What would a new National government do on climate change?

Tom Powell

The signs are that a new National government would do much less than the current government has pledged to do on climate and, as a result, may undermine the pursuit of our climate commitments.

With the polls showing that the National Party has a chance to lead the government after next year’s election, it is worth wondering what they would do to promote action on climate.  At the moment, Christopher Luxon and his climate spokesperson Scott Simpson are making all the right noises about continuing the present government’s programs on reducing emissions and building the nation’s resilience. 

The National Party voted unanimously to support the 2019 and 2020 amendments to the Climate Change Response Act (the Zero Carbon Act) which formed the program of five yearly emissions budgets, advised by a newly formed Climate Change Commission, and reformed the Emissions Trading Scheme (ETS).   They seem committed to carry on the present government’s climate-focussed programs.

But cracks are appearing.  Matt Burgess, newly appointed as economic advisor to the National caucus, has just released a paper titled, “Pretence of Necessity; Why further climate change action isn’t needed and won’t help”.  The paper’s title sums up his position.

Burgess bases his conclusions on an expected boom in exotic forestry as the price of ETS carbon credits rises, which would then offset the nation’s future emissions.   There is no need to reduce emissions of long lived greenhouse gases (i.e. carbon dioxide), he argues, all we need is more pine trees to suck that CO2 back into the land. 

Burgess further argues that policy levers in the forthcoming emissions reduction plan, such as levies, subsidies, regulations and bans, will be an ineffective waste of money because net emissions are already capped by the ETS.  The nation’s net emissions can’t rise above the amount specified in the cap, no matter what else is done.

From a climate perspective, there are serious problems with these arguments.  For one, not everyone, least of all farmers, wants a major chunk of NZ farmland converted to pine forest to generate ETS emissions offsets.  There are mouths to feed and native biodiversity to protect.

Another issue is that the ETS is still not working as it should.  Because the “cost containment reserve” (i.e., the maximum price) of carbon credits has been reached in two recent government auctions, the number of credits offered for auction has gone beyond that set by the cap.  When the auction price exceeds the maximum, it triggers a mechanism that releases more credits for auction.  The emissions cap is being routinely exceeded.   

Also, there is no time limit on the validity of credits, and companies with forestry credits aren’t selling them to offset emissions.  The government has essentially guaranteed that they will increase in value with time so presumably these credits have become a lucrative investment security.  When these carbon credit investors decide to sell, it would allow more emissions than planned in the emissions budgets.  Trade in carbon credits was never intended to become a speculators’ market.

So, there is a push within the National Party to abandon emissions reductions beyond what falls out of the ETS. If this happens and history is any guide, it could be a disaster for New Zealand’s goal of achieving our climate commitments.
The Climate Change Response Act was originally passed by Parliament in 2002 in order to satisfy the requirements of the Kyoto Protocol, an early international treaty on climate change, of which New Zealand is a signatory.   The Emissions Trading Scheme was established by the then Labour government in September 2008 as a further step to satisfy our treaty obligations.  Later that year, National won election and came to power.

In 2011, carbon credits traded at about $21/tonne CO2, but successive government moves to weaken the ETS resulted in the price of carbon credits dropping to just $2/tonne in 2013.  Although changes were made subsequently to strengthen the ETS, by 2017, when the National government left office, the price had recovered to only $19/tonne.  New Zealand lost nearly a decade of progress on emissions reductions due to mismanagement of the ETS, even as the then National government pledged to cut New Zealand’s net emissions by 30% by 2030 at the Paris Accords in 2015. 
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Given National’s past poor performance on climate action, it is important that we hold the Party accountable for their support of the Zero Carbon Act.  We certainly can’t solely count on a flawed, limited and easily manipulated tool like the ETS to bring New Zealand’s emissions down, as Matt Burgess suggests. National needs to confirm its support for the emissions budgets established under the Zero Carbon Act and follow that with a programme of actions that will meet the legislated targets. We need to know they will not just rely on buying international credits and planting pines when there is so much else we can do.

Note: the article published in Stuff also contains a rebuttal statement from Scott Simpson, National's Climate Spokesperson.