Choice v necessity: the politics of climate
While I know men who value and even carefully cultivate their collection of neckties, I doubt any view them as a bastion of mana and identity ...
The climate wars are back! Well, sort of. No longer is there any disagreement about the nature of climate change and its existence, but the heated debate will now become one around choice: should the Government centrally direct climate efforts, or should there be a price on emissions and people be left to make their own decisions?
The Climate Change Commission, led by Dr Rod Carr, has suggested both, but with the latter taking a back seat to the former.
Make no mistake, the decisions made around mitigation of carbon emissions, their costs, benefits and effects on the New Zealand lifestyle will be a big subject of political debate over the next year.
The significance of the commission’s report, released on Wednesday, should not be understated. What it effectively proposes is to use direct government rules and regulations to drive down emissions, instead of just relying on the Emissions Trading Scheme. It also explicitly rejects a guiding principle of ‘‘leastcost’’, while producing nothing to replace it.
How much will its proposals cost? Unclear. Cost-benefit analyses on the different options were not present. There is some general modelling about the effect on the overall size of the economy – including the higher cost of acting later, compared to now – but it’s all a bit of guesswork, looking ahead to 2050.
So, having spent its first term in government getting institutional architecture for climate change sorted, and getting legislation across the line, Labour (and Green Party Climate Change Minister James Shaw) now have decisions to make.
Shaw has undoubtedly been the significant player in the Government on climate policy, to the point that one day, probably in a decade’s time, people will wake up either praising or cursing him.
Shaw has taken the long view on climate: that quietly introducing a thorough-going institutional architecture is the most important thing for bedding lower emissions into the economy. To this end, the Government passed the Zero Carbon Act. That put an emissions cap on the ETS, mandates the creation of climate budgets, and emission reduction plans to meet them. It also created the Climate Change Commission and its ongoing role in monitoring progress against the goal.
Farms are still outside the ETS at this stage, but only if the sector, along with Government, manage to come up with a measurable farmgate-type charge for emissions.
In addition to that is the climaterelated financial disclosures regime legislation, which will work its way through Parliament this term. Any bank, credit union, building society, investment scheme, insurer, or Crown financial institution with more than $1 billion in assets will be required to either disclose its climate risk or explain why not.
Over time, it will embed the practice of companies levelling with shareholders and customers about the long-term risk to their balance sheets from climate change. That could mean physical risks such as sea level rises or extreme weather events, and economic risks such as increased carbon prices or government regulation.
It is clear that the decisions made by the Government over the
next few months will entail a few of the latter.
Taken as a whole, the aim of all of this legislation is to stop companies – and individuals – investing in emissions-intensive plant. For a household, it could mean being encouraged not to buy a petrol car, or not getting gas installed in a new home or renovation. For companies, it means disclosing the risk of ‘‘stranded assets’’ – that is infrastructures used in fossil fuelrelated activities that may be unusable in future.
The purpose of all this architecture is clear: to embed emissions reduction right through government and policy-making, binding the hands of any future, less climate-committed, administrations.
The commission’s draft report explicitly called for certain things to phased out by certain dates: house gas connections by 2025 being the one that caught a lot of attention.
This time, the commission has reframed it by simply stating that
its assumptions were, for example, no new gas connections or native deforestation by 2025, or new petrol or diesel-only cars by 2035. This leaves open the possibility for something other than fossil gas to be piped in, such as hydrogen.
This was, in part, to make it clear that the Government will ultimately make the decisions. It was also to dispel the notion that the commission was a policy shop, instead of a more general planner.
Now the commission will settle into its ongoing role of tracking the Government’s progress. It has not
yet settled on exactly how that will look.
But the political debate now looks most likely to focus around the commission’s abandonment of the ‘‘least-cost’’ approach to driving down emissions. It has explicitly dropped this as a goal, but on the debatable basis that ‘‘least-cost’’ creates perverse land-use outcomes and hurts poor and more marginalised communities. In an interview with Stuff this week, Shaw also made this case.
Stuart Smith, National’s climate spokesman, reckons the issue was fundamentally one about choice, and rejects the premise of moving away from both the ETS and the ‘‘least-cost’’ approach. His view is that the ETS preserves personal choice while still driving down emissions efficiently. He points to the fact that almost all taxis and Ubers are now hybrids or electric. He also takes aim at electric vehicle subsidies as being little more than middle-class welfare that will do little to cut emissions.
National has found climate policy difficult – there are competing interests within the party. But when in government it did sign up New Zealand to the Paris climate agreement, supported the Zero Carbon Act through Parliament, and is broadly supportive of the emissions budgets. Smith just wants a bit more detail.
Now the argument is really splitting along ideological lines over the best way to achieve emission reductions. National falls on the other side of the ‘‘how’’ argument than the commission, and most probably the Government.
Yet quite aside from the general disarray National is currently in, it will find it difficult to argue the point on some of this stuff: the ETS is an abstract concept to most people, whereas bans for new petrol-diesel car imports, or even on new household gas connections, are easily explained, and some can be announced now, even if unlikely to take effect for a decade or so.
Banning, limiting or charging more for ‘‘bad’’ things while subsidising ‘‘good’’ ones is easier to understand than an ETS. It is also the direction that many other nations around the world have gone in.
For both sides of politics it becomes all about framing: the command-and-control nanny state versus necessarily, inevitable and forward-looking change.
And if Covid has proven one thing, it’s that New Zealanders are not adverse to the heavy hand of the state, if they think the circumstances warrant it.