Restoring confidence in the NZ ETS

By Catherine Leining, Policy Fellow, Motu Economic and Public Policy Research

In the wake of releasing Budget 2014 on 15 May 2014, the New Zealand Government introduced the Climate Change Response (Unit Restriction) Amendment Bill directed at preventing “reregistration arbitrage” by post-1989 forestry participants in the New Zealand Emissions Trading Scheme (NZ ETS) (New Zealand Government 2014). The immediate passage of the Bill with effect from 16 May 2014 provoked strong protests and has implications for the future operation of the scheme. This situation highlights how a loss of confidence in Government rulemaking can weaken economic incentives for sound investment decisions.

Reducing methane emissions - timing matters

By Luke Harrington

Recent climate modelling research has found that countries with high emissions of short-lived climate pollutants (SLCPs) should keep mitigation of carbon dioxide (CO₂) a top priority, and working to reduce methane emissions in isolation will not be any more effective than doing so in several decades time. In essence, “action on short-lived climate pollutants will not ‘buy time’ to delay action on carbon dioxide”, says co-author Professor David Frame, director of the New Zealand Climate Change Research Institute.

Paul Krugman: Crazy Climate Economics

Foreword by Catherine Leining

This week, we feature a New York Times opinion piece, written by esteemed United States economist, Paul Krugman. He presents an argument for informing public debate relating to climate policy in a non-partisan way, using clearly presented economic ideas. While the United States faces more issues in navigating past political ideologies that distinguish themselves by proud defiance of factual information, New Zealand has also experienced its share of uninformed political debate and lobbying that exaggerate the costs and overlook the benefits of mitigating climate change. The most recent assessments from the Intergovernmental Panel on Climate Change clearly reinforce that globally, the benefits of reducing emissions far outweigh the costs. In New Zealand’s case, we need to thoughtfully apply wise climate economics as we prepare our emissions-intensive economy to compete under increasing global carbon constraints and encourage other countries to take effective action.

The Science of the ‘Trillion Tonne’ Limit

By Luke Harrington

A recent post by Catherine Leining, ‘The trillion tonne challenge: Think cumulatively, act immediately on infrastructure’, explores the significance of limiting our cumulative carbon emissions to one trillion tonnes, and how keeping to such a target might be approached. But where has this number come from? How is it calculated? And why is it such a significant realisation when it comes to defining mitigation targets?

Who is taking smaller bites out of climate stability?

By Corey Allan, Research Analyst, Motu Economic and Public Policy Research

How should we compare efforts to reduce greenhouse gas emissions across countries? The Kyoto Protocol focuses on production emissions, which are the emissions resulting from the production of goods and services. But what is the point of production? Would we produce goods if there was no one to consume them? In a globalised world, production will move from one country to another if there is still sufficient demand for the output. So is a country really contributing to the reduction of greenhouse gas emissions as much as it appears if their production emissions are falling, but their consumption of emissions-intensive goods remains unchanged?

Researchers at Motu, and a student intern from Stanford, have just released a preliminary analysis of the emissions associated with household consumption in New Zealand.  The analysis shows that the composition of consumption emissions can differ significantly from the composition of production emissions.  The difference is particularly salient for food emissions, as you can see from the two charts below: