Hi! I am Deirdre Kent and I live in a retirement village in Waikanae, an hour north of Wellington in New Zealand. For the last 20 years I have been thinking and writing and acting on the topic of New Economics. This site has a lot of blogs about New Economics, including a lot about my last book. However, more recently my passion has been on advocating for Whole Food Plant Based Eating. So here you will find new material on that topic.
Because I am older, I started eating this way for health reasons, although others adopt it for environmental reasons and of course animal welfare reasons. I want to stay alive and I also am glad that eating this way is one of my small contributions to reducing emissions.
I will be blogging here and giving you links to material from the various authorities on this topic.
OK here is my mea culpa on climate action. I am guilty.
Yes, even though I have read a lot about climate change and the urgency of effective action and have been duly alarmed, even though I am active in climate groups, even though I submitted to the Climate Commission, I still lapse.
This week I caught myself driving to the next town to do shopping I couldn’t do in my town. When I found myself driving the second day my thinking was, “Well I should have planned my week better, written my shopping list more carefully, but really I enjoy the outing. And I couldn’t have caught the train because my hip is too sore for all the walking.”
Then yesterday in preparation for an upcoming trip to the South Island I drove for the third time to buy new trousers although I know it is better to buy second hand ones and pick up something I ordered the previous day.
Cars are handy when the weather is inclement and when your walking is compromised. I like the convenience and the comfort. I topped up with petrol so that I am ready for more driving. Just one more trip please….
Well I guess the government is going to have to make me reduce my driving. I already eat climate friendly because I have to for my heart health to keep my ageing body alive, so no guilt there. But I never examine whether the grapes or any other food I buy is flown here out of season.
Given that I regularly fail to keep my carbon footprint low, and there are probably many others like me, I reckon voluntary reduction of our carbon footprint is just too difficult an ask. The tobacco industry always argued it didn’t need any legislation banning advertising because a voluntary agreement was in place. Farmers don’t want legislation, they will do it voluntarily. Pull the other leg!
The simple way government can do it is to ration either our energy use or our emissions. Rationing energy is easier than rationing emissions. A simple scheme has been worked out ten years ago in UK where you are given an energy quota each year, quotas are tradable and your quota reduces each year. Jack Santa Barbara has summarised your own greenhouse gas quota scheme here.
The inventor of Tradable Energy Quotas (TEQs) Dr David Fleming was an economist and so he knew:-
Economic growth is dependent on energy growth.
Therefore the economy will decline if energy use declines.
If the economy doesn’t keep growing it becomes unstable.
So his TEQS scheme was designed to prevent instability as the economy shrank. Communities with these restrictions would naturally cooperate and the economy would adjust. The “degrowth” movement now gaining momentum. This term is defined to mean degrowth of economies of the overdeveloped nations, actions to prevent financial inequality there, and growth in developing nations.
So don’t ask me to reduce my carbon footprint voluntarily. Make me!
We have now had three online meetings of those wanting to promote TEQs as described by Dr David Fleming and summarised by his colleague Shaun Chamberlin here.
The last discussion was very stimulating and it was hard to sleep that night. Five good brains agonised for an hour over whether to make the unit energy or emissions, but still no conclusion. It isn’t any good launching a campaign until we are clear in our minds of what it would be called, how it is designed and how, if at all, it would work alongside the ETS structure or replace it.
First let’s look at the history. TEQs were designed as applying to energy. Dr David Fleming wrote about managed energy descent and invented this tradable quota system to ensure a smooth descent rather than a chaotic one. But on the website the Parliamentary report of 2011states on P47 that it could be designed for emissions. It’s just that we can’t see the second design and it is far from simple to figure out what it would be.
Fleming, who died in 2010, didn’t include non CO2 emissions in his Tradable Energy Quotas and I would imagine he didn’t envisage that a country like New Zealand would have half its emissions in agriculture in the form of methane and nitrous oxide.
Josh Floyd the Melbourne researcher from the Simplicity Institute had tentatively suggested to us in an email that we use TEQs for fossil fuels and use the ETS for other GHGs. But there would be different prices for the units coming from two different systems. Someone argued that is logical because they are different gases. I don’t know the answer.
We then asked where is the public now in their thinking? Will they want to reduce their fossil fuel energy? We think they will know they have to reduce their emissions yes. Would they be more on board if the unit was emissions? Probably.
Jack brought up the idea of what happens to a society during a big disruption as he had read that research shows altruism dominates the responses during big disruptions. (Think Christchurch earthquake and the 2020 lockdowns). Then someone asked if we could somehow use the pandemic issue to edge into the campaign.
Every time we talk to someone new about whether we want Tradable Energy Quotas or Tradable Emissions Quotas they answer the latter. But let’s think a bit more.
Ideally it seems people would like it to be Tradable Emissions Quotas (TEQs). As yet we not really sure whether the data is there for making this feasible. TEQs were originally designed to be Tradable Energy Quotas, but since in New Zealand half our emissions are from methane and nitrous oxide from agriculture, and we know we need to reduce all the greenhouse gases, we instinctively choose emissions as the unit.
But let’s suppose the technology and the data is now available to make the unit for the quota “emissions” and see what happens.
There are two ways of measuring emissions – production based and consumer based.
The IPCC has asked countries to use the production-based as the way to count our emissions. In the case of Aotearoa New Zealand we import manufactured goods with embedded carbon dioxide and we export food with embedded methane and nitrous oxide emissions. Using the the IPCC method means we must measure all our emissions from agriculture and waste as well as from industry and transport. And that is why, when we try to invent a Tradable Emissions Quotas and plan to do it on consumption data it just doesn’t work.
And the design still has to be worked out. In the case of Tradable Energy Units the TEQ scheme only wants us to surrender units when we buy fossil fuels or energy. The units go up the chain to the producer or importer and then to the registrar. When we buy items of services with embedded emissions we don’t surrender units, as the price is already reflecting the embedded emissions. In the case of emissions being the unit, there is nothing comparable to fossil fuels.
Also you can think of it this way:-
If we bring down energy use, we will bring down emissions too.
But if we bring down emissions there is no guarantee we will bring down energy use and this will lead to ecological disaster. In fact Dr Rodney Carr in answer to a question on a Climate Commission webinar said our energy would be the same in 2050 as it is now. And our GDP would have increased by 73% with all the material throughput that implies.
I have been reading the chapter in Jason Hickel’s book Less is More called Can Technology Save Us? There was lots of data and science reported. He eventually dismisses green growth as a fantasy.
I asked Professor Robert McLachlan this and he answered, “Cutting down more trees than we planted wasn’t so great but the bigger impact of trees in our climate policy has been to delay getting out of fossil fuels. We put all our eggs in the domestic & international carbon trading basket, which fell apart in the 2010s. Now we’re trying more tools. We didn’t have to get out of generating electricity from coal as UK did.”
In the past its main flaws were:-
political football, e.g. as soon as it was set up National campaigned to weaken it, removing agriculture and giving everyone a 50% discount, only recently phased out.
no cap on emissions.
was designed to work together with international markets, but these failed. NZ was a major party to the biggest carbon trading scandal of all time.
carbon price too low.”
He is merciful.
Not so the late Jeanette Fitzsimons who said in 2016, “Scrap it. It fails on every count. Many suspect the design of the ETS, with no price floor and no emissions cap, was never intended to make a real difference to our climate-changing emissions. It was intended to provide a trading platform for speculators, which it has done. While all this waste of effort has been going on, the existence of the ETS has been used to justify having no other measures to address climate change.”
She said, “The purpose of a price on carbon emissions is to encourage people and firms to make better decisions in how they use energy (avoid that extra trip to town); and more importantly, better investment decisions: a wood-waste boiler instead of coal; a wind rather than gas-fired power station; a more efficient car next time. The ETS has done none of this.”
And after reading a long review of it by Catherine Leining, Suzi Kerr and Bronwyn Bruce-Brand, I can’t help but agree with Jeanette’s conclusion,”Any further public time and expense tweaking a broken system will send good money after bad, and use resources that would be better used on measures that will actually reduce emissions.” In one telling sentence at the end, they admit it failed, but they don’t comment on whether the new version will work.
Leining et al’s review goes into the painfully long history since 1993 , says the system applies to about 52% of our gross emissions, says agriculture was going to be introduced in 2013 once ( it not getting there till 2023), gives a graph showing how the price dropped from just less than $30 a tonne in 2011 to about $5 in 2013 then crept up again, and concludes that ETS was “not designed to achieve specific targets for domestic mitigation.” Then comes the punch line. “As a result, while it constitutes a functional cross-sector market, theNZ ETS has not significantly reduced domestic emissions to date” (They failed to say that net emissions had risen 60%)
They go on to say how it will be tweaked. Units will be auctioned every three months from March 2020 under a cap, which is an improvement. It will also limit participant purchasing of overseas units and improve forestry accounting.
However a major distortion occurs by giving a 90 percent subsidy to businesses who are “emissions intensive and trade exposed”. Stuff journalist Charlie Mitchell produced a comprehensive article on these industries. Australian owned Blue Scope Steel, Canadian owned Methanex, Fletchers Golden Bay Cement, Rio Tinto’s aluminium smelter and Fonterra are the biggest recipients. It is argued that some would relocate overseas if they were in the scheme.
It’s no wonder Charlie Mitchell summed up up in Feb 2020 as “Kafkaesque, having nightmarish complexity, riddle with exemptions, impenetrable” and economist Geoff Bertram called it a “dog’s breakfast”.
I can’t believe it. We’ve been discussing Emissions Trading Scheme since 1993 in New Zealand and I still didn’t know how to explain it. Although I consider myself a responsible citizen who keeps up with the news I somehow managed to escape from having to learn.
You see I didn’t need to know. Oh well unless I was a politician, a government servant, a Parliamentary staff member or a consultant involved with ETS. Although I had been in climate change groups we had never discussed it because we were in the process of persuading government to do something about climate change. In my case it was local government.
Then, because I was interested in Tradable Energy Quotas (TEQs) as a framework to reduce emissions, I finally thought it necessary to understand ETS. I discovered that only larger land owners and businesses were involved.
Then I read a paper that reviewed the scheme in late 2019 by Catherine Leining, Suzi Kerr and Bronwyn Bruce-Brand.
To my amazement there was a table of climate change policy milestones in New Zealand from 1993 to 2019. 42 lines of actions were listed over those 26 years. Every sector seems to start for a few years with voluntary obligations and then it becomes mandatory. The sectors are forestry, transport, waste, synthetic gas, agriculture. I can’t imagine the number of work hours that everybody has put into this. We know how to measure emissions now for those sectors. Well done.
You can see the political wranglings as the Labour and National Government gain and lose power. But even after all that work, the fourth page says, “As of November 2019 the system applies unit obligations to approximately 52% of New Zealand’s gross emissions.” Agriculture is the biggest political football and so far the industry seems to have persuaded the government to wait and wait.
Then I flip to the end of the article to look at the conclusion. I notice a mild little sentence which says, “While it constitutes a functional cross sector market, the NZ ETS has not significantly reduced emissions to date” Oops! It then goes on to say something quite extraordinary:- “The NZ ETS was not designed to achieve specific targets for domestic mitigation.” Wow.
While things are due to improve with the new Government and the Climate Commission (they finally start auctioning the units in March this year) there is still no reason for you or me to understand the ETS. We aren’t involved. We just see the result – a net increase in emissions. A pity, considering all that work has gone into it…
We are not involved because we aren’t part of the scheme. That is where Tradable Energy Quotas (TEQs) are different. Units are given to the downstream consumer, not bought by the upstream emissions producer. TEQs are denominated in quantity and, unlike ETS, they involve every citizen. The climate emergency can’t be addressed by upstream systems because it doesn’t guarantee emissions decline and it doesn’t involve energy users like you and me and require us to play an active part.
The word of the year for 2020 was ‘doomscrollling’. Wikipedia says it can be defined as “an excessive amount of screen time devoted to the absorption of dystopian news.”
We are used to it now. For four years we have been waking up in New Zealand to the latest outrage from Donald Trump. For me it was quite obsessive. Now we are more inclined wake up to sanity and competence from that part of the world.
Today we wake up to riots and arrests in Russia and a heat wave in South East Australia. Most major centres in the Victoria’s north will be surpassing 40 degrees. NSW-Victoria border towns could endure temperatures up to 44 degrees. The choice is do I read more stories about that? Maybe not. I know the climate story is grim. I have known for ten years.
Towards the end of last year, after finding myself always passing on alarming facts about the latest freak weather event or climate prediction too often, I realised that all this obsession with bad news keeps me from spending time on championing real solutions.
It wasn’t until I read Jason Hickel’s book Less is More that I found he had articulated what I had been struggling to do. He had just summarised the ghastly story of the climate emergency we are in. It was, he explained a series of eco-facts. He says “The philosopher Timothy Morton has likened out obsession with eco-facts to the nightmares suffered by people with post-traumatic stress disorder or PTSD, where you relive your trauma and wake up viscerally terrified, sweating and shaking. The idea is that if you are able to anticipate the traumatic event, you might be able to avoid it – or at least prepare yourself psychologically. Morton thinks our eco-facts serve a similar function. By endlessly repeating terrifying eco-facts, on some subconscious level we’re trying to insert ourselves into a fictional moment right before the collapse happens, so we can see it coming and do something about it. At least will feel prepared when it arrives.”
“In this sense, eco-facts carry a double message. On the one hand they cry out, urging us to wake up and act right now. But at the same time they imply that the trauma is not yet fully here – that there is still time to avert the disaster stop this is what makes them so beguiling, so reassuring, and why we seem strangely to crave more of them. The danger of this is it will all be lulled into waiting around to waiting for the effects to become more extreme. Once we reach that point we tell ourselves will finally get round to doing something about it. But the ultimate echo fact is never going to arrive.”
So this year I am seriously trying to spend less on doomscrolling on climate and more on comparing the various proposals and acting.
Appealing though it is I don’t fancy the choice of doomscrolling to species extinction. Right now I see the most promising way forward as learning about Tradable Energy Quotas (TEQs)
A rural family of four plus an elderly mother are working out how to live with less energy. The children are 3 and 1. The father Doug owns a small farm but the mother Joan occasionally drives asn hour and a half to the nearest town to give her specialist art lessons. She spends a lot on petrol her 1996 Nissan Pulsar is often needing repairs.
With three adults and two children, the quota is 8 Tradable Energy Quotas (TEQs) a week each. Between them they will get 24 TEQs a week. They know next year it will be fewer, which gives them the opportunity to plan ahead. They have to surrender TEQs each time they buy petrol or diesel.
The farm is a business so Doug will probably buy TEQs from a broker at the going rate. Doug finds he has enough TEQs this year but plans to buy a draft horse to relieve him next year. Electric tractors are too dear. He plans to breed draft horses and is learning about this.
Joan is faced with options when she is offered more work in town. Driving an hour and half for a morning session for a few dollars is surely not going to be worth it. Does she buy more TEQs? She could, but no she really can’t afford to that and it isn’t a long term option. She tells the class and her boss she is thinking of leaving. But the Polytech doesn’t know of anyone else who can teach her specialty. Everyone thinks.
If she stays home, she could either keep her TEQs and pool with others in a similar situation to set up an appropriate business for the little rural community or else she could sell her TEQs for cash on the market. She tries selling them this year but continues to plan. She knows that her friends are in much the same boat as their old cars aren’t exactly fuel efficient and none of them can afford an electric car. The friends get together and work out a business that would keep them in the rural area, use less petrol, and they would spend less time on the road. They reckon this new business would attract others to their area. Maybe it has something to do with her art, maybe horticulture or something else.
Do you see the trend? Not only do Joan’s students have to work out how they will learn that special art, but the whole family decides as a group how to adapt. Joan and her friends are another group that has to plan together. Rona the mother gets involved with the family decisions. Doug learns about what alternatives he has to his diesel driven tractor. The knowledge spreads around the small community. Everyone gets involved. Everyone has to adapt. And small rural communities are going to thrive.
I have a theory that the reason it seems superior to FEASTA’s Cap and Trade, Canada’s Carbon Fee and Dividend and all others is because Fleming was a historian/environmentalist who later in life got a PhD in Economics. He understood how the economy works. This meant that he saw the close correlation between energy use and economic growth. He knew that if the economy doesn’t grow it collapses because it is designed like that.
So he took all of this into consideration when he invented TEQs, a managed energy descent framework that wouldn’t result in economic collapse, widespread unemployment and social unrest. He was also aware that rations must be tradable or else a black market develops.
His idea is that government gives an entitlement of energy units (they could be denominated in emissions too) for each adult, and high energy users would have to buy them on the market from low energy users. Businesses and Government etc have to buy theirs on a weekly tender and this sets the price. Hence it delivers climate justice like Fee and Dividend. But it differs in many ways which his colleague Shaun Chamberlin summarised well in his 2015 post here. For effective climate action, every citizen needs to be involved to change the way we live, work and play, so Fleming’s scheme involves every citizen.
While the Fee and Dividend system is simple to administer because in Canada they just impose the fee on about 1350 mines and ‘preparation sites’, (and it is passed down to wholesaler, retailer and customer), there is still no built-in incentive to adjust their lifestyles or to cooperate to adapt to live with less energy. TEQs is not complicated to administer. The weekly tender auctions are just like those for Government bonds and units can be added and subtracted just like Airpoints or Flybuys or Snapper card. Almost everyone has a mobile phone.
They also have to spend extra money to support small, rural and remote communities. I am not sure if TEQs would require this, but I believe that remote rural communities would tend to thrive again.
I am keen to recruit people to a regular Zoom call until we all learn more about it (and this includes economists!) We are thinking out a strategy and have been discussing whether it could be implemented at a local body level. We have had one call and are getting good people involved. We know we have to be able to defend it, compare it with other systems and answer awkward questions so all brains are welcome!!
A few months ago I gave this presentation to a climate change group. Hope you enjoy it. Well it’s not actually enjoyable to know that energy use and economic growth are so closely linked. As Naomi Klein said “The economy is at war with the climate”. We are going to need all our collective intelligence to downshift without chaos. Can we manage an energy descent without it being haphazard and dangerous socially?
That is why I got to be studying Tradable Energy Quotas (TEQs) which set the scene for a well managed transition to a low energy economy. I even wrote a blog on it recently.
Some years ago I read about Tradable Energy Quotas as a method of ensuring everyone has access by right to their fair share of what fossil fuels are left and high energy users could buy units from low energy users. Then, being aware that our country, and indeed the whole world, was not make the necessary cuts to emissions in time to have a liveable climate, I thought to revisit the idea.
I discovered that not only had the idea lasted, but that there was a UK organisation called the Fleming Policy Centre which promoted it. This was named after the visionary green economist Dr David Fleming whose ideas on de-growth for a post fossil fuel economy are well worth reading. He died in 2010 but his friend Shaun Chamberlin carried on his work, finishing his two books Surviving the Future and Lean Economy.
Rationing had always appealed to me. As a child I remember taking ration coupons to the shop to buy sugar, clothing, butter and tea along with our money. Naturally our parents managed the petrol coupons.
Petrol was rationed from 1940 to 1950. During the last three years of the war the restrictions were severe. New Zealand also rationed clothing, footwear and nylon stockings.
Then in the 1970s there were oil shocks. When carless days were introduced in 1979 they were unpopular and largely ineffective because a black market arose in exemption stickers given to car owners in essential industries. Petrol rationing was threatened but never imposed.
The fact is that black markets will always appear when there is no trading allowed in ration coupons. And if you ration per month with no trading allowed, then people will buy all the petrol they can and store it in all sorts of containers like “califonts, kegs, kettles, demijohns, vinegar and whisky bottles, tins of all descriptions” as one account says. The government then made this illegal, which really encouraged a black market.
TEQs are ration coupons but they will come in digital form these days like Airpoints or Flybuys. The difference is that you can’t use them alone when you cash them. You will have to surrender them along with your cash when you buy petrol or gas or any fossil fuel.
Fleming worked it out that only 40% of petrol users were private individuals and the rest were business, governments and other organisations. Each year there is a set number of TEQs allowed. 40% are given to individuals in a weekly allowance. The business and governments have to get theirs through buying them at a weekly tender and this sets the price in NZ dollars when people come to trade them. Through a market, heavy users will be able to buy TEQs from low users. Buying and selling is as easy as topping up a mobile phone or Snapper or HOP card for bus trips.
Fleming argues that this method puts the onus on the users to find the best ways of reducing their fossil fuel use. (More about this later). In WW2 people used horse and cart or just walked.
And of course TEQs units also be denominated in emissions rather than energy. In fact it makes more sense these days to do that now that we know how many categories there are for emissions. That’s worth doing instead probably. But you can understand that this was invented in 1996 before so much was known about our NZ emissions. We certainly didn’t know agriculture contributed nearly half our emissions in those days and we have quantified emissions from waste much better too.
A great deal more information on TEQs are at https://www.flemingpolicycentre.org.uk/faqs. This will take a long time for you to get through. Skim it and come back and back. I recommend reading the 2011 All Party Parliamentary report.
If you are a New Zealander and interested in following through as an idea, please get in touch with me at firstname.lastname@example.org as we are trying to start a movement to promote TEQs.
It is not uncommon these days to see advertisements urging us to buy local because local shops have done it hard during the Covid-19 lockdowns. This sentiment used to be confined to the Greens and the new economics groups, but it is now widely accepted.
In 1996 economist Richard Douthwaite wrote in his book Short Circuit – Strengthening local economies for Security in an Unstable World, “The establishment of a local money system is fundamental to greater economic self-reliance.” He went on to describe the various local currencies possible, spending considerable time on the dramatically successful Austrian depression currency in Wørgl in 1932-33. You see the Mayor of Wørgl had read and digested the message of Silvio Gesell in his book Natural Money 1906. Gesell said that money should decay like ordinary goods and it was completely unnatural that those with money should find it increased. (of course those were the days of higher interest rates)
Another chapter of Douthwaite’s book was entitled “Banking on Ourselves” and argued that to strengthen a local economy we must have local banks. Douthwaite himself had been a development economist and knew how essential it was to have development finance for business.
It was a surprise therefore when I listened to economist Steve Keen being interviewed by Phil Dobbie for his Patreon site. Steve Keen, an Australian economist who currently lives in Thailand, argued that the German system showed the importance of local banks. He said he was once being driven to a small town of 5000 people when they came across a factory building satellites. He said that sort of thing only becomes possible if the local bank manager knows and trusts the people involved. (He also argued that the bank should take shares in the business to share the risk). Keen said the big banks of Germany influence only about half the economy and the rest comes from banks called Sparkassen, local non-profit savings banks publicly owned. According to the OECD, the German public banking system had a 40% share of total banking assets in Germany.
Dobbie said that wealth in UK was concentrated in the London/South East where the GDP per capita was about twice that of the poorer North East of England. Dobbie asked Steve Keen about relocalising, banking, taxation, democracy and even currencies and Keen rose to the occasion, describing the success of the Wørgl currency in the 1939s. They talked about the possible Scottish devolution. It is one thing to have a budget from the national government, but quite another to have your own currency, Treasurer and central bank.
“We don’t want to rely on gratuitous payments of a central government handing out case for political point scoring”, said Dobbie. Now that sounds familiar! That lesson is so clear in New Zealand after the spectacle of a $3 billion Provincial Growth Fund where the Minister, over three years has favoured Northland which, although poor, just happens to be where that Minister is contesting the election. It received $553 million whereas the West Coast got $140 million and the Wairarapa received $10 million.
Imagine instead if there were 16 regional banks, all supplying local money to their regions. Imagine if the regional government was able to run a deficit because it is an issuer of a currency. Can you? Wealth would be more evenly distributed in our country. But with banks and Government all being centralised we can’t help but have a concentration of political and financial power in the cities of Auckland and Wellington.
Maybe the unimaginable can become possible in these Covid days.