By Dr George Preddey
In my 17th submission to all MPs and other worthies on Budget Day, 20 May 2015 (Budget Day), I suggested alternative proposals for New Zealand’s climate change INDCs (intended nationally determined contributions).
These proposals dispensed with the pseudo-econometrics that characterised much of the discussion document and worked backwards from an essential goal of net carbon neutrality by 2070 as determined by peer-reviewed science. New Zealand’s emissions are nominally 80Mt (CO2-e) in 2015. Achieving this goal requires a 100% reduction in net emissions over 55 years, or nominally a constant 1.82% reduction or 1.45 Mt (CO2-e) reduction in emissions per year.
Applying Ockham’s razor* by assuming that the required decrease in net emissions is linear, New Zealand’s INDC commitments would be 9% by 2020 (5 years hence), 27% by 2030 (15 years hence), and 64% by 2050 (35 years hence).
Under my alternative proposals, New Zealand’s commitment by 2030 (27%) would be marginally less ambitious than the European Union’s commitment (40%) but would closely match the United States’ commitment (28%), perhaps giving PM John Key some political comfort. Furthermore, my alternative proposals are evidence-based and consistent with IPCC and Royal Society of New Zealand conclusions.
What should replace the NZ ETS?
I have argued that the Government should scrap the ETS altogether. In its place, I suggest that the Government should introduce:
[i] a science-based carbon budget, and
[ii] a carbon tax.
A United Nations Conference on Environment and Development (UNCED) in 1992, commonly referred to as the Rio Earth Summit, achieved agreement on a Climate Change Convention that eventually led to the Kyoto Protocol intended to limit anthropogenic global warming. The Kyoto protocol came into force in 2005. A common expectation, post-Rio, was that imposing a rising price on carbon through (for example) an emissions trading scheme would inevitably reduce carbon emissions and thereby reduce the threat of anthropogenic global overheating.
Tragically the reality post-Kyoto has been that carbon prices have continued to fall whereas anthropogenic carbon emissions have continued to rise inexorably. An overwhelming consensus among climate scientists is that, despite a plethora of carbon emission trading schemes operating globally, there is already too much carbon in the atmosphere. Levels exceeded 400ppm (parts per million) CO2-e for the first time in 2015 that can be compared with:
[i] pre-industrial levels of ca 270ppm; and
[ii] 350ppm considered by most scientists to be the upper “safe” level if catastrophic global overheating is to be averted.
A science-based carbon budget
The concept of a global ‘carbon budget’ emerged about a decade ago when scientists began to calculate how much more oil, coal and gas could still safely be burned while restricting human-induced global warming (to date 0.8°C) to 2°C as agreed at Copenhagen in 2009. Robust climate science predicts further human-induced global warming of an additional 0.8°C even if human-induced carbon emissions ceased immediately. This additional increase is required to restore Earth’s radiative equilibrium.
New Zealand’s excess emissions are currently not manifest as large bills because the National Government is offsetting growing excess fossil emissions by claiming credit for:
[i] carbon sequestered in plantation forests; and
[ii] probably fraudulent trading under the New Zealand ETS. This situation will dramatically worsen when many trees are felled in the 2020s and forests revert from carbon sinks to carbon sources, causing excess emissions of 78-90Mt (see endnote ).
Carbon budgeting is essential to robust planning for serious emissions reductions by putting emphasis on essential outcomes based on science rather than carbon pricing inputs based on economics. A carbon budget would detail expected carbon flows (sources and sinks) and practical actions to reduce or increase these flows as appropriate. It would set limits on total emissions and develop action plans for each sector of the economy. Accounts would be expressed in Mt of (CO2-e) carbon, not dollars nor carbon credits (largely intangible). A Climate Commission has been proposed to run the carbon budgeting process by: [i] working with stakeholders to explore options, costs, and sector action plans; [ii] consider the impacts of pricing instruments and complementary regulation; and [iii] test combinations of these against the Government’s financial constraints.
 If humanity eventually unites to halt catastrophic AGO (Paris 2016 was not that point), carbon reductions will necessarily be enforced through international trade sanctions. Under current NZ ETS settings, gross emissions in 2030 will be just 0.4% lower than if the Government had taken no action whatsoever. New Zealand risks severe penalties in the future by ignoring its ethical responsibility to act, shown by its shameful international record on responding to AGO.
A carbon tax
According to Benjamin Franklin, there are only two certainties in life: death and taxes.
The Carbon Tracker Initiative is a team of London-based financial analysts and environmentalists that advises financial market investors on the risks that AGO poses for stock portfolios. Their award-winning analyses based on proprietary fossil-fuel databases showed that: in 2012:
[i] only 565Gt of emissions remained in a safe carbon budget for Earth’s atmosphere; and
[ii] there are 2,795Gt of potential emissions in total proven fossil-energy reserves owned by fossil energy states and companies.
Accordingly only 20% (565/2795) of known fossil-energy reserves can be burned safely; hence 80% are unburnable “stranded assets” that must be left in the ground to avert an AGO catastrophe. The Carbon Tracker Initiative’s 2011 analysis was substantially re-validated in 2013 by the International Energy Agency (IEA) which concluded that 69.1% of proven fossil energy reserves must be left in the ground.
AGO has been described as the greatest market failure in human history (refer para  above) and accordingly it is simply implausible that market solutions alone (such as emissions trading schemes) would fix it. It also seems highly implausible that fossil-energy companies and investors in them would willingly relinquish 80% of their fossil-energy resources market value (in monetary terms US$21.6 trillion). It is also simply implausible that market forces alone could force them to do this. These numbers show that planet Earth has an enemy far more committed to action than governments or individuals: pariah fossil-energy companies and countries behaving recklessly over the survival of human civilisation. “Wrecking the planet is their business model – it’s what they do”.
What is desperately needed in place of ineffective emission trading schemes is carbon pricing applied across all fossil fuel sources by:
[i] politically-regulated increasing carbon taxes applied at points of extraction or emission; and
[ii] politically-imposed resource use consent conditions that enforce the phasing out of fossil energy extraction. Political interventions may be feasible in democracies like New Zealand where Governments are able to regulate (up-to-a-point) strong vested interest groups, but problematic in democracies like the United States where vested interest groups undoubtedly influence Government decisions by lobbying for political concessions. Big money talks..
International agreements between countries on respective carbon tax rates will undoubtedly prove difficult, but not impossible once all countries recognise that the growing threat of climate catastrophe will not respect national borders. Recalcitrant nations could be dealt with through punitive import duties. New Zealand already risks severe penalties in the future by currently ignoring its ethical responsibility to act now on AGO.
The basic concept are that:
[i] a carbon tax is charged at points of extraction or importation of fossil energy and may be extended to carbon emissions generated by farming, deforestation etc;
[ii] the tax is progressively increased;
[iii] the tax revenue is returned to the general public equitably and in full. To maximize effectiveness, the level of carbon tax is regulated politically, based on scientific and economic assessments that balance the level of tax and rate of tax progression. Further details of how a carbon tax would operate are beyond the scope of this submission but are for example set out in Hansen (2009).
Credible leadership needed
New Zealand’s political and business leaders are uniquely placed to show desperately-needed, strong, credible international leadership in reducing carbon emissions. This country already has 70% electricity generation through renewable energy resources (hydro, geothermal, and wind). New Zealand has previously shown strong international leadership over the existential threat of global nuclear war triggered by superpower confrontation. Nuclear-Free New Zealand is now part of this country’s psyche.
There is also self-interest (i.e. economic) justification for strong, credible international leadership in reducing carbon emissions rather than being a pathetic “fast follower” (PM John Key’s own words). New Zealand’s principal exports currently depend heavily on its (tarnished) “100% Pure” brand. In a world facing increasing the harsh realities of AGO, strong, credible international leadership would undoubtedly benefit the New Zealand economy.
Indisputable maths (the difference between 2,795Gt and 565Gt) and the dire warnings of climate scientists that 80% of proven fossil-energy reserves must be left in the ground demand that all proposed new energy initiatives must be curtailed immediately if this country is to demonstrate such leadership. “Fossil fuel industries do not have a future: if they do, then bluntly, we don’t … Looking for more oil is like growing tobacco to fund hospitals” (see endnote ). What is it about these simple facts that Energy Minister Simon Bridges didn’t understand when he announced in 2015 a major expansion of offshore oil and gas prospecting?
The Labour opposition’s position on offshore prospecting is at best ambivalent. Ironically a previous Labour Government showed commendable leadership in proposing a carbon tax, but was defeated by ridicule, for example by the uninformed National MP who drove his farm tractor up the steps of Parliaments to denounce Labour’s proposed “fart” tax (more correctly a “belch” tax).
It is 120 years since the physicist Arrhenius postulated in 1896 that carbon emissions from burning fossil fuels would cause anthropogenic global overheating (AGO), and 100 years since the physicist Albert Einstein published his General Theory of Relativity.
Compelling observational proof of Arrhenius’ conjecture has been provided by a multitude of peer-reviewed scientific papers including the IPCC’s AR5. In late 2015, gravity wave were detected from two black holes that had collided more than a billion years sending a ripple through space time itself and entered the Milky Way galaxy 40,000 years ago, just as modern humans were beginning to expand across planet Earth.
The detection of gravity waved marked the birth of gravitational astronomy and provided observational proof of Einstein’s theories and the physical reality of black holes.
It is just 28 years since the physicist Stephen Hawking published A brief history of time: from the big bang to black holes. In the book’s Introduction, pre-eminent astronomer Carl Sagan notes that Hawking is attempting, as he explicitly stated, “to understand the mind of God”. Hawking’s conclusions are “a universe with no edge in space, no beginning or end in time, and nothing for a Creator to do.”
These reflections raise significant questions for me including:
[i] whether modern humans are alone in the universe (answer: unknown); and
[ii] how modern humans should respond to the existential threat of AGO (answer: not yet decided).
What is increasingly certain for me is that a wrong answer to question [ii] potentially renders question [i] unaskable.
Influenced by Hawking’s analysis, I have concluded that the mitigation of AGO (a scientific fact that potentially presents an existential threat to human civilisation and perhaps to modern humans) should NOT be attempted by applying neoliberal free market economics (essentially a religion) that is inherent in emissions trading schemes.
My summary response is that the Government should scrap the ETS altogether and in its place introduce a science-based carbon budget and a carbon tax..
*Occam’s razor is a problem-solving principle devised by William of Ockham (c. 1287–1347) that states that among competing hypotheses that predict equally well, the one with the fewest assumptions should be selected.