25 September 2012

Pro-coal Minister of Everything Steven Joyce goes feral; attempts to influence the Environment Court and the Court of Appeal

Today I was absolutely gobsmacked by a statement by Steven Joyce, the Minister of Economic Development, in an official New Zealand Government press release.

Joyce explicitly took the side of and promoted the cause of Aussie coal miners, Bathhurst Resources, in two up-coming court cases.

Joyce said:

"The Escarpment Mine is an open cast mining project that is ready to go and would provide 225 jobs and incomes for workers and their families on the West Coast straight away. The developer is being held up from opening the Escarpment Mine by on-going litigation that has gone through the Environment Court, the High Court and the Court of Appeal. These on-going objections are to resource consents which were granted more than a year ago. The whole consenting process for this development has now taken a staggering seven years. I call on those objectors to the mine to reconsider their appeals and consider the economic future of the West Coast and its people."

I know Joyce is very pro-development, Joyce even has his own archive of posts on Hot Topic, where Joyce's preference for fossil fuel developments is obvious.

But this time he has crossed a line. Joyce is using his position as a Minister of the Crown to explicitly influence decisions yet to be made by the Environment Court and the Court of Appeal on the resource consents sought by Bathurst.

Joyce is breaching the Sub judice rule.

Let me back up and start at the beginning. The resource consents for the Escarpment mine proposal were applied for in August 2010. Not seven years earlier as alleged by Joyce. Bathurst took over the project from L and M Coal Ltd.

As Hot Topic noted, in August 2011, the hearing commissioners acting for the regional and district council considered with some anguish that resource consents could be approved. This was in spite of the many adverse effects on native species habitat, water quality and the coal-measure limestone landforms within the Mt Rochfort Conservation Area. It was also after the commissioners refused to factor in climate change effects from the eventual release of carbon dioxide from the coal. In other words, it was a pretty marginal decision.

However, the resource consents are not legally granted, as Forest and Bird and the West Coast Environmental Network immediately lodged appeals with the Environment Court. This is Joyce's second factual error; in an appeal of a resource consent, the council's decision ceases to exist. The Environment Court starts from a blank piece of paper, examines the facts and makes it's own decision. It considers consent appeals on a 'de novo' basis.

Then Bathurst started the cycle of litigation - by applying to the Environment Court, separately from the consent appeal, to have the effects of climate change barred from the consent appeal Bathurst succeeded. So Forest and Bird and the West Coast Environmental Network appealed that decision to the High Court.Bathurst won that appeal. However, Forest and Bird and the West Coast Environmental Network appealed the High Court decision to the Court of Appeal.

So there are two court hearings yet to happen.

1. The Environment Court is yet to decide on the facts; if the resource consents 'promote sustainable managemnent' of resources and may be granted.

2. The Court of Appeal is yet to decide on the law; whether it permits or stops the Environment Court considering the greenhouse effects of the carbon dioxide emissions from the downstream combustion of the coal.

Now Steven Joyce, a Minister within the Executive branch of Government, is expressing an opinion on what the outcome of the Court's process should be.

This is contrary to the 'sub judice' rule; which is "Don't comment on undecided Court cases". Or as set out in Parliament's Standing Order 112.

"112 Matters subject to judicial decision
(1) Matters awaiting or under adjudication in, or suppressed by an order of, any New Zealand court may not be referred to in any motion, debate, or question, including a supplementary question, subject always to the discretion of the Speaker and to the right of the House to legislate on any matter or to consider delegated legislation. (2) To enable the exercise of the Speakers discretion under paragraph (1), a member who intends to refer to such a matter must give written notice to the Speaker of this intention."

Or as set out in the Office of the Clerk of the House of Representatives document "Sub judice rule". Chapter 16 in 'Parliamentary Practice in New Zealand'. New Zealand Parliament (14 October 2010).

"The Standing Orders prohibit reference in any debate to any matters awaiting or under adjudication in a court from the time the case has been set down for trial or otherwise brought before the court, if it appears to the Speaker that there is a real and substantial danger of prejudice to the trial of the case...This is the implicit acknowledgment by the legislature that the proper forum in which to resolve legal disputes is the courts and that the legislature, above all other institutions, should take extreme care not to undermine confidence in the judicial resolution of disputes by intruding its views in individual cases...The House's sub judice rule takes effect in criminal cases from the moment a charge is made and in other cases from the time proceedings are initiated by filing the appropriate document in the registry or office of the court. The restraint ceases when the verdict and sentence are announced or when judgment is given. If notice of appeal is given, the restraint reapplies from the time of the notice until the appeal has been decided."

Or as set out by the Speaker, Margaret Wilson, on 16 October 2007, in "Speaker's Rulings Sub Judice Rule Operation.

"It seems to me that it is important in any consideration of it to emphasise the high constitutional nature of the rule. It stands as an expression of the relationship between the different branches of government; the legislative branch and the judicial branch. This House determines what the law should be, but it is for the courts to determine in each particular case how the law is to be applied. In criminal matters, it is not for this House to decide guilt or innocence. That is a matter for a court of law. Standing Order 112 defines quite precisely when this constitutional principle is engaged."

Obviously, Joyce and the rest of National just don't give a stuff about anything of a high constitutional nature or the rule of law, or Joyce driving his Bagger 2000 coal excavator through the sub judice rule. Clearly such things are just the concerns of those pesky people who obstruct progress when government tries to remove roadblocks in the way of business development.

Even not-so-bright Minister of Energy Phil Heatley knew better than to comment on the Environment Court case when he was asked about it on a Q and A interview.

"Phil. Well, you appreciate, Shane, this is before the courts. I'm a bit limited about how much I can discuss this. But the reality is Denniston, like any other application, has to go through a process, and there is a balance between the economic benefits and the- what impact it'll have on the environment."

Kevin Hackwell of Forest and Bird has responded promptly to Joyce's call and raised the issue of how independent other decision making may be, such as the decision to grant access for mining on the Mt Rochfort conservation area, which is also yet to be made by the Minister of Conservation, Kate Wilkinson.

"There would be a serious question, given his public advocacy, about whether such a decision has been influenced by government policy."

That's an important point. Especially since the Government wants to make stop the Minister of Conservation deciding mine access to conservation areas on the basis of conservation purposes. The Government has just introduced amendments to the Crown Minerals Act which add the Minister of Energy as joint decision-maker and add economic matters to the mandatory conservation purposes the Minister of Conservation must consider.

We will have to see how this 'sub judice' breach plays out for Joyce, given his party and Prime Minister have no problem with John Banks and his unknowingly non-anonymous donations.

I could not think of a better reason to reject having a joint Energy/Conservation Ministers and joint economics/conservation goals decision over mines on conservation land than Steven Joyce's attempted interference in the Environment Court and the Court of Appeal cases concerning the Escarpment mine.

Solid Energy and the declining price of coal; neither unforeseen or dramatic or a crash

On Monday Don Elder the Chief Executive of New Zealand's Solid Energy confirmed that a major restructuring of the NZ coal miner would require closure of the Spring Creek underground mine and the loss of 460 jobs over the company.

This move had been signaled in advance, but it is still making most news broadcasts today. Elder attributes the need to downsize to trends in international coal prices. For example Elder told Radio New Zealand;

an unforeseen, and dramatic, global price crash had rocked the industry.
"In the second week of July the markets tanked, demand fell through the floor," he said. In up to six weeks the price plummeted 40 to 50 percent and did not show any sign of bouncing back anytime soon."
The new chair of the board of directors, Mark Ford, said in a press release;
“The price for Spring Creek’s semi-soft coking coal would need to be somewhere from NZ$180-200 a tonne for the operation to deliver a profit and pay off the investment made in it,” Mr Ford said. “International semi-soft contracts are now being made at around NZ$120 a tonne.”

New Zealand PM John Key seems to have accepted the Elder view that prices are to blame.

"The issue isn't that we're not on their side, the issue is that international coal prices aren't on their side."

"In the case of Solid Energy it's a victim of falling commodity prices."

The NZ media seem to have uncritically accepted the price explanation. In one story, Fairfax reported the reason for the mine closure and job losses as being due to a severe downturn in global coal prices

Not so, "Chalkie", of the Fairfax NZ business section. "Chalkie" took Solid Energy to task for blaming their troubles entirely on the international coal price. Chalkie also satirised Elder's cornucopian Think Big style lignite and coal-gas proposals.

Chalkie says he doesn't believe Elder has credibility when he says current coal prices in NZ$ are 20% lower than at the bottom of the 2008 global financial crisis. Chalkie points out that Elder's quoting of a coal price of $330 USD per tonne, as the top of the price mountain that the price has now fallen off, is just unrealistic.

In June 2011, a record price of $US330 a tonne for Australian hard coking coal, was reached because of supply shortages following the January 2011 Queensland floods which drowned most of Queensland's coal mines.

Chalkie also notes that a coking coal price of $USD126 a tonne is still well above the norm before the GFC. I have complied some prices for Australian hard coking coal. Data at Google Docs. Coking or metallurgical coal is used in steel making, and usually trades at a premium price above 'thermal' coal supplied to power stations. I prepared a chart of prices per tonne in $USD from 2006 to 2012. Spring Creek Mine coal is 'semi-soft' coking coal, which I think means its price is not quite the same as coking coal, but still more than thermal coal.

The post Queensland flood price of $USD330 a tonne sticks out as a spike or outlier as does the 2008 high of $USD250 tonne, which also followed a La Nina mine flooding event. Coal producers might not want to know about global warming, but global warming certainly knows about Queensland's coal mines.

And here is a chart of 2012 monthly hard coking prices in $USD. The data.

The price for Aussie had coking coal has fallen consistently in 2012. However,there is no cliff the price has fallen off in July 2012. The hard coking coal price did not plummet 40 to 50 percent in 6 weeks as Dr Elder says. The price trend is neither "unforeseen" nor "dramatic" and nor is it a "crash".

It's not hard to find reasons for the decline in the price. of coal. Reuters reports a number of reasons. Demand for coal is down in China. While the floods stopped the Aussie supply, steel makers looked to substitute other suppliers. Mongolia is increasingly eating into Australia's share of coal exports to China.

Chalkie also notes that the Huntly East underground mine has had some safety issues. Work to install a $NZ40 million ventilation tunnel, the sort of thing Dr Elder criticised Pike River Coal for not having, stopped in August 2012. Could it be that Solid Energy is using the international coal price as an excuse to avoid spending the money needed to make its underground mines as safe as the public now expect in a post-Pike River Coal disaster world?

Chalkie also notes a "field of dreams" approach to the Taupo wood pellet plant, (later written down in value by $NZ30 million) and delays in the Mataura lignite briquette plant. Given the execution of these smaller projects, Chalkie questions Solid Energy's ability to deliver on the grander lignite conversion plans.

I will leave the last word to Chalkie.

Every day at 8.30am sharp, management at Solid Energy would gather for morning prayers at the company shrine.
The small room was dominated by a huge gleaming slab of coking coal, etched with phrases from an early foreign exchange hedge contract. The dozens of executives stood facing it, arms by their sides, palms turned towards the slab in unison.
It was always a brief, uplifting affair. The CEO would begin with a chant: "Every day in every way, we expect coal prices to rise."
The executives would respond: "And rise they shall."
CEO: "With wood pellets and lignite we will rule."
Response: "Nothing bad will happen."
CEO: "Our big ideas are worth squillions."
Response: "Yes, probably more."
CEO: "Gentlemen, make it so."
And with that they would shuffle out shiny-cheeked into the morn
.

10 September 2012

Rio Tinto Alcan NZ do a Godfather; Nice smelter you got. Be a shame if something happened to it

The Godfather I argue that Rio Tinto Alcan NZ (NZ Aluminium Smelters Ltd), the owner of the Tiwai Point aluminium smelter is "Godfathering" the smelter, its workforce, the Southland economy, the NZ electricity market, Meridan Energy and the poor critically endangered slow-breeding kakapo, as well as "Godfathering" the NZ emissions trading scheme to get excessive free allocations of emissions units.

Godfathering? Yes a new term for climate change blogging. Its sort of a bit like Grandfathering, which is jargon from emissions trading. But it's sort of very different.

Grandfathering in an emissions trading scheme (an ETS), is giving the emission units for free to the existing emitters in the ETS on a historic pro-rata calculation. The units of course representing the desired cap on emissions. Alternatively the units could be sold by auction to emitters which is logical if we treat the units as shares in a public commons owned by the Government on behalf of citizens.

Of course our ETS is not so simple. If our ETS just applied simple "grandfathering" as outlined, then it would have a real cap, it would not allow importing of unlimited international units, and it would be impossible for any emitter to receive more units than their emissions.

That's not the case under the NZETS, at least for some emitters. In 2010, NZ Aluminium Smelters Ltd Tiwai Point smelter, which is roughly New Zealand's third largest point source of greenhouse gas emissions, was a net seller of units, not a net payer. Their free allocation of units was 135% more than the units they needed to surrender for their emissions.

That's excessive. The justification given for this is that in order to maintain their export competitiveness, NZ Aluminium Smelters Ltd needed to be compensated for the rather unfathomable and diluted ETS costs that may flow through their secret contract with Meridian Energy and the electricity wholesale market. I will come back to this later in the post.

Let me update the smelter company's emissions and allocations for the 2011 year.

In 2011, NZ Aluminium Smelter Limited produced 354,030 saleable tonnes of aluminium. The 2011 Ministry of Economic Development Chief Executive's Report shows that the New Zealand aluminium manufacturing sector (a.k.a. NZ Aluminium Smelter Ltd) reported emissions of 601,370 tonnes CO2-e for the 2011 year. We divide by two for the 'two tonnes for one unit' deal, and that results in 300,685 units to surrender.

The Ministry for the Environment allocated 437,681 units to NZ Aluminium Smelter Ltd for the 2011 calendar year.

That's 136,996 more units allocated than surrendered or alternatively the units allocated to NZ Aluminium Smelter Ltd exceeded the units surrendered by 146%.

So that's even more excessive than 2010's 135% over-allocation!

How did NZ Aluminium Smelter Ltd/Rio Tinto Alcan NZ Ltd achieve that? Simple really. They threatened to close the smelter and move production offshore if the NZETS really imposed a real carbon price on them.

"Nice aluminium smelter you got. Be a shame if something happened to it."

Now thats what I call "Godfathering"! But wait there is more.

In July, Rio Tinto Alcan NZ announced an annual loss.

The smelter CEO Ryan Cavanagh said the smelter's financial difficulties were due to falling world aluminium prices. And that they needed to revise their electricity supply contract with Meridian Energy to get input costs down.

A day later, the parent company Rio Tinto Alcan indicated what may happen to it's unprofitable smelters. They will be shut down. No pressure, Meridian Energy!

"Thats a nice aluminium smelter you got. Be a shame if something happened to it."

According to Brian Fallow, if the smelter closes, there could be a "seismic" knock-on effect on the electricity market. Supply would exceed demand by the 14% of NZ's electricity generation used by the smelter. Wholesale electricity prices would react. Some generation assets might be crowded out.

"Thats a nice wholesale electricity market you got. Be a shame if something happened to it."

Brian Fallow notes the Meridian power contract, that the smelter wishes to renegotiate, represents 40% of Meridian's sales. Closure of the smelter or renegotiation of the contract put the spanner of uncertainty into the Government's planned partial sale of Meridian and the other generators.

"Nice plan for partial privatising some state-owned power generators you got. Shame if something happened to it."

The closure of the smelter would also have an impact on the local Invercargill and Southland regional economy.

"Nice regional economy you got. Shame if something happened to it."

Next we hear that the smelter is fast-tracking the redundancies of it's highly-trained and highly-paid workforce.

"Nice well-trained professional smelter labour force you got. Shame if something happened to it."

And Rio Tinto Alcan NZ also wants to withdraw from partly funding the successful Kakapo Recovery Programme.

"Nice charismatic endangered species programme you got. Shame if something happened to it."

That's a lot of Godfathering!

Let's look at New Zealand Aluminium Smelter's electricity use and costs in 2011. How much do they use? How much do they pay? Does their power cost justify extra allocations of emissions units? Is it realistic for New Zealand Aluminium Smelter to try to get Meridian to give them cheaper power?

Let's look at some electricity use data from the Energy Data File 2012. The actual data is Spreadsheet G worksheet G.6.a. now at Google Docs.

Electricity use by sector 2011

This dot chart makes it very clear that the NZ Aluminium Smelter Ltd's Tiwai Point Smelter is, by a huge margin, the biggest single consumer of electricity in New Zealand. A single company at a single plant used 5.3 million MWh out of 38.8 million MWh consumed in 2011, or 13.67% of the total consumption. Only the combined 4.4 million people in homes (the residential sector) used more electricity, 13 million MWh or 33% of the total. If we just look at industrial use of electricity, and leave out the residential sector, the smelter used 20.6% of all electricity used by industry.

Electricity sales price by sector 2011

This chart shows average rates (including line costs) in cents per kilowatt hour (i.e. its MWh divided by sales $$ times 100) for the industrial electricity sectors.

You need to look at the bottom left hand corner, not the top. Thats because Rio Tinto Alcan NZ Ltd/NZ Aluminium Smelter Ltd pays the very lowest average rate for electricity in New Zealand; 5.03 cents! Residential users pay 22.6 cents per KWh, or four times as much.

No industry in New Zealand uses more electricity than New Zealand Aluminium Smelters/Rio Tinto Alcan NZ. No industry pays less per unit for electricity than they do. They even get excessively allocated emissions units to help with the lowest priced power contract in New Zealand. And now New Zealand Aluminium Smelters/Rio Tinto Alcan NZ are going for "Godfather" gold by trying to bully their power price even lower.

09 September 2012

Power to the smelter? Rio Tinto Alcan NZ Ltd wants to pay less for electricity for the Tiwai Point aluminium smelter

So we know Rio Tinto Alcan NZ Lmited/New Zealand Aluminium Smelter Limited say they are not profitable at the moment and the smelter may have to shut down.

Now they want to renegotiate their electricity contract with Meridian Energy. It could be tricky.

This is the secret contract for the aluminium smelter at Tiwai Point, where power from the Lake Manapouri Power Station is sold to a Rio Tinto Alcan NZ Limited subsidiary at what are suspected to be very cheap rates possibly 4.7 cents per kilowatt hour or one quarter of the price charged to the domestic consumer.

So how much electricity does the smelter use? How much does it pay? The old Ministry for Economic Development issues an annual report on energy use. The Energy Data File 2012 was published in June 2012 and this may help.

I downloaded a 5 megabyte zipfile of spreadsheets.

Spreadsheet G records electricity production and use. Within it, worksheet G.6.a. is an 'Electricity Market Snapshot', giving electricity consumption by industry for the year ended 31 March 2011. I copied it and uploaded it to Google Docs. Funnily enough, aluminium smelting isn't mentioned.

However, there is 'Basic non-ferrous metals ANZSIC 2006 industry code C213'. This sector consumed 5,300,000 megawatt hours in the 2011 tax year. I looked up 'ANZSIC 2006 code C213 Basic non-ferrous metals' on the Statistics Department's website and it is:

"Aluminium Smelting This class consists of units mainly engaged in smelting alumina to produce aluminium, or recovering aluminium from scrap. The aluminium is cast into basic shapes or may be cast according to customer specifications. Also included in this class are units manufacturing aluminium alloys from primary aluminium smelted at the same unit."
.

In other words Basic non-ferrous metals code C213 is a 100 percent the bloody Tiwai Point Smelter! Now for some charts.

Okay, looks crap in Blogger. Click click for a 600 by 600 pix pick.

This dotchart makes it very clear that the Tiwai Point Smelter is by a huge margin, the biggest single consumer of electricity in New Zealand. A single company at a single plant used 5.3 million MWh out of 38.8 million MWh consumed in 2011, or 13.67% of the total consumption. Only the combined 4.4 million people in homes (the residential sector) used more, with 13 million MWh or 33% of the total. If we ust look at industrial use of electricity, and leave out the residential sector, the smelter uses 20.6% of all electricity used by industry.

Click click for a 600 by 600 pix pick.

This dotchart shows industry sector purchases of electricity from the generator/retailers at sales value. In spite of the smelter buying way way way more electricity than any other industry, the sales to the smelter in dollars are fourth in terms of value.


Click click for a 600 by 600 pix pick.

This chart shows industrial electricity users sorted by average rate including line costs in cents per kilowatt hour (i.e. its MWh divided by sales $$ times 100). You need to look at the bottom left hand corner, not the top. Thats because Rio Tinto Alcan NZ Ltd/NZ Aluminium Smelter Ltd pays the very lowest average rate for electricity in New Zealand; 5.03 cents! Residential users pay 22.6 cents per KWh, or four times as much.

Rio Tinto Alcan NZ Ltd/NZ Aluminium Smelter Ltd are really demonstrating breathtaking audacity in threatening to close the Tiwai Point Smelter if they don't get their electricity costs lower, when they already enjoy the lowest electricity cost of any sector in New Zealand.

Tiwai Point smelter troubles and 25 years of aluminium prices

The Tiwai Point Aluminium Smelter has been in the news a lot lately. Mainly because owners New Zealand Aluminium Smelters Limited/Rio Tinto Alcan New Zealand Ltd, are hinting they may need to close the smelter unless they get a big discount on their electricity bill from Meridian Energy.

I thought I would prepare a chart of world aluminium prices. I found a good data source at Indexmundi.com and obtained an current price from the London Metals Exchange.

As ever, it looks crap in the Blogger interface. Double click in the image to see the chart in full 650 by 500 pixel glory.

How to prepare the chart.

I used the R programming language running with the RKward scripting progamme running on a Linux Simply Mepis 8.5 operating system installed on my Dell Inspiron 1300 laptop.

First the data. I downloaded the longest available time series of prices, back to 1987, from Indexmundi.com. I saved this as a comma seperated values file in my 'R' working directory. I added to this csv file the latest September aluminium price, US$1962 per metric tonne, from the London Metals Exchange website.

Here is the script. It may also be used with 'R' under Windows.

a <- read.csv("alspotprices.csv",skip=1, header=TRUE, sep=",", na.strings="NA", dec=".", strip.white=TRUE)
# reads file 'alspotprices.csv' from working directory to R 

str(a)
'data.frame': 303 obs. of  3 variables:
 $ Month : Factor w/ 303 levels "1987/07/01","1987/08/01",..: 1 2 3 4 5 6 7 8 9 10 ...
 $ Price : num  1653 1810 1746 1962 1680 ...
 $ Change: Factor w/ 275 levels "-","0","-0.0002",..: 1 252 143 260 265 245 254 221 271 31 ...
# 'str' queries the structure of the new R object. a good way to check it is read in ok
max(a$Price)
[1] 3578.1
# query what is the highest value in the price data? It is $3578 
summary(a$Price)
 Min. 1st Qu.  Median    Mean 3rd Qu.    Max. 
   1040    1403    1616    1773    2059    3578
# what is the five number summary the price data?
alt<-ts(a$Price, frequency = 12, start = c(1987, 7))
str(alt)
Time-Series [1:303] from 1988 to 2013: 1653 1810 1746 1962 1680 ...
# convert the numeric price data into a timeseries data object, monthly (12 p.a.) prices starting from the 7th month of 1987. Check it with 'str' command

png("al-spotprice-1987-2012.png", width=800, height=600, pointsize = 16)
# define type of image file and its dimensions
plot(alt/1000,ylim=c(0,3.5),las=1,lwd=3,type="l",col="4",cex.main=1.6, cex.lab=1.2, main="Aluminium Spot Price 1987 - 2012",xlab="Year", ylab="US thousand dollars per tonne")
# main plotting command
mtext(side=1,line=-2.3,"Data: www.Indexmundi.com www.lme.com/aluminium.asp")
mtext(side=1,line=-1.3,cex=0.8,"http://www.indexmundi.com/commodities/?commodity=aluminum&months=300")
# add key for data sources
abline(h=1.773,col=1)
abline(h=1.403,lty=2,lwd=2)
abline(h=2.059,lty=2,lwd=2)
# place horizontal lines at the 1987-2012 mean price $1773 and 1st and 3rd quartiles 
box(lwd=2)
# make the plot box 2 pixels wide
legend(1995, 3.5,bty='n',bg="white", c("Upper quartile $2059","Mean $1773","Lower quartile $1403"), lty = c(2,1,2),lwd=c(2,1.5,2) )
# add a legend
dev.off() 
# send output to your working directory and turn off graph window.

04 September 2012

How fast over the cliff? Kennedy Graham's speech on the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill

How fast shall we drive over the cliff

I really like Green MP Kennedy Graham's speech on the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill. Its is worth listening to.

"The Green Party will vote against this bill, the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill, on the grounds that it weakens an already weak emissions trading scheme to the point of irrelevance."

"The deliberate weakening of the emissions trading scheme reflects a fundamental misperception of the nature of the climate change challenge...[the] Government's flawed world view....subordinates climate change to economic growth...It implies that economic growth is the principal criterion of the quality of life. It asserts a narrow and myopic view of the nature of climate change...

Climate change is not just another tough problem today and a potential crisis tomorrow. It is part of an ecological crisis today. It is the first of the nine planetary boundaries we must stay within if human civilisation is to continue to flourish. It is 20 years now since we agreed to avoid excessive carbon concentration in the atmosphere that would cause dangerous anthropogenic interference with the climate system.

It took 18 years to identify a 2 degree temperate rise and 450 parts per million concentration as the limit for avoiding that danger. The global carbon budget for the climate boundary is 1,600 billion tonnes of net greenhouse gas emissions for the period 1990 to 2100. In 20 years we have used almost half of that.

The remaining budget from now to 2100 is 870 billion tons, about one third of the remaining fossil fuel reserves. We have to learn to say no to fossil fuel extraction. Such a global budget allows future annual global emissions of 9.5 billion tons. This is 20 percent of current emissions, so the global emissions reduction curve will need to be steep if we are to avoid dangerous climate change.

This requires global emissions to peak before 2020, and to drop by 8 percent in 2020 and by some 56 percent by 2050. The developed countries—the global North—are required now to reduce their national emissions by about 35 percent by 2020, and 80 percent by 2050. These are not matters of choice. This is not the stuff of currency speculation, dealing with toxic debt, or hedging risk through derivatives and futures trading.

Emissions reduction is an ecological imperative. Nature does not do deals, other than with itself, and certainly not with humanity. Nature is what it is. Human notions of choice will prove as ephemeral as a feather in an evolutionary storm if we court dangerous climate change, yet this is what we are doing.

So where does New Zealand stand? We are called upon to reduce national emissions by up to 40 percent by 2020 and 80 percent by 2050. What have we pledged? We have promised conditionally a mid-point of 15 percent by 2020 and 50 percent by 2050. It is simply not possible for New Zealand to achieve these weak targets with the spineless market instrument it has fashioned for the purpose over these past 3 years.

An 80 percent reduction by 2050 would mean a drop from 63 million tons to 13 million tons. How might we conceivably achieve this? Not by the 2008 Labour emissions trading scheme , not by the weakened 2009 National emissions trading scheme, and certainly not by this limpid legislative construct masquerading as a model of responsibility and balance that is before us today.

Today's bill will defer agriculture indefinitely, defer any increase in the price cap, defer the one-for-one surrender obligation, allow a greater switch from forestry to dairying, and enable importers to increasingly use dangerous synthetic gases. What remarkable, steel-like resolve!"

How fast over the cliff? a submission on the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill

How fast shall we drive over the cliff

Following up from yesterday's post where I said the proposed amendments to the New Zealand Emissions Trading Scheme are as useful as arguing over what speed to go while driving over a cliff, I have written a very brief submission. I have submitted it via the Parliament website.

It was almost exactly the same as leaving a comment on a blog where there is an anti-bot security step. You know, where you read some letters on an image file and type them in a dialog box. So its pretty easy.

Also there's an option to upload a PDF or other document. So there is really no excuse not to let the Government know what you think of the NZETS.

Committee Secretariat
Finance and Expenditure Committee
Parliament Buildings
Wellington
4 September 2012

Submission on the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill

Dear Sir/Madam,

I oppose this bill. It weakens the existing very weak New Zealand Emissions Trading Scheme (NZETS) to the point of irrelevance.

I oppose the current design of the NZETS.

I oppose the NZETS because its fundamental design flaws make it completely ineffective in reducing New Zealand’s greenhouse gas emissions.

I submit that the design flaws are:

  • the use of unlimited international junk credits,
  • the indefinite delay in obligations for agriculture,
  • the lack of a cap,
  • the price ceiling with no price floor,
  • the lack of revenue recycling via the tax system to consumers, and
  • the excessive free allocation to industrial emitters such as NZ Aluminum Smelters Ltd.

I consider the NZETS should be replaced by a no-exceptions, no offsets, tax on greenhouse gas emissions with income compensation to citizens via the tax system.

Thank you
Yours faithfully,
Robin Johnson's Economics Web Page

How fast shall we drive over the cliff? More amendments to the New Zealand Emissions Trading Scheme

How fast shall we drive over the cliff

I look at at the Government's amendments to the New Zealand Emissions Trading Scheme and conclude we are arguing about what gear to drive in as we speed towards the cliff. The Government has kindly given us the opportunity to make a submission about how fast fast we should go over the emissions cliff. Time to fasten your seatbelts.

Back in July, Minister for Climate Change Issues Tim Groser announced more watering-down of the New Zealand Emissions Trading Scheme (NZETS).

About a week ago, on 23 August 2012, Groser introduced the amending legislation - the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill.

Consistent with previous emissions trading scheme legislation, the bill will be fully and rationally considered by Parliament's Finance and Expenditure Select Committee in an insultingly short period of time - ten working days. The closing date for public submissions is Monday, 10 September 2012.

What does this ETS amending bill do?

* It indefinitely postpones the entry of pastoral agriculture into the NZETS.

* The 'two-for-one' deal, which halved the number of carbon credits each emitter had to surrender for a tonne of carbon dioxide equivalent greenhouse gases, is extended for another three years. It was to end on 31 December 2012, but will now run on at least to 2015.

* The price cap of $12.50 per tonne ($25 for two tonnes) will also extended. It was to end on 31 December 2012, but will now run on at least to 2015.

What doesn't the bill do?

* It ignores the recommendation from the 2011 ETS review committee to stop the unlimited use of international carbon credits by New Zealand emitters. Which as we know, makes the NZETS the weakest link.

Whats the cliff we are driving off? Well, it's climate change. And it's the price of the New Zealand emissions unit.

NZ Unit price 2009 to 2012 from OMF Financial Ltd

Who said what about the bill?

Simon Terry of the Sustainability Council said that the NZETS is now in a state of eternal transition".

Helen Clark stated the obvious, that pastoral agriculture must be in the NZETS; “You can’t have your major sector generating greenhouse gases outside the scheme."

Federated Farmers said the deferral of agriculture was huge win for New Zealand's farmers

Business New Zealand seem unusually silent. I guess for them it is all going to plan. Back in July they welcomed Tim Groser's announcement of the delays to the NZETS. So why waste space repeating the message?

However, I do offer some relief from this dreary "business-as-usualism".

Green MP Kennedy Graham has given some strong speeches accurately reflecting both the scientific reality of the cumulative carbon dioxide emissions and the ethical challenge of the failure of politics and governance to respond.

None more so than in his 'first reading' speech in which he summed up the bill thusly.

"Today's bill will defer agriculture indefinitely, defer any increase in the price cap, defer the one-for-one surrender obligation, allow a greater switch from forestry to dairying, and enable importers to increasingly use dangerous synthetic gases. What remarkable, steel-like resolve!"

I do recommend you read Kennedy Graham's speech in full.

Graham, a much more experienced diplomat than Tim Groser, walks us through more than 20 years worth of futile international climate change negotiations, all the while as the relentless accumulation of emissions in the atmosphere uses up the carbon budget consistent with limiting warming to two degrees. And with no faux-realist "get people on the bus" cliches we have come to expect from Tim Groser.

Kennedy Graham concludes that we don't have to accept this state of affairs. He calls on us to make a submission to the Finance and Expenditure Select Committee.

Greenpeace are also saying get stuck in with a submission. What to say?

How about "the NZETS is completely ineffective in reducing GHG emissions due to it's many design flaws - the use of unlimited international junk credits, the delays and exemptions, the partial coverage, the lack of a cap, the price ceiling, the lack of revenue recycling due to the excessive free allocation to emitters."

Something brief and to the point.

However, I will leave the last word to Jeanette Fitzsimons speaking on TV Ones's Q+A: Panel after a Nick Smith/Russel Norman debate back in September 2011.

"Look, its like we are in a very fast car, we are heading towards a cliff, which is getting really close, and we are arguing whether to change from fifth to fourth gear".