Pure Advantage: green growth is bigger than just carbon

By Gareth Renowden 15/06/2012

Duncan Stewart manages the Pure Advantage programme and in this personal guest post addresses Simon Johnson’s criticism earlier this week that the new green growth report, New Zealand’s Position in the Green Race, fails to take carbon emissions reductions as seriously as necessary. Duncan is a director of investment and advisory firm The Greenhouse, an executive director of environmental compliance software company CS-VUE, and a board member of New Zealand’s electric vehicle association APEV.

The report is “good in parts” eh…? Well partly thank you. The headline provides some insight into your analytical approach; focus on carbon and dismiss the other environmental issues. OK, but in doing so you may have missed the point. NZ’s environmental performance is characterised by many different metrics — greenhouse gas emissions are just one of them. It’s certainly an important one, but no one is going to argue that the loss of native biodiversity is less important, or that methane trumps water quality.

These issues are all interconnected and need to be dealt with through a systemic change in the way we value and manage our natural capital.

Will the ETS fix declining water quality? I doubt it.

Will it provide healthier homes for kiwis? Probably not.

Therefore if clean/green New Zealand is an aggregate of a range of environmental performance metrics, it makes sense for Pure Advantage to identify and focus upon all of the key problem areas. The appropriate green growth solutions may be quite different for each, which is why it makes sense to use a cluster model to deliver these (or butterflies emerging from a chrysalis — whatever is easier to understand). Crosscutting issues such as education also need to be applied to address problems collectively.

What the Green Race document has done is highlight multiple performance failures, rather than do what so much of what the historic green debate in NZ has done, which is default to using a single environmental issue as a proxy for a range of environmental issues. The historic approach enables the government to point to a single initiative like the ETS and say, ‘see we care about the environment, we built a shiny new emissions trading scheme’. The fact the ETS doesn’t work is beside the point.

So, Point 1: green growth is bigger than just carbon. 

A Market Ornament

The role of a market instrument is to change economic behaviour. In our public submission to the ETS review, we said:

“If the NZ ETS is meant to materially alter behaviour in New Zealand by encouraging the development of alternative energy, greater energy efficiency and a significant and demonstrable reduction in emissions, then it is not clear that it will succeed. If, on the other hand, the NZ ETS is meant to be largely symbolic and part of New Zealand’s superficial green branding, then it is largely fulfilling that goal.”

This statement alone makes our position on the performance of the ETS clear. Your argument that Pure Advantage is not being transparent on carbon pricing is unfounded. 

Will dialling up the price of carbon and including all sector scheme participants change behaviour? Absolutely.

Will government do this? No.

Will Pure Advantage repeating our ETS position make a difference to government’s lack of willingness to act? No.

But what would happen if Pure Advantage were to encourage industry to take the initiative and change their behaviour in the absence of a strong carbon price (i.e. ‘reality’)?

Well, for one thing you get a win by actually decreasing emissions rather than talking about it, and, secondly, you’ve then got a marketplace which is actually more capable and willing to accept said carbon price and a government that feels more comfortable about dictating that price. I guess this underlines the very practical approach Pure Advantage is taking.

Last week I chaired a meeting in Rotorua, which included key players in the woody mass biofuel and bio-products industries. It was the first time the value chain from forestry, technology, distribution and end use had got in the same room for a korero. Hallelujah they even agreed to play nicely with one another, share information and have a formal workshop with a view to strategy development. Is this example of Pure Advantage practically supporting low-carbon industry coordination an equally valid approach to putting a price on carbon? I argue yes. 

Does it need to happen anyway? Yes. 

So Point 2: Yes, absolutely put an effective price on carbon. But don’t dismiss the requirement for industry to also develop and coordinate its own solutions, especially as this will further serve to politically de-risk effective pricing.

Answers to your direct questions
  • Do they recognise the economic point that decarbonising must involve carbon pricing? Yes. Do you realise industry coordination is also part of effective decarbonisation?
  • Do they accept that the NZETS is an ineffective carbon price scheme? Yes, as publicly stated.
  • If yes to both these questions, why don’t they show leadership and stand publicly for what they believe in? OK, we’ll personally fund and launch a charitable green growth campaign, then undertake world-leading low carbon research, develop a detailed strategy and issue a partly good report to tell businesses and politicians about it… 

And yes, Pure Advantage is well aware of Hansen’s advice. We helped to arrange and fund his visit to New Zealand. I sat on the steering group that offered The Climate Show an opportunity to interview him. He stayed at my house.

Perhaps Pure Advantage is guilty of not explaining itself clearly enough in the document in relation to the NZ ETS. But there is no shadowy carbon agenda — if you don’t believe me then talk to NZ’s largest environmental watchdogs — it’s no picnic convincing Greenpeace and WWF that a group of business people are genuinely working to address a suite of green issues. Then talk to industry groups like HERA and NERI — they support us too. Even Labour said they would be prepared to work on a bipartisan basis for green growth.

Finally sounds like a season of change, Mr. February.