Twas the night before… the ETS

By Gareth Renowden 30/06/2010

Tomorrow morning, a large chunk of New Zealand’s much debated Emissions Trading Scheme comes into effect. Forestry’s already been in it for two years, but July 1st is the day that the liquid fuels and electricity generation sectors start to have to account for their emissions, and it’s the first day that consumers might see a change in fuel and electricity prices that can be blamed on the ETS. Last week’s National Business Review had a pretty good overview of the state of play here. The scheme has also come in for some robust criticism in a new book, The Carbon Challenge, by Sustainability Council executive director Simon Terry and VUW economist Geoff Bertram (of which more in another post soon, I hope).

Federated Farmers have been out protesting in force — even though agriculture gets a free pass until 2015, and then gets 90% of its emissions “grandfathered” (effectively free). A few weeks ago Farmers Weekly editor Tim Fulton popped in for a cuppa and interviewed me about my views on climate change, agriculture and the ETS for an article that appeared a couple of weeks ago. Most of what I said won’t be news to Hot Topic readers, but I thought it worth passing on my thoughts on agriculture and the ETS to a wider audience:

Author Gareth Renowden’s views might jar against a farmer and ACT Party campaign to dump the Emissions Trading Scheme but he’s not about to be pitch-forked into that particular political debate.

“The laws of physics aren’t left-wing or right wing. They’re not green or red or blue. The laws of physics are the laws of physics – and what they tell us is that if you put more carbon dioxide into the atmosphere the earth is going to warm up,” he says.

People can argue about how warm the planet will become but the trend will remain the same whether you’re an environmentalist or a libertarian, the entrepreneurial tree-cropper and author says. “What I’m trying to do in my writing and when I talk to people is to say, ‘look, the science is not political, please just step away from that, look at the evidence and then decide what you’re going to do’.”

Adopting an ETS needn’t be a sickly economic pill, says the North Canterbury blockholder. “I’m very confident that in New Zealand’s position as a trading nation and as an agricultural nation we are uniquely well placed to cope with climate change and, to be blunt, profit from climate change.” The ETS gives NZ farmers a real chance to be “seen to be” the most carbon efficient on the planet.

“If we show the world that we’re carbon efficient as well as production efficient we’ll find probably that we’ll end up saving our own costs by giving ourselves a marketing edge in key markets.”

Such optimism isn’t commonly heard on NZ’s pastoral plains and hill country but Renowden is adamant that the country can thrive by adapting to what the climate has in store. “I’m actually very bullish about agriculture’s prospects in a world where the climate is changing rapidly. We’re a small country. We’re remote, in the middle of a big ocean which is going to warm slowly. The changes that take place will, with luck, be slower than in other places so our growers will have time to adapt to changes as they happen.”

So, farmers might ask, why should we rush into an ETS and other climate initiatives if we have so much time to spare? Renowden, an innovator in growing and marketing truffles, counters that NZers are wasting time debating the science of climate change when we could be working on responses to it. “What it’s actually doing is taking a valuable voice out of the debate … because if you deny the problem, you don’t have a seat at the table about what we do”.

He puts Federated Farmers firmly in this camp of counter-productiveness. “They are showing all the signs of saying ‘we don’t want to do anything’ … whereas I think the best approach for NZ agriculture is to confront the problem.”

He accepts that the ETS will be a cost “but it will only be an insurmountable cost if you don’t respond to the pricing signal that the ETS sends. I mean, it’s a market-based mechanism to change people’s behaviour”.

Thoughts may turn at this point to what an ETS imposed on NZ agriculture could possibly do to maintain the balance of the world’s climate. Renowden isn’t ruffled by these doubts. “Funnily enough (former agriculture minister) Jim Anderton gets it quite well. You’ve got a Crown responsibility through the Kyoto Protocol to account for our carbon emissions and that is a cost on all of society. The ETS is a means of taking that cost and distributing it around society.”

Agriculture, producing 50-60% of the country’s greenhouse gas emissions, should naturally be subject to the scheme, Renowden says. “If we give 50-60% of our economy a free pass on emissions then the rest of the country has to pay for it. And believe you me, our competitors out there around the world will notice and they will say that NZ is subsidising its farmers.”

In European markets, for instance, products were typically by judged by “a perception of how green they are or how planet-friendly they are” so NZ could not afford to be seen to give its producers an easy ride.

The New Zealand wine industry is benefiting from being pro-active in this area, Renowden says. “They are already there, already thinking about ways they can adapt themselves and cope with the future because they can see their colleagues having to do it overseas.”

In case the wine industry is dismissed as being irrelevant to the experience of a livestock producer, Renowden can point to his neighbour Ian Turnbull, a Federated Farmers stalwart, who converted to organic farming about six years ago. Renowden reports that Turnbull is now growing Dorper sheepmeat on irrigated pasture “and the last time I saw him he seemed to be quite happy and was doing quite well”.

His own experience of farmers tells him that care for the natural farmed environment is not – and perhaps never was – the exclusive domain of zealots. In fact, there’s a rich variety of environmental initiatives out there that you wouldn’t expect “if all you ever do is listen to Don Nicholson, Rodney Hide or for that matter the National spokesperson”.

A response to climate change therefore starts with the state of mind.

“Instead of seeing climate change and the ETS as somehow a threat that you’ve got to resist I think you’ve got to accept that it’s happening and make the most of it.”

Fulton captured the essence of our conversation well, I think, and the piece provided an interesting counterpoint to the reports in the same issue about plans for last week’s protest at Parliament. It remains to be seen how successful the farming campaign will be. ACT’s Hide and Boscawen and the Feds Don Nicholson have pretty much had the field to themselves for the last few months. John Key and Nick Smith have been content to tough it out, and although Smith is now on the road defending the policy, there’s still no sign of any coordinated effort to explain to the wider population why action on climate change is necessary, and why carbon pricing is an important part of that response. Whether this government’s watered down ETS is the best way to go about it is, of course, a matter for debate…