Phil Goff announced Labour would bring agricultural livestock emissions into the ETS in 2013, two years ahead of the 2015 entry under National’s amended ETS. This would raise $800 million dollars for R & D, he said.
A couple of flags went up for me when this was announced.
Firstly if the Govt uses money paid under the ETS for things other than saving the planet, what is the point? I will come back to this.
Secondly how does the Govt get the money and thirdly the amount of $800m did not ring true.
Firstly the amount is wrong. Livestock emissions of these bullshit carbon dioxide equivalents (carbon) last year amounted to 32.8 million tonnes. Agriculture will pay 10 % of these being 3.28 million tonnes at $20 = $65 million per year. So bringing agriculture in 2 years early costs agriculture $130 million which is well short of the $800 million Goff said he would get from the farmers.
Secondly as far as I can make out the Govt does not get any money in any case. This is how it works.
A forester plants a forest. They apply to the Govt for NZ Units. The Govt creates the NZU’s and gives them to the forester. There is no cost to the Govt to do this and there is no limit on how many NZU’s they create. The NZ ETS is not linked to Kyoto, it has nothing to do with it. Besides this Kyoto expires in 2012.
The milk or meat processor has to acquire enough NZU’s to cover 10% of the livestock emissions. They pay the forester for them, or they can buy them overseas. Fonterra or the likes then surrenders these units to the Govt.
So in summary the Govt creates NZU’s and gets them back. They are bits of paper there is no money.
John Key said Goff was wrong and the Govt would get $355m. This is the right amount when you count agricultures costs over 5 years but he is also wrong because the Govt does not get any money. Key also thinks farmers will charge more for their milk when they are in the ETS pushing the price of milk up. He doesn’t even know how the price of milk is set let alone how the ETS works so we can ignore what he says. It is a worry if he thinks farmers will just pass the cost on and not be any worse off under his ETS. He needs to be told how farming works and that farm incomes will drop 10% due to his nonsense, write letters everyone
Getting back to the first point although Key and Goff are as dumb as each other on this, the fact they think money paid by emitters can go into Govt funds for any purpose such as R& D indicates they don’t really care about saving the planet.
Also wrong in all this are the politicians who think the taxpayers are subsidising farmers for their emissions. They are not because there is no money paid by anyone to anyone for these emissions. See explanation above and reread it if you need to. These emissions do not cost anyone anything and so no one pays. Remember Kyoto has nothing to do with this.
If you want to know where Kyoto fits into all of this I will explain. The first commitment period for Kyoto expires at the end of 2012 so come 2013 it will be history anyway and a 2nd commitment period looks unlikely thankfully.
Under Kyoto NZ is given(free of charge) things called Assigned Amount Units (AAU’s) equal to our gross emissions in 1990 times five. Gross emissions do not include removals from forestry.
In 1990 our gross emissions were about 61 million tonnes and so we get 309 million AAU’s being our 1990 emissions times five. That means we can emit 309 million tonnes carbon over the 5 years from 2008 to 2012.
Under current predictions we will emit 363 million tonnes but forestry will remove 80 million tonnes putting us in credit by 21.9 million tonnes or AAU’s
The emissions are all our emissions and whether the emitter bought and surrendered any NZU’s under the ETS or not it makes no difference. Surrendering NZU’s does not negate the emission as far as our Kyoto balance is concerned. The NZU’s are unrelated the only point of them is to encourage tree planting or reduce emissions so that we don’t use more than our allocation of AAU’s. Buying NZU’s does not reduce our obligations under Kyoto. Agriculture not paying for its emissions now costs nothing. When agriculture does start paying it will be 10% but that does not mean the taxpayer is paying 90%, no one is paying anything. Also agricultural emissions are up 8.4 % on 1990 so paying 10% is too much anyway.
If our Kyoto balance was in deficit we either have to buy AAU’s off another country or we can just say sorry and keep our money. The only penalty for not meeting Kyoto obligations is to surrender the extra AAU’s plus 30 % in the next commitment period. Of course there is not going to be a next one so no worries.
One thing that puzzles me is that the amount of AAU’s we get is calculated on our gross emissions but for some reason our obligations under Kyoto are net emissions (gross less forestry sinks) which is why our Kyoto balance is predicted to be 21.9 million AAU’s in credit.
I find this strange and am seeking more info but this is another example of the whole thing not making sense. In 1990 our gross emissions were 61million tonnes and we removed 23 million tonnes from forestry. Thi smeant out net emissions were 38 million tonnes. In 2009 our net emissions were up 23% to 46 million tonnes but somehow we are in credit because our allowance of 309 million AAU’s is calculated using gross emissions and our obligation of about 280 million AAU’s during the first Kyoto commitment period are calculated using net emissions. ????
Complicated I know but you would think Key and Goff at least should know how it works.