week Gareth tweeted about a good article in the Herald by Chris Barton.

Chris Barton reported that the Norwegian-owned newsprint-maker and transnational Norske Skog Tasman NZ had joined the ranks of export businesses like Rio Tinto Alcan NZ/NZ Aluminium Smelters who are exporting jobs off shore.

Norske Skog is shutting down one of two newsprint machines at the Tasman Mill, in Kawerau, due to lowered demand for newsprint.

At the same time Norske Skog is building a new $A84 million plant in Tasmania with some substantial help from the Australian Federal government (A$28 million grant) and State government (A$13 million loan).

Chris Barton noted some strong questions asked of the Government such as "what is being done for jobs"? And strong criticisms of the Government's naive "market will take care of everything" approach.

Chris Barton mentioned the NZ emissions trading scheme (NZETS) only briefly in passing, as he noted the rock-bottom NZ carbon price and the poor despairing carbon foresters.

So that prompted me to look at how Norske Skog Tasman NZ fits into the NZETS. What are the greenhouse gas emissions of the Norske Skog Tasman pulp mill? Is Norske Skog Tasman regulated by the NZETS? Have they ended up with a large free allocation of emission units (like NZ Aluminium Smelters Ltd) ostensibly to protect their international competitiveness and to keep the jobs in NZ?

Norske Skog Tasman uses geothermal steam from the Kawerau geothermal field for heating and electricity generation in its newsprint mill. Geothermal steam naturally contains carbon dioxide and methane which are released when the heat energy is transformed.

The use of geothermal steam for energy is covered by the NZETS as an energy sector emission. So Norske Skog Tasman must report its greenhouse gas emissions and obtain and surrender emissions units.

There is a specific emissions factor in the Climate Change (Stationary Energy and Industrial Processes) Regulations 2009 for Kauwerau's geothermal steam. The factor is 0.0275 tonnes CO2-2 per tonne of geothermal steam used.

Norske Skog Tasman's production of newsprint is included as an emissions-intensive trade-exposed activity eligible for a free allocation of 0.4911 emission units per tonne of uncoated newsprint, at the highest level of assistance; 90%.

So far, so much like NZ Aluminum Smelters/Rio Tinto Alcan NZ.

Let's start with a 'back of envelope' calculation of the units Norske Skog Tasman should surrender (the NZETS gross carbon price).

According to the Kawerau Geothermal Field Background Study, Mighty River Power supplies 285 tonnes of geothermal steam per hour to Norske Skog Tasman, who on-sell 26 tonnes to Carter Holt Harvey Wood Products. So net use is 259 tonnes per hour.

Assuming 24/7 production, the annual use is 259 * 24 * 365 = 2,268,840 tonnes of steam per annum. And 2,268,840 * 0.0275 = 62,393.1 tonnes CO2-e. So in a typical year, Norske Skog Tasman should be surrendering very roughly about 62,000 emission units under the NZETS.

How many free emission units were allocated to Norske Skog Tasman? In both 2010 and 2011, Norske Skog Tasman received the fifth largest free allocation of units (after the Smelter, NZ Steel, Methanex and Fletcher Concrete). In 2010, Norske Skog Tasman received 122,826 New Zealand Units (NZUs) for the six-month 2010 NZETS compliance period. In 2011 Norske Skog Tasman received 237,752 NZUs.

Assuming 24/7 production in 2011, Norske Skog Tasman was allocated 381% more units than it needed to surrender (237752/62393.1 * 100 = 381.0550). Thats a way more excessive free allocation than NZ Aluminium Smelters!

However, I might not have the right numbers. My calculation may be wrong. Why don't I ask the Environmental Protection Authority under the Official Information Act for the exact number of units surrendered by Norske Skog Tasman. Watch this space.

Alternatively lets look at Norske Skog Tasman's annual financial statements (PDF) for the 2011 calendar year.

Note 24 helpfully records that Norske Skog Tasman received 119,646 units in 2010 and 241,825 units in 2011. They surrendered only 10,754 units and sold 160,000 units, and had 190,717 units left at 31 December 2011.

The accounts show that in 2011 Norske Skog Tasman was allocated 22 times more units than it needed (241,825/10,754 = 22.49). The units allocated to protect jobs and export competitiveness, were not 90% of units surrendered. They were not 100% of units surrendered. The units allocated exceeded the units surrendered by a factor of 22!.

I can still here an echo of voice saying "You have left out the electricity allocation factor! You are wrong wrong wrong!" Well, yes, the industrial free allocation factor of 0.49 units per tonne of newsprint allegedly includes compensation for NZETS-related electricity price increases our manufacturing emitter is subject to. This rationale and the factor of 0.49 units per tonne were approved in this Cabinet paper. However, the cabinet paper provides no explanation of how the factor of 0.49 units per tonne of newsprint was calculated.

The electricity allocation factor has also been the subject of a consulation process and there is an emitters contact group for it as well.

However I think the idea that manufacturing emitters need compensation for NZETS-related electricity price increases is a smoke-screen. Norske Skog Tasman has not had its electricity price increased by the NZETS.

According to the Kawerau Geothermal Field Background Study (PDF), Norske Skog Tasman and Mighty River Power (MRP) have "..a power purchase agreement whereby NST (Norske Skog Tasman) contracted to take a majority of MRPs generation. Due to the fact that MRPs plant is grid tied, this is effectively a financial agreement offering NST price certainty and MRP a customer contracted to take the majority of supply."

The Tasman Mill is not just a plant connected to the grid. It was built to use geothermal power, just as Tiwai Point Smelter was built to use Lake Manapouri's hydro power. The Tasman Mill is joined at the hip to the Kawerau geothermal field. The newest Mighty River Kawerau geothermal generation plant was built on the Tasman Mill site. Norske Skog is buying geothermal steam from Mighty River Power and paying MRP as if it was electricity via a financial derivative contract.

To conclude the free allocation part of the analysis; in the example of Norske Skog Tasman, the NZETS free unit allocations are not just a discount of the full NZETS carbon price, the allocations are a transfer of substantial corporate welfare. The units allocated exceed the units they have to surrender by an estimated factor of 22.

And in terms of protecting the international competitiveness of Norske Skog Tasman and keeping jobs in New Zealand, the free allocations have not made the slightest difference. Thats in spite of National Party scaremongering back in 2008 that the NZETS would cause the mill to close. And Catherine Beard of Business New Zealand (formerly boss of the Greenhouse Policy Coalition) still scaremongering in October 2012 that any real cap in the NZETS will cause more job losses Talk about slamming the stable door after the horse has bolted.

Lets look at the real factors affecting whether a commodity manufacturer stays in New Zealand.

If you are a transnational like Norske Skog, you always have the choice of playing off more than one jurisdiction. The country with the smaller economy, like New Zealand, can't match the money of a larger economy like Australia. If Norske Skog had not purchased the Tasman Mill from Fletcher Challenge in 2000, this 'regulatory arbitrage' would not be possible.

Corporate aquisitions that seemed a good idea before the Global Financial Crisis, look much more risky after the Global Financial Crisis. Norske Skog paid $NZ5 billion for Fletcher Challenge's paper and pulp assets. In 2011, Norske Skog was faced with falling international demand and prices and it was considering selling some assets to avoid default on its debt.

Incidentally, Rio Tinto Alcan shares most of these international commodity trader issues; the over-priced debt-funded purchase of Alcan and Comalco by Rio Tinto before the GFC, the Rio Tinto's plan to sell Pacific Aluminium (including NZ Aluminium Smelters Ltd), the low demand for aluminium from the stagnant economies of the Eurozone and the USA and the price and supply competition from Chinese smelters in the huge and growing Chinese market.

Imagine a fictional conversation between John Key and the CEO of Norske Skog.

"So, Yon, you don't mind if I call you Yon? For the Tasman Mill, you kiwis are all online, the demand for newsprint is down. You give me quarter of million of these NZ units that are worth $NZ3 each. No other ETS accepts them. Thats pretty low quality carbon credit, Yon. Now, Yulia Gillard, she gives us $A28 million for new plant at the Boyer mill in Tasmania. Can you match that, Yon? Can you?"

That is the bottom-line, isn't it? New Zealand could never have matched $A28 million, either as a direct grant, or through manipulation of the NZETS free allocation provisions.

To me, the Norske Skog Tasman job losses are a good demonstration of how futile it was to have an NZETS designed mainly to completely avoid any carbon price on transnational exporters. The carbon price has not just been reduced or discounted to Norske Skog, the sign has been reversed so that its an off-balance sheet transfer of corporate welfare to them in the form of emission units. Such transfers are no doubt sought by local managers who are rent-seeking, but they will be irrelevant to the international commodity trade movements that will ultimately determine whether these transnationals stay or go.