New Zealand Celsias

I seem to be unfashionable. I am not following the trend that many governments are taking to manage their climate emissions. I am also calling for better support for New Zealand farmers in climate change discussions.

In the lead up to the global climate change negotiations in Copenhagen next month, I have been thinking a lot about inter-governmental frameworks for restoring our climate. Many countries are developing Emissions Trading Schemes to manage their climate changing emissions, either on their own or in blocks like the European Union. New Zealand’s government has been following this course too, although their latest attempt looks far from successful. I am not in favour of these schemes. Why? Because I believe a global “carbon recovery charge” would be a much better way forward.

Setting up an Emissions Trading Scheme (ETS) is inherently messy. Many vested interests try to manipulate these schemes in their favour. As a young taxpayer, I am also concerned about the ways these schemes tend to lock-in the right for some big emitters to pollute for many decades. For example, a report from the Sustainability Council this week suggested that over 80% of the costs of meeting the costs under the proposed ETS would fall on future taxpayers, and not on the businesses responsible for those emissions. This would represent “a massive intergenerational wealth transfer.”

I generally understand the economic arguments behind these schemes. In a perfectly imagined economic world they seem to make a lot of sense. Yet I am still in favour of a much more simple approach that also seems to be fairer:

• set a global charge on carbon
• all countries collect this charge domestically when they use/sell fossil fuels
• each country can redistribute funds collected from this charge to develop cleaner alternatives, encourage reforestation, and avoid inequalities in the system
• this charge is progressively increased every year, to accelerate the transition away from fossil fuels to better alternatives.

A benefit of this approach is that it by-passes any arguments among countries about what their “fair allocation” of emissions should be. Our political representatives seem to waste too much energy in that process. All countries are part of a shared system, with some transitional arrangements for developing countries. Other greenhouse gases could be included at a later stage.

I understand that this is still politically challenging, both internationally (getting governments to agree) and domestically (getting citizens to support a system like this). At least politicians and citizens could understand it though, which is more than can be said for an ETS. If countries really wanted to make this work, they would also need to place a carbon charge on goods from any countries that did not comply with the scheme. This is protectionism, but only with the intention of protecting our climate.

This is not a “tax” by the way. Taxes go into Treasury’s piggy bank. They then get shelled out for all sorts of purposes, like funding healthcare and building roads. In contrast, a “carbon recovery charge” would recover the long-term costs that climate emissions are now causing, and redirect these towards the recovery of our society, our economy and our climate. Each country could choose how to use any funds that they collect. Progressive countries could direct them towards projects that benefit low income households (e.g. better insulation in houses; rooftop energy systems) to avoid inequalities in the system.

Now here is another reason why I am being unfashionable: I am in support of giving farmers a fairer go in this system. Farmers could actually benefit from supporting a carbon charge, instead of trying to make the ETS that our government is proposing "less bad". New Zealand is unique among many countries because the biggest share of our emissions come from farming. It is always going to be a sticking point. Farmers in many countries receive large subsidies from their governments. New Zealand farmers lost this protection decades ago. They therefore have every right to be concerned about the impact of an emissions trading scheme when they are competing globally with countries that do not place a charge on emissions from animals.

Many farmers are also stuck in a cycle, as they try to grow more and more from the same bit of land. That intensification cycle needs to be broken globally, not just in New Zealand, to make farming better for the land, waterways, climate, farmers, and consumers. Introducing a global carbon recovery charge is a small step towards breaking this cycle. That is because intensification has been fuelled by the low cost of fossil fuels. Nitrogen fertilisers, for example, are made out of natural gas. If there was a global charge on fossil fuels, these inputs would become relatively more expensive. Less intensive forms of farming would then be encouraged. In other words: put the charge on the front end of the farm instead of on the rear end of the animal. This also addresses a concern I have always had: if farmers are charged for methane, will this encourage more factory farming globally? It is much easier to capture methane from an animal in a factory than on a field. I am not suggesting that a carbon recovery charge would transform our food and farming systems on its own. It could place a useful part though.

Even if I am being unfashionable, it is good to know that I am not alone. Climate scientist James Hansen is a strong advocate of a global carbon charge. Al Gore seems to support it as well, and even the Chinese leadership have flirted with the idea. Many mainstream economists do too (although I have not heard much noise from them in New Zealand). There are many ways to increase the cost of carbon without placing a simple charge on it. Some people will argue that an emissions trading scheme is a more effective way to do that. To my mind though, simplicity and fairness are also vital ingredients for effectiveness. Anything that helps us to make a rapid transition to a safe climate future needs to be promoted.

You can find more of Nick's blog posts on Re-Be.