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

So finally the US capitulates and agrees to be part of talks in 2 years time that will look to make deep cuts in global emissions. Yet the reality, as reported here, is that not much has changed. The US still won’t budge on developing nations (read China and India) and still won’t provide any meaningful targets. It’s interesting that without Australia alongside they are looking very much alone on this issue.

Arguing over who is responsible and who must cut what is really a waste of time. It’s not an argument that can be won by either side. The simple question to be asked is whether global emission levels need to be reduced. If so then they need to be reduced through a global mechanism such as I have proposed in Climate Control where emissions will be reduced by virtue of a quota agreed at the point of extraction not use.

Otherwise we might as well stop wasting our time and focus on adapting and developing cheaper supplies of energy.

A couple of weeks ago I attended a PM forum in Christchurch. It was a chance to hear Helen Clark and her Ministers talk about the new Emissions Trading Scheme that they had just put out. I’ve tried to wean myself off climate change conferences because in the end they are all pretty boring and generally say the same thing: the world may end in a flood of seawater and we need to get cracking by x% right now.

What always surprises me is that no matter how many calls for action there are very little has been done to really restrain emissions. Why is this? Well quite simply this is a very tricky issue. Economic growth is not going to be sacrificed on the altar of environmentalism or, more to the point, an outcome where there is uncertainty. So it drags on. China continues to expand its economy at a fierce pace and shows little interest in reining in its emissions insisting that it’s full steam ahead.

So in come emissions trading schemes: carry on as normal but buy your way to heaven via a piece of paper saying “1 tonne of carbon”. If it sounds like a papal remission that’s because it’s pretty close.  It’s a piece of paper you get for money which blesses your wins away.

The problem is quantifying and packaging a tonne of carbon or equivalent. How can we be sure that people will get what they pay for. This is where certification comes in. We need an agreed international standard and a single market. After all there’s only one type of carbon just like there is one type of gold. Its not like crude oil where there are different prices for different types.

Another issue is the changing science. For example, if forests are used as credit generators because of their ability to sequestrate carbon, there is a possibility that the amount the sequestrate may change over time either due to ecological reasons or a change in the understanding of how and how much they actually lock up and over what time period.

As a business having to purchase carbon credits on paper I would be crossing my fingers and hoping it all works out otherwise i might be out of business.

There is also a concern about the over issuance of paper credits. As readers will know they fractional reserve money system we have started life in a similar fashion: an underlying quantity of a commodity on which paper bills were issued. We know the outcome of that, a money system with no control.

From what i have seen this issues haven’t been covered in enough detail. I can still envisage a scenario where the carbon credit market takes off but overall emissions are not reduced. The goal of all this is to reduce emissions not create a huge market in carbon. But for now its the easy way out and politically more acceptable. Trees can take the slack for now and maybe technology can takeover at a later date.

Leo Hickman, a Guardian columnist, published an interesting book called “Final Call - In search of the True Cost of our Holidays”. Its reviewed here and I’ve made a few comments on it.

Eco tourism is all the rage these days and rightly so. We should always consider the impact of where we go and what we do. But as consumers of goods, services and exotic holidays we expect the price to reflect the cost of what we are paying for. If it doesn’t is that our fault or problem?

Well that’s where the consideration or “ethics” of your decision comes into play. I’m in favour of travel as it expands the mind. body and soul. It allows us to gain a different and newer perspective on the world. But do we dare look beneath the surface as Leo has done?

I’m reminded of the excellent Stephen Frears film “Dirty Pretty Things” about the  immigrant workers who keep London going at night whilst people sleep easy. Crap working conditions for service staff are nothing new so why should it be any different on holiday?

What should happen is that people get paid proper wages and work in decent conditions. Then it’s up to them whether to take a job or not. Madeleine Bunting deals with this issue quite well in her book “Willing Slaves” which also looks at the guest worker phenomenon.

My interest is more in the environmental sphere. Simply put we should be paying the Trucost of our activities. How we get that is a bit trickier but doable.  I’ve looked at this before and having been to the UK recently its clear that this issue is center stage.

We must move quickly to connect external environmental costs with the pricing mechanism. Once a cost has been calculated (carbon, nitrogen runoff, water) then that cost gets added in at the point of extraction, abstraction or manufacture. The EC (external cost) flows back to an Environmental Contingency Fund where it sits (in sovereign bonds) until it can be put towards paying for the exact cost that was incurred, whether that is planting some forests to sequester carbon, cleaning a river or fencing land or implementing new water management processes.

As much as we would like it to be, it isn’t (as yet) an exact science. But it will alert consumers to the true cost of the good and allow them to make more accurate purchasing decisions.

Then maybe we can actually enjoy our holiday instead of worrying about how much damage we’re doing to “the planet”.

Bjorn Lomborg is back with a new book and lots of publicity. Called “Cool It” it looks more closely at the benefits as well as the costs of a warming climate. What separates Lomborg from the climate change sceptics is that he readily agrees on the problem but not the solutions.

His main focus is always to step back from the hysteria and hype and look more pragmatically at the problem. I would say this is a sensible approach though it’s hard to ever get sensible debate when it comes to the environment.

Nothing else quite allows people to represent themselves as good or worthy and label others as bad or dirty.

Lomborg is not into saving the planet. He’s into calm reasoning and tries to stay within the remits of his expertise as a statistician. Interestingly enough Al Gore has been getting a judicial working over in the UK over his alarmist portrayal of the situation.

The moral of this story is that we need to make reasoned policy based on what we know and can observe. That a warmer climate presents severe challenges is not without doubt but let’s keep a clear head whilst working out what, if anything, we can do about it.

Letting issues like this develop into a battle between good and bad just leads to reactive approaches. Lomborg falls somewhere in between and is worth listening too even if just to disagree with.