De-commission the Climate Change Commission

Tim Hazeldine writes ($) in the Herald today on how the Climate Change Commission has gone so far off-target. It is hard to excerpt, the whole article is excellent.

Our climate change policy should be solely about climate change. “You can’t kill two birds with one stone” is a cliche but it is not trite. It is true and important in almost every policy context. Yet the Commission considers it should in future “consider broader well-being factors, like eradicating poverty, safeguarding food security and addressing other environmental outcomes”. Wrong, wrong, wrong and wrong.

Exactly. It is not that those other outcomes are undesirable. But insisting emissions policies also solve those other problems puts our emissions targets at risk. Allowing other objectives into the decision making carries a huge emissions penalty. Second-best emissions policies have roughly no effect on emissions.

It is farmers, other businesses, entrepreneurs, innovators, inventors, scientists, workers, and, not least, households – the whole team of five million – who will get the job done, and at the lowest cost, so long as the overall cap set by the Emissions Trading Scheme (or through a carbon tax) is secure.

Also mostly pointless, are the multitude of policy recommendations that pour forth from the report. If the real decision-makers in the economy (i.e. all those listed above) are getting the correct price signal from the ETS, then there is generally no justification for further government intervention. What should be done will be done… The main exception will be in the provision of what economists call “public goods” – in particular research results

A binding ETS cap does not mean doing nothing else. It means being smarter about where to point other policies, targeting then in places the ETS does not reach or might not reach adequately. Where possible, use cost-benefit analysis to check policies are cutting emissions at a high-enough rate to justify their cost, taking proper account of the effects of the ETS. I say “where possible” because research is something that cost-benefit analysis may not be much help. But fill your boots on feebate and harbour crossings.

Just one of the [Commission’s] 1000 technical references is a well-published economics article. This, by the way, rates subsidising electric vehicles as the highest-cost of all known climate policies.

An indictment of the Commission. Naturally, having shown EVs underperform other technologies with the one piece of economic evidence they cite, the Commission recommends accelerating the uptake of EVs.

So, what to do? The Climate Change Commission has, in just a few months, seriously outgrown its boots. The Government should step in, and with polite thanks for their efforts, de-commission the commission. It should then persuade a super-smart mid-career research-grade Kiwi economist – tough-minded but humble (they do exist) – to take the reins of a slimmed-down secretariat.

This is a pretty robust conclusion. However, the Climate Change Commission arguably exceeded its legislated mandate in its first report, and its emissions reduction plan threatens our emissions targets. Those two problems are serious enough to fully justify Hazeldine’s conclusion.

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