Tuesday, 17 April 2012

Agriculture and the ETS

Federated Farmers asks the right question:
The Ministry for the Environment is also starting a series of regional ETS consultations as a pre-regulatory move; change is on the way. What we do know is that Kyoto's first commitment period comes to a halt at the end of this year and we have to set a national "carbon budget" to 2020. Will we sign up to Kyoto's second commitment period or revert back to United Nation's looser Framework Convention on Climate Change?
Big emitters in the G10 members have signaled retreat. Canada, Japan and Russia have all stepped back from Kyoto while the United States never made it to the start line. Minister for Climate Change, Tim Groser, believes we have to have an ETS or overseas trade will become problematic. That's incorrect. Canada, when faced with a multi-billion dollar bill for its coal fired power stations, withdrew from the Kyoto Protocol last year. There has been no impact on its exports and not even calls here to boycott Maple Syrup. We are also yet to see Greenpeace activists chaining themselves to Toyota dealerships, in protest of Japan's decision not to sign up to a second commitment period.
I'm generally a fan of revenue-neutral carbon taxes set at relatively low levels but capable of being ramped up as more of our trading partners adopt them. But I've also wondered whether we'll be Python's lonely Sergeant-Major marching up and down the square by himself on Kyoto penalties, with the rest of the squad headed off to see a film. Recall that Kyoto penalties are only binding if we choose to sign on for the successor agreement. If few are signing on, there may be more effective things we can do on climate change than buying carbon credits from defunct Russian factories.


  1. I strongly encourage you to read the following proposal on a form of Carbon Tax, if you haven't seen it before, Eric. It is 5 years old.

    Ross McKitrick's T3 Tax

    It seems a rational and fair suggestion to me. What do you think?

    1. I'd looked at it a while ago; I'd thought a reasonable problem is that it's potentially too responsive to short term cycles versus long term trends. But yes, there should be feedback both from temperature and from advances in the science.