The NZ government has announced a delay in implementing the proposed Emissions Trading Scheme. The 5 year pushback for the transport sector comes at a time when fuel prices are going through the roof and the government is concerned about the impact of further price rises on consumers.

Forgive me for wondering if that isn’t the whole point. First up it was the carbon charge which was dumped back in December 2005 and now the brand spanking new ETS which looked full of holes and now is barely recognisable as a piece of effective policy.

The main concern cited by “critics” is that higher costs may be passed onto consumers. Well the goal of the carbon charge and the ETS is to raise prices in order to lower demand. However, fuel prices are generally regarded as inelastic i.e. demand does not fall as prices rise, which consigns a price approach to the bin. Of course, there is some level of price at which demand will certainly fall. According the research it is when the price increase exceeds income rises i.e. the is the affordability as opposed to higher prices.

Or to put it more succinctly as long as money is available fuel will be purchased regardless fo the absolute price. So the supply of money is a major player in this equation. Now with the credit crunch bedding down money has become less available and so the impact of higher fuel prices is starting to kick in.

So given fuel prices have nearly doubled in the last 3 years, one would expect to have seen a huge fall off in fuel consumption. This has not been the case.

One can conclude that price measures will not reduce emissions and therefore any policy based on this approach is doomed to fail.

Why, you may ask, is no one clamouring for quotas to be implemented? The answer to that is very simple. It’s too hard.

So let’s keep pouring millions of $ into schemes that won’t do the job and keep the veneer of pretending to do something about climate change. They’d be better off spending the money on something important like child poverty and education.

Global leaders are shaping up for talks on a binding reduction in global greenhouse gas emissions. The EU Environment Commissioner is the in US for talks on this very subject. The US say they are ready to move forward on this thorny issue but want all countries to make similar reductions. This is not music to the ears of the Chinese who will continue to trumpet the issue of per capita emissions as opposed to total emissions.

No doubt they will all keep knocking this ball around until someone caves in. But why bother? It’s simply the wrong approach. At the moment we have a free energy market (actually its dysfunctional but that’s another story) where people can choose to buy what is offered. If we want to reduce greenhouse gas emissions we simply need to reduce the amount of fossil fuels available to create them.

Then just leave the market to operate as normal. Simple.

I know I’m restating my position on this but the longer this goes on the more clear it becomes

It’s good that the water debate is starting to take more shape. In the main we have struggled with the idea that we should pay for it and how to construct proper markets around it. Some places meter water and some don’t but as we know it’s hard to manage a resource if you can’t measure it use.

So it’s refreshing to see a piece in The Press  on the need for a water market to be constructed to provide an efficient allocation of this precious resource. As I’ve discussed many times, a resource with no price will be treated as if it is free. For many people water is free and always has been but now there are competing claims on water. In New Zealand this is primarily from agriculture with huge demands for irrigation from the dairy industry, which converts water into milk on an enormous scale.

Initial objections are alway around the issue that water is a necessity for life and should therefore be free.  Well so is food and shelter and they aren’t. We have lived with the false notion that water will always be plentiful and is a constant renewable resource. Tell that to Australian farmers who have suffered a 5 year drought in many areas. Water availability is subject to climatic variation and to overuse. Just look at the state of NZ rivers and lakes which are well known to have experienced a serious decline in quality over the last 20 years of intensive farming.

It’s fairly simple to make sure people are allocated a fair supply of free water to assuage those who believe they shouldn’t pay for it but anything above a basic amount should be paid for just like our energy.

It’s only through the pain of payment that we really focus our efforts on conservation, efficiency and alternatives.

It’s time we got on with this whilst we still have water to charge for.

Finally some research has been done on the effects of bio-fuel crops on the ecosystem. As widely expected the research has shown that bio-fuels can be highly destructive on the environment as well as actually adding carbon into the atmosphere.

So much for being the replacement to fossil fuels.

This a prime example of doing something because it looks like the right or a good thing to be doing. Those people with prescriptive views on how we should live our lives rarely take the trouble to do the sums and that’s where the problem arises.

Until we start to price up environmental externalities and let them flow through the price mechanism we will not get to see the true cost. So we will keep doing things because they feel good to us or they remove some embedded guilt about the way we use the environment.

The market is working in an inefficient manner and the environment continues to suffer because of it. Many environmentalists have a big grudge against the market perceiving it to be a monstrous creation of the capitalist machine. They are sadly mistaken. The market is how we show the real value of the environment to everyone not just those who think humans are a stain upon it.

Now I don’t want to tar all bio-fuels with the same brush. Bio-diesel from algae for example is using a waste stream and an easily grown input. Large swathes of forest don’t need to be cut down for this process.

But until we see the costs flow through the system we just don’t know.

So after the environment minister said the 13th chapter was inaccurate, it gets released. How ridiculous is that?

How can anyone have any faith in a government which is so transparently incompetent. It’s good to read Simon Upton calling for the Parliamentary Commissioner for the Environment to take charge of the next report.

13: unlucky for some.

I wasn’t going to bother with this really. Who needs another dose of reality? But there is an interesting story here.

The Greens have come out with a story about a buried chapter in this report. They claim that Chapter 13 was pulled due to a very negative slant on the dairy industry. It pointed to dairy as the “largest cause of environmental decline” in New Zealand. Anyone who likes to swim in their local stream, river or lake could attest to that.

The dairy industry is also one of the biggest earners for the country. There you have it. New Zealand is no more immune to political lobbying than any other country except its pretty transparent. It’s hard to keep anything a secret here.

The Greens propose that this report come under the auspices of the Parliamentary Commissioner of the Environment rather than the government.

Yes to that!  The government simply cannot be trusted to be objective. Yes it’s a sad statement to make but that’s the way it is until we get a more distributed form of democracy and power.

If you can’t sleep then here is the link to the various reports.