ETS passed: did science get enough of a look in?

Friday, 12 September 2008, 11:23 am
Press Release: Science Media Centre

SCIENCE ALERT: The ETS bill is passed, but did science get enough of a look in?

The emissions trading scheme (ETS) legislation, which passed on a 63-57 vote after its third reading in Parliament on Wednesday night, sets limits on the amount of greenhouse gas sectors of the economy can emit.

Farmers and large industries have attacked the bill. Others say that while well meaning it will do little to counter the effects of climate change. What science underpins the legislation and what input did New Zealand scientists have during the drafting of the bill?

Key points:
- The Government accepted the climate science of the Intergovernmental Panel on Climate Change as underpinning the need for the ETS.

- Scientists at research institutions such as NIWA and at the Ministry for the Environment were briefed and the Government's Climate Change Leadership Forum has had some scientific input.

- Experts say the interaction of science and economics will need more evaluation as the scheme comes into effect.

Experts comment:

Professor Jonathan Boston, Director of the Institute of Policy Studies, Victoria University.

"The rationale for an ETS rests on the presumption that the mainstream science on climate change, as reflected in the four assessments of the IPCC, is correct. So, in this regard, the legislation can be said to have a firm basis in the relevant science, and is taking the science seriously.

"The legislation is largely a framework document. There are lots of details to be worked through via regulations, etc. The legislation is bound to be amended many times over the coming years (in response to scientific evidence, international developments and political pressures, etc.), so the precise details of the current Act are not as important (in my view) as the fact that, finally, New Zealand has introduced a mechanism for placing a price on GHG emissions.

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"I do not know what specific recommendations and submissions that specific scientists (or organisations representing scientists) have made on early versions of the legislation. I cannot answer the question, therefore, as to whether scientists recommendations have been taken on board or ignored: but I fear one could write a book on the subject! After all, there are many different views amongst scientists on many of the relevant issues, including optimal emission reduction paths, stabilization targets etc.

"Regarding political compromises: of course, there have been many. The main thrust of these has been to slow the process of implementation of the ETS -- by bringing in various sectors at a later date and putting back the dates when emitters will finally have to buy all (rather than just some of) their allowances; to this extent, the legislation will be less effective in reducing emissions than would otherwise have the case. Against this, New Zealand is committed to Kyoto and is bound by the caps set for the first commitment period (2008-12). Hence, the slow implementation of the ETS will not affect NZ's international obligations; it will mean, however, that New Zealand will probably need to purchase more Kyoto compliant emission units than would otherwise have been necessary."

Recent papers by Professor Boston on climate change policy:

Global Climate Change Policies: From Bali to Copenhagen and Beyond
http://ips.ac.nz/publications/files/87701057d45.pdf
Towards a New Climate Change Treaty
http://ips.ac.nz/publications/publications/show/215

Professor Martin Manning, Director of the Climate Change Research Institute, Victoria University:

"An additional point would be that as we evolve from the framework of the ETS legislation to the details of its implementation, we will need to consider the interaction between the science and economics of climate change in more detail than has been done so far.

"NZ is more sensitive than other developed countries to how trade, agriculture and forestry are treated in the international policies and then to how those are interfaced to our ETS. The types of analysis we will need now to move forward will have to start from the basic science and deal with issues like the short lived effect of methane on climate versus the irreversible effects of CO2 in relation to long term targets. The whole area of interfacing our domestic ETS to our international commitments and the nature of those international commitments deserves far more detailed scientific and economic analysis than has occurred here so far.

"While we need to study the details of our own circumstances as above - because no one else is going to do that for us - there is a flip side in that we are going to have to set up processes that allow us to learn quickly from experience overseas with different regulatory and legislative approaches used elsewhere. This may be most important in relation to Australia and the linkages we should establish between our two countries should involve a strong science component."

Dr Suzi Kerr, Senior Fellow at Motu Economic and Public Policy Research and the only New Zealander commissioned by the government to peer review the proposed ETS framework:

"Economic analysis was reasonably well incorporated in the ETS. However, the government had a limited body of empirical research to guide their decision-making. This is partly because these are new issues globally and partly due to New Zealand's relatively limited capacity for economic analysis.

"Existing economic analyses point towards two possible issues which may justify further attention as the policy evolves. The first is to include a carbon price cap or safety valve in the early years of the system. This would provide more certainty while the economy comes to grips with the system and while international carbon markets develop. The second issue of potential concern is the currently very high levels of free allocation which are costly to tax payers.

"Many of the outstanding issues where economics is important will be addressed in the regulations rather than the legislation ï¿½" the practical problem of putting the legislation into effect. The challenges here go beyond the ETS alone. It is difficult to combine research with policy making, especially when the research is very much in the early phases. It is also difficult to get genuine constructive discussion between the private and public sectors. The agencies are trying hard at this and doing better than they have previously, but there is still room for improvement.

Dr Kerr's review of the proposed ETS (November 2007):
http://www.mfe.govt.nz/publications/climate/review-proposed-nz-ets-nov07/review-proposed-nz-ets-nov07.pdf

Graham McKerracher, senior communications advisor for climate change, Ministry for the Environment

"In creating the Emissions Trading Scheme the government accepted the science of the Intergovernmental Panel on Climate Change in its Assessment reports that there is 'unequivocal evidence that climate change is occurring' (ETS is an evidence based policy). In response to the scientific evidence the government developed an economic policy to reduce emissions by putting a price on carbon.

"During the evolution of the scheme scientists from NIWA and the Ministry for the Environment (MfE) were briefed and kept the officials that were putting the ETS together briefed on the likelihood of reducing emissions from the agricultural sector in the short term. Some like David Wratt at NIWA and Sue Suckling (former chair of NIWA and Agriquality New Zealand) are on the Climate Change Leadership Forum (CCLF). While Len Brown at MfE and Chris Livesey at MfE were and still are involved in providing information to the Climate Change leadership forum.

"CCLF was established in September 2007. The Forum has 33 members, including six government chief executives and private sector participants from the agriculture, electricity, forestry and industrial sectors. Additionally members also cover the science, environmental and local government sectors and there are 3 Maori representatives. Its purpose was to facilitate communication between the government and the broader community as policy decisions are taken on the proposed design of a New Zealand Emissions Trading Scheme (NZ ETS). The Forum provided an opportunity for community and business leaders to air their differing views on emissions trading and wider climate change policy as well as an opportunity to help shape the design features of the NZ ETS. Now that phase is finished the group is now focusing on business opportunities brought about by the ETS.

"Technical Advisory Groups (TAGs) were also set up to advise those developing the ETS policy. On the Agriculture Technical Advisory Group there are representatives from AgResearch and the College of Sciences at Massey University.

"The Stationary Energy and Industrial Processes TAG, while not containing any dedicated 'science' stakeholders as such contains a number of technically skilled engineers/ industry experts. I note that although they are not stakeholders, departmental consultation has included MoRST and science advisors from MfE and MAF. EECA has also been consulted on aspects of the policy.

"There have also been science agencies engaged as consultants on aspects of the scheme (for instance CRL Energy Ltd prepared a report on Synthetic Greenhouse Gases in the ETS). Consultation on the Bill and on the Framework for an Emission Trading Scheme document was of course also open to submissions from science stakeholders."

ENDS

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