Is it time to red-sticker the ETS?

Is it time to red-sticker our Emissions Trading  Scheme?  Each year we pour billions into the ETS in an arguably futile exercise to reduce our tiny proportion of global emissions. In the meantime our critical infrastructure is collapsing around us. Surely we would be better off investing those billions in building climate resilient roads, bridges, power and communication networks?

Currently New Zealanders are paying around $2.4billion per annum into the ETS. That’s at the present market price of around $70 per tonne of CO2. However over the next few years that price is expected to rise to around $100 per tonne. That will mean nearly $3.4billion annually disappearing into what is essentially an exercise in international virtue signalling. New Zealand’s CO2 emissions only make up one tenth of one per cent of the global total. So even if the scheme eventually achieves its aim of halving our emissions, we will have merely split the atom of our contribution to the global problem. Meantime China, India and rest of Asia make up 58% of emissions and are continuing to build coal fired power stations.

Most of us are not even aware of the huge sums going into the ETS. The way the scheme works means its costs are largely invisible to ordinary citizens. But at $3.4billion that is approx. $1,700 per annum for every household in New Zealand. We were never really asked about this effective tax increase by stealth. But we are all paying it in the price of fuel, electricity and gas. And of course that ignores the extra costs which the higher price of those essentials adds to everything else.

Some will argue that these funds are recycled into planting trees and funding green energy projects like EVs and converting gas boilers to electricity. However it is not clear how much is actually recycled. And even if all of it is, this investment is again focused solely on the futile exercise of reducing our microscopic contribution to global emissions. It does nothing to build our resilience to natural disasters. In fact it makes us more at risk. Pine trees have not been part of the solution on the East Coast – they have been part of the problem. Forestry slash has both blocked and fortified flooded rivers, making them even more destructive.

And if we think electrifying much of our transport sector, as well as the heating in our industries, schools and hospitals, will improve resilience we are making a big mistake. Fuel source diversity is what mitigates risk, not increasing reliance on one energy source. And certainly not an energy source which is difficult to store and delivered by a network that is at particular risk in natural disasters. Petrol has been limited in Napier this week due to Cyclone Gabrielle. But electricity has been non-existent.

In spite of all this the Greens co-leader James Shaw argued yesterday (NZ Herald) that we can’t stop trying to reduce our emissions. Rather we “actually have to double down on that”. Anyone suggesting otherwise was apparently promoting a form of climate “denialism”. Perhaps Shaw is the one in denial. Not only are our national CO2 emissions globally insignificant, even on a per capita basis they are already some of the lowest in the developed world. We are only about a third of Australia’s per head of population. In the meantime our critical infrastructure is collapsing while we pour billions into the ETS to try and further reduce our emissions.

It’s time for a change of direction. We may not need to red-sticker the ETS. But certainly the funds going into it need to be redirected. We need better roads, stronger bridges, and even tunnels. We need more robust electricity, communications, and water supply networks. We need stronger flood protection measures. Over the next five years we could start work on these urgent needs using the $15billion going into the ETS. Or we could continue to waste those funds on pointless emissions reductions initiatives – some of which are actually reducing our resilience. New Zealand only has so much national income to invest. So the choice here is very real. And suggesting we can do both is the real “denialism”.

Ewen McQueen
February 2023

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