Great Society

The case for a carbon dividend in two charts

A carbon dividend takes the revenue from auctions of emissions units for the ETS and gives it back to households. This year, the sale of emissions units will raise around $1.3 billion.* That is around $750 per household. The following two charts show a) low-income households spend more of their incomes on carbon than other…

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Not about emissions

With its Emissions Reduction Plan released last week, the government is promising unprecedented control over every aspect of your life. How you move. What you eat. Where you live. How you heat your home. It is little short of a revolution. Between its emissions plan and next year’s Budget, which will also be about climate…

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How do officials think about the costs of expropriation?

The government has introduced legislation which will allow the Minister of Health and the Director General to take over private companies doing COVID testing (further description is here). The likely target of this change is Rako, which has sought a commercial negotiation with the government for the last year. The amendment, which is before the…

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Just when you thought it could not get any worse

Having banned saliva testing for more than a year, the government is now proposing to take it. As in, expropriate inventors and manufacturers of COVID testing products. Newsroom ($) quotes the Chief Executive of Rako, Leon Grice: There is other legislation where the Government can come in and expropriate or requisition private property – that’s…

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A climate policy framework

John Cochrane has written a long essay in National Review called ‘Climate Policy Should Pay More Attention to Climate Economics’ with a subtitle of ‘Without numbers, we will follow fashion.’ The article is beautifully written, hardly a single one of the 3,500 words is wasted. In arguing for economics in climate policy, Cochrane covers many…

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The ETS is extraordinary

Just a reminder of what an extraordinary achievement the New Zealand Emissions Trading Scheme (ETS) is. Introduced in 2008, the ETS covers around 96% of GDP. Apart from the carve-out of agriculture, the ETS has no domestic exceptions. Many offshore schemes exclude small businesses, and/or transport. Ours does not, making it probably the most comprehensive…

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Big picture, people

According to a tweet by the NBR, pundits are calling the Emissions Trading Scheme (ETS) dysfunctional after its $50 price cap was breached at Wednesday’s auction. Big picture, people. Wednesday’s auction was roaring success for the credibility of the ETS system, of the government’s emissions budgets, and of the political sustainability of a carbon price…

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Only ten beers on the table

The response by James Shaw to today’s breach of the ETS price cap has reminded me of the most helpful analogy I have heard to describe how a binding ETS cap really does neutralise every policy under the cap under nearly all foreseeable circumstances. The analogy comes from Eric Crampton. It involves beer. To recap…

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Why not subsidise more EVs, Minister?

This morning’s Emissions Trading Scheme (ETS) auction resulted in a clearing price of $53.85, breaching the $50 price cap. The government issued an additional 1.6 million ETS emissions units from a reserve to defend the cap.* These extra units will raise New Zealand’s emissions by 1.6 million tonnes. The law requires the extra units to…

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How much land do we really need to plant with trees?

Both the government and the Climate Change Commission have misrepresented how much land will be covered in forests in 2050 with current emissions policies. In its final report, the Commission told the government the existing policies and the Emissions Trading Scheme at $50 will deliver net zero emissions in 2050. That extraordinary finding put a…

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Keep climate policy focused on the social cost of carbon

A new paper in the journal Climate Policy says “Keep climate policy focused on the social cost of carbon”. Its abstract: In the context of climate change, the application of cost-benefit analysis to inform mitigation policies can help to achieve the best outcomes and avoid the worst: spending trillions of dollars but failing to get…

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Another reason to love natural gas

Natural gas does not just save us from burning coal. It saved us from nuclear. In the 1960s, nuclear power was seriously considered for this country until the discovery of the Maui gas field in Taranaki 1969: In 1968, the national power plan first identified the likely need for nuclear power in New Zealand a…

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The iron law of electricity

My Insights #2 this week: Events have rather overtaken last week’s blackout. The outage on the evening of 9 August left 35,000 households in the dark for up to two hours on the coldest night of the year. This week we published a paper on the blackout by Carl Hansen, the former Chief Executive of…

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Numpties

Let’s Get Wellington Moving wants to spend $350 million to reduce emissions by 1,000 tonnes. That is a bad deal – for you, the environment, just about everyone except Let’s Get Wellington Moving, it seems. Here is part of the summary of a plan called “City Streets”: Let’s pretend for a moment that the government…

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New competition for the Flat Earth Society

Supermarkets are easy, apparently. So easy, according to this article on Stuff, that you can set up and run a chain of them and at the same time “actively work towards other government goals across the environment, technology, business, and the labour market.” What does that mean? The author helpfully explains (I am not making…

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Opening statement on the Natural and Built Environments bill

My opening remarks to the Environment Committee this morning on the Natural and Built Environments bill, which will replace the RMA: Any planning system must allow trade-offs between competing outcomes. Property rights confront owners with some but not all of these trade-offs. The reforms should be based on understanding which trade-offs the planning system needs…

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How Musk deals with complexity

Elon Musk has given a personal tour of SpaceX’s Starbase at Boca Chica in Texas to a Youtuber, Tim Dodd aka the Everyday Astronaut. You can see the first part of the interview here. Musk’s interview is in his capacity as Chief Engineer at SpaceX. Musk is also the CEO of Tesla and a founder…

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Kiwi Olympics

My article in this week’s Insights newsletter. It is a #3, the third item in the newsletter which is always an attempt at humour. You can sign up to our weekly newsletter here. — Dear International Olympic Committee, Please find attached our bid to host the 2036 Olympics Games in Wellington. We noticed that at…

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Time to get real about emissions

It is nice to see others point out the consequences of an emissions cap. Thomas Lumley gets the logic of an ETS: We’ve got a cap (more or less). One of the non-intuitive aspects of having a cap rather than a fixed price is that parallel efforts to reduce carbon emission don’t work the way…

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Submission on the Natural and Built Environments bill

I wrote the submission by the New Zealand Initiative on the exposure draft of the government’s Natural and Built Environments bill, or “NBA.” This is the first of three bills that will replace the Resource Management Act. We do not have undiluted praise for the bill. I will post more on it soon. For now,…

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Forest fires and the power of emissions accounting

It seems forest fires on the west coast of the United States are threatening access to carbon offsets used by BP and Microsoft among others. Some have claimed forest fires mean the carbon captured in forests could be less than permanent. Here is the Climate Change Commission in their final report (p65): Climate change exacerbates…

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“Urgent”

Carbon News reports: Research commissioned by Beef + Lamb New Zealand has found that about 26,550 hectares of farmland has been sold to “carbon-only” entities since 2017… “Without urgent action, the sale of sheep and beef farms into forestry will only accelerate as the carbon price increases…” According to Stats New Zealand there were about…

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Says it all, really

The Gisborne Herald reports: Mr Robertson described the report of the independent Climate Change Commission as “the most important document of my political lifetime”. Robertson is talking about a report that says we should spend 5-10 times more than necessary to cut emissions, threatens our emissions targets, is filled with untruths and rhetorical tricks, and…

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New Zealand emissions are falling

After peaking in 2006, net emissions of greenhouse gases from this country have fallen materially. Since 2006: Net emissions including agriculture are down 6.7%. Net emissions including agriculture per capita are down 22.1%. The gap between these two figures is population growth. Between 2006 and 2019, the population increased 20% from 4.2 million to 5.0…

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What today’s carbon price can tell us about the next ETS auction

For two weeks now, New Zealand Unit (NZU) prices have stabilised at just below the ETS price cap of $50. This morning, NZUs are trading for $48.12. It is possible that the price of NZUs on secondary markets will rise above the $50 cap. Were that to happen, it will be advance warning that the…

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Why so angry?

After a recent article in the Herald (ungated version here) I received the following email: I realise that your objective is to advance a right wing agenda rather than provide factual information, but I was sufficiently annoyed by your article that I have provided media with the attached more informative article, to help people understand…

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A solution searching for a problem

John Cochrane may be grumpy but he is possibly my favourite living economist. In this article he makes a number of great points about climate financial risk. Here are two: The idea that climate change poses a threat to the financial system is absurd, not least because everyone already knows that global warming is happening…

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The best solution to the ETS price cap is to dump it

With prices turning vertical on the Emissions Trading Scheme (ETS) over the last two months, the government finds itself exposed to fiscal and reputation risks. These risks do not come from the price increases per se, but from the way the price cap mechanism introduced to the ETS this year. The price of carbon on…

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Wear it with pride, New Zealand

Carbon News ($) reports New Zealand is not using climate change policies to manage public health. Public health is desirable. So it is very much a good thing that we have public health specialists who know what they are doing when it comes to public health how to deliver public health. Making climate scientists and…

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