Moderate predictions calm the carbon debate

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Moderate predictions calm the carbon debate

Phil O’Reilly

Climate science relies on computer simulation of thousands of variables. As with any computer simulation, the more relevant information gathered, the better the output.

The UN’s latest IPCC (Intergovernmental Panel on Climate Change) report shows scientists gaining a better understanding of the relationship between the variables, and expressing more confidence in the results.

As confidence in the data grows, the projections are getting more moderate, for example the IPCC is now suggesting a 38 centimetres rise in sea levels by 2100 - much lower than earlier predictions.

38 centimetres is a long way from the devastating six-metre rise portrayed in Al Gore’s An Inconvenient Truth.

It tells us there are dangers in over-reacting to incomplete data.

Some of the more extreme recommendations of recent years would have crippled our economy, with the loss of major industries and a large reduction in farm stock levels.

And given that New Zealand accounts for only .02% of global emissions, restricting our industry and farming emissions would have been basically useless in global terms.

There will be some relief in the business community at the moderating of the climate change predictions coming from the UN.

Business believes energy efficiency and reduced emissions make businesses sense as well as environmental sense and there is overwhelming support for sustainable stewardship of the environment. There is widespread business support for a careful risk-management approach to the environment.

At the same time, there is an acute awareness of the need to protect our international competitiveness, since our small size means we must export to keep a good standard of living. Carbon taxing New Zealand businesses would weaken their competitive position, as many overseas competitors will face no such taxes.

Protecting the environment doesn’t have to harm business competitiveness, nor does business competitiveness have to harm the environment. We can choose policies that maximise benefits for everyone, instead of punitive carbon policies that create winners and losers.

What needs to happen now is increased dialogue between Government and business with a view to getting economy-wide support for more sensible measures to reduce emissions. Business is heartened by the renewed commitment to dialogue shown by the Government and Energy Minister, and would welcome further discussion. The more moderate predictions coming from the IPCC should allow a calmer, more reasoned climate in which to debate the options.

Business NZ members have contributed many options for consideration and would welcome the opportunity to discuss new ideas, including more efficient uses of existing energy resources, demand-side management of energy needs and development of cleaner energy sources.

Business NZ, with several large industry members, is funding a significant investigation into options for a workable emissions trading scheme. We want to find a formula that works well for all sectors and all sizes and types of organisations, that is voluntary, does not harm competitiveness, and that is capable of integrating with trading schemes elsewhere.

It was encouraging to hear last week of the Australian Government’s Task Group undertaking a similar exercise with almost identical aims. The opportunities to share information and work in harmony in this area could possibly lead to a trans-Tasman or even larger regional carbon trading system.

It is important that voluntary action is given consideration. The EECA experiment with voluntary commitments in the 1990’s demonstrated that companies were capable of setting realistic targets and in most cases exceeded them.

Other things that need to happen now include calling a halt to the current intention to cap electricity generation and non-vehicle emissions before 2012 (2012 being the point at which current Kyoto commitments end and new measures will begin). This intention, likely to become law this year, would discriminate heavily against New Zealand businesses’ ability to compete in international markets in a year designated as Export Year.

Another priority should be to rework the Government’s draft Energy Strategy so that all of its proposals are supported by a robust cost-benefit analysis. Better cost-benefit information would reduce the risk of the exercise becoming simply a choice between slogans.

The IPCC report gives the New Zealand Government a level of breathing space in order to carefully analyse the overall costs and benefits of any proposed action to introduce a price for carbon into New Zealand in advance of our major trading partners and international competitors.

This is not the time for precipitous action in connection with climate policies - it’s time for a calm debate and reassessment of all known opportunities, risks, costs and benefits.

Phil O’Reilly is Chief Executive, Business NZ