Global Warming and Kyoto Becoming Decoupled

22 October 2005

Global Warming and Kyoto Becoming Decoupled

Events relating to the Kyoto Protocol on climate change are continuing to move at speed.

It may turn out that one of the most significant was the statement by British prime minister Tony Blair in New York last month. Blair, a longstanding supporter of the Kyoto treaty, prefaced his remarks by saying he was going to speak with “brutal honesty”, and acknowledged that his thinking on the matter had changed.

“The truth”, he said, “is no country is going to cut its growth or consumption substantially in the light of a long-term environmental problem.”

That is, no democratically elected government could impose large economic costs on its citizens today for minimal environmental benefits a century into the future.

That much has been obvious to thinking observers for years. If the case for such action were robust, governments could have hoped to carry their electorates with them. It never was, and unsurprisingly Kyoto appears to be falling apart.

Even weaker was the argument that although meeting Kyoto targets would not achieve much, more stringent action could be taken in the second commitment period (after 2012) and beyond. That was like expecting future governments not just to shoot themselves in the foot but to blow off their legs.

It cannot be too strongly emphasised that the current debate is not about whether global warming is happening or not, or whether whatever warming there is can be blamed on human action. It is about whether the Kyoto Protocol makes sense as a response to any problem.

In New Zealand’s case, the logic that appears to have driven Blair to change his mind is even more compelling.

A report for the Greenhouse Policy Coalition by economic consultancy firm Castalia released this week makes it clear that it will be impossible to meet our Kyoto targets without causing unacceptable economic hardship. It explains why policy to date was based on false premises regarding the potential for energy efficiency improvements, structural changes in the economy and the benefits of forestry sinks.

By 2012, New Zealand’s emissions are expected to exceed its Kyoto target by about 35%. With nearly 50% of New Zealand’s emissions coming from agriculture, and other industries having to be shielded to prevent carbon ‘leakage’ to other countries, achieving the necessary level of emissions reductions from other industries and households is simply out of the question.

Many other countries including Canada and Japan, and even the European Union as a whole, are also well off a path to reaching their targets. Only countries whose economies have collapsed since 1990 or that have been able to switch easily from coal to gas (like the United Kingdom) have achieved significant emissions reductions. Generally, countries with growing economies and populations are projected to increase emissions until such time as new low-carbon technologies become available.

These developments come on top of the recent discovery that New Zealand faces a fiscal liability of over $300 million in the first commitment period, a House of Lords committee report questioning the objectivity of the Intergovernmental Panel on Climate Change, signs of second thoughts by other governments, and the government’s decision to review its climate change policy. The British government has just announced a similar review.

What is likely to happen? Prime minister Blair made it clear in New York that Kyoto or a successor treaty is not the answer: “What countries are prepared to do … is to develop the science and technology [otherwise] there is no way we are going to tackle this problem.”

Promoting technological advances and delaying action, if it proves warranted, until the economics stacks up is what eco-realists have been saying all along. It is also essentially the approach that the United States, and now the wider Asia-Pacific group which also includes China, India, Japan, Australia and South Korea, is promoting.

Two parties with support arrangements with the new government have positions on Kyoto that differ from those that Labour and the Greens took into the election, and the government has agreed to a review.

Especially pleasing is the provision in the agreement with United Future that “a new cost benefit analysis of the proposal to introduce a carbon tax as part of our Kyoto obligations will be conducted and no legislation will be introduced before the analysis is completed.”

No competent analysis of this sort was done before New Zealand ratified the Kyoto Protocol, and the costs of the decision were seriously miscalculated. This was a gross failing on the part of government agencies, and chief executives should be held to account. Governments cannot be expected to make sound decisions in the absence of competent analysis.

Given the international developments and the compelling evidence in the Castalia report, it is to be hoped that logic and politics come together to evolve a better, post-Kyoto, New Zealand approach to climate change. Roger Kerr is the executive director of the New Zealand Business Roundtable.

ENDS

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