Economics | Deirdre Kent

Tradable Energy Quotas – the magic route to degrowth and control of emissions

In the face of an urgent need to reduce emissions, we are proposing a TEQ scheme replace the Emissions Trading Scheme. This article argues that price-based schemes to reduce emissions are unfair to the poor and not working anywhere. They must be replaced by a numbers-based scheme. And since the Government has recently reduced the excise tax on fuel, we must now decide the purpose and future of fuel excise taxes.

We are proposing a method of reducing Greenhouse Gas Emissions that is:

Effective
Equitable
Simple
Stimulates widespread creative solutions
Does not involve government micromanaging solutions.

What does TEQ stand for?

Tradable Energy Quotas (TEQs). TEQs are a system which achieves a phased, planned reduction in carbon emissions and in the use of oil, coal and gas which produce them, while at the same time ensuring equal and fair access to energy. Thus the word “Energy”in the title means “fossil fuel energy.” The scheme caters for everyone –individuals, industry and the Government – and it enables users to sell the TEQ units they do not use. It brings everyone together in a single scheme. It supplies the incentive to take the long-term action needed now to achieve a transformation in the way we will be using fuel in the future. It is fair. It is simple and practical. It gets its results by uniting us all in the common purpose.

At the heart of TEQs is a non-negotiable respect for the limits set by physical reality, as revealed by climate science. This gives society as a whole a clear signal as to future emissions limits, stimulating a collective focus on adapting to these limits. Thus it brings out creativity in everyone, with time to plan how they are going to live within next year’s budget.

TEQ stands for Tradable Energy Quotas, as there is embodied energy in every product and service we buy. It was designed by economist David Fleming, using the model invented by Japanese Toyota executive Taiichi Ohno after World War 2. It is a system so that, according to Fleming, “Everyone has the incentive to make it work; they actually want to do so; they apply their creative judgment; they monitor their own performance; they create a momentum and a flow. Success is built in.”

What are our emissions now and what did we promise at Paris or pay a huge penalty if we missed the target?

We promised to drop our emissions by 41% of the gross emissions in 2005, and to do this by 2030. Our emissions as at 2005 were 82.486 MtCO2-e and we have to reduce this by 33.819 MtCO2-e. In other words get our emissions down to 48.667. Well our gross emissions have been hanging round or dropping a wee bit below the 82 MtCO2-e since 2005 and are much the same now. [1] So are we going to reduce our gross emissions or not by out target date?

No, the Minister has already announced we will pay other countries to reduce their emissions instead. Oh, yes we will do a bit, maybe a third. As Pat Baskett has written, “Recent government policies give a false assurance that our comfortable lifestyles are secure – for more summers of fossil-fuelled pleasures. Meeting our targeted emissions reduction (of 41 percent below 2005 levels), as agreed to at the 2015 Paris climate conference, will require little, or no change in our individual activities. We’ve decided to simply buy our way out of the problem.”

Clearly with agricultural emissions being excluded, with so many free units being given to the cement, natural gas, dairy and aluminium industries, and a hopelessly complicated ETS scheme with anomalies and exceptions all over the place, the Minister knows it is not going to happen.

What do Governments do in emergencies?

Rationing worked in the war. When the petrol emergency came, government couldn’t muck around trying other schemes. Climate change is such an emergency. A warlike footing is needed. It can easily be argued that our decision about how to deal with climate change is more momentous than war because more lives are at stake. But rationing without allowing trading in ration units has its problems. Trading is necessary to avoid a black market. During the war the government didn’t increase petrol taxes (using a price mechanism) as that would have been too hard on the poor.

How TEQs work

The first step is to establish a total energy budget to achieve a desired goal, a certain budget of carbon energy. This total amount of energy is then converted to quotas ( e.g. 1 quota equals 1 ton of CO-e). By limiting the quotas available total energy is capped, ensuring that the desired target is reached.

The next step is to establish the time frame in which the goal is to be achieved; for example, 10 years.

Next is establishing a desired rate of decline over the time frame (e.g. equal amounts yearly, or accelerating declines over time). This feature ensures energy use and therefore emissions decline year by year.

First there has to be a weekly tender to set the price. This is attended by banks and brokers who on-sell them to businesses, organisations and central and local Government.

Then we have to know would what proportion of quotas should be given to individuals and what to businesses etc. Say it is 40% to individuals. That means 40% of the budget is divided equally among eligible individuals.

Individual adults (driving age and over) are given free allocations of tradable quotas; each adult is given a week’s supply of quotas regularly.

The balance of tradable quotas are available for public and private organisations, local and national government and businesses, who would buy them from brokers or banks.

When a person or organisation buys fuel or energy (petrol or gas or electricity) that results in GHG emissions, they surrender units with their money; a credit card like system is used, making it as easy as topping up your Auckland HOP card or acquiring Flybuy points. These then flow through the system of retailers, wholesalers and producers and eventually back to the Registrar.

Quotas are tradable. Those who need more could buy surplus units at the national price, with the process of buying and selling comparable with topping up a mobile phone or travel smart card (e.g. Auckland HOP card, Wellington Snapper card or Flybuys). High energy users can buy units from low energy users. If you don’t allow trading, a black market turns up.

Desirable Features of TEQs

TEQs have several desirable features, including:

Effectiveness: Unlike what appears to be happening with the ETS, we will reach our target. By establishing a budget ceiling on emissions and only issuing enough quotas to reach the budget ceiling, the total amount of emissions is assured. Given the seriousness of the climate emergency this guaranteed ceiling on emissions would seem to be the only way of reaching our target and avoiding a financial penalty in 2030. Relying on price to do this is unwise and risky.
Universality/ inclusivity: everyone is involved in the process of reducing emissions, not just large emitters as with the ETS; everyone thus comes to understand the importance of reducing emissions and that they have a contribution to make. Everyone will have skin in the game and people will naturally cooperate to create new businesses and technologies.
Fairness: It ensures that everyone has access to their fair share of energy or emissions. It delivers climate justice. Not relying on price to reduce consumption, it means that the vulnerable will not be priced out of their rightful access to energy. For instance, the ETS price will be up to $250/tonne of CO2-e in 2050, even under the Climate Commission’s recommendations.
Transparency: TEQs are easier for everyone to understand than the ETS; the impact of the quotas are direct and evident, whereas with the ETS the impacts are hidden and mixed with other market factors so that parties have greater difficulty determining whether prices are rising due to the ETS or some other factors. Journalist Marc Daalder in an explanatory piece March 2021 wrote, “Despite being one of New Zealand’s most important tools for reducing emissions, the Emissions Trading Scheme (ETS) is horribly complex and poorly understood.”
Simplicity: because the impact of quota transactions are direct and evident with credit card use, the TEQ approach is simpler than the ETS and not as easily gamed.
Integration – cross-sector engagement, motivation and collaboration Bringing individuals, households, business and all energy-users into climate policy in an engaged and integrated way would open up significant new possibilities for cross-sector co-operation. TEQs stimulate creative solutions all along the supply chain. Because everyone is involved, everyone has a stake in adapting to a lower ration the next year; transacting parties will work out solutions to doing what they need to do to change the way they live, work and play. By giving citizens agency over decisions about how to change their life you liberate all that brainpower and energy. All parties have freedom within their quota.
The TEQ approach does not involve increasing prices of the ration unit (the market will affect prices of goods and services but not the TEQ itself) as will the ETS. If it is working well and people are adjusting, the price of TEQs will be low.
The TEQ approach does not involve the government micromanaging solutions. As above, all parties have motivation to cooperate to reduce emissions so they can sell their quotas rather than use them; this dynamic will unleash considerable creativity within the country to reduce emissions. All the government needs is to do is make firm rules, and then legislate when public pressure arises. Government will also have no trouble passing laws when the public needs them, so it is easier for the Government on many fronts.

TEQs provide a managed energy descent whereas the current solutions, by tackling emissions only, just bring more problems. It is the only viable solution to our environmental problems. Clean energy might help with emissions, but it does nothing to reverse deforestation, overfishing, soil depletion and miss extinction. A growth obsessed economy powered by clean energy will still tip us into ecological disaster.

It ensures that there won’t be social chaos which would come from an unmanaged energy descent, should the global supplies fall off more suddenly than is hoped.

Where did you get this idea?

It came from the UK in 1996. Invented by the late Dr David Fleming, an economist who was also a historian. He played an important role in setting up the Transition Towns movement and the UK Green Party. See http://flemingpolicycentre.org.uk/faq for more details. Invented as a Tradable Energy Quotas, it works to reduce emissions and pull countries back from overshoot.

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. 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.

Have TEQs ever been tried anywhere?

Yes, after two years preparation it was tried in 2013-14 for a short while in Norfolk Island, but it never became a true TEQ scheme. The technology for point of sale wasn’t integrated across the small island territory, and only 29% of the community or 486 people were involved. It was a voluntary scheme for 15 months. It wasn’t designed under Fleming’s structure. It was more like an instrument to measure your household carbon footprint and then aiming to reduce it.

Banks didn’t cooperate to produce a carbon card, claiming it was not core business. Because of the lack of infrastructure, they abandoned the trading element of the scheme. The same rations were given to all the population children and all, which meant a backlash from single-person households. They excluded households not purchasing petrol or diesel in a given month. They reduced the price of petrol 4 cents a litre to encourage cardholders to use their card. The Norfolk Island scheme ended up more like that of a CRAG (Carbon Rationing Action Group), a voluntary effort to reduce household emissions. It was not a TEQ. Household members measured and reported your emissions and your health status on a large list of indicators including BMI, a measure of obesity.

Eight years later the climate issue is more urgent, the model is clear, the data is available, the technology better and our New Zealand government knows how to get its team of 5 million on board.

What happened in the UK after TEQs were invented in 1996?

Yes, for the years 2004-2011 TEQs were scrutinised in detail by various agencies of the UK government including the House of Commons. In that process, they have also been judged the best of all the Personal Trading Schemes.

Colin Challen, MP, introduced a Private Members Bill in 2004, leading to extensive international research.

In 2006, the then Secretary of State for the Environment David Miliband, gave a strong speech in support of TEQs, and a government department feasibility study followed. (They studied TEQs as an example of Personal Carbon Trading, PCT). One of their four reports concluded, “there were no technical obstacles to implementation, that PCT would be a progressive policy and that public acceptability was compatible with or slightly better than the presented alternatives of upstream trading and carbon taxation.” Unfortunately, in one study which was more influential than the others, although the authors were told to examine TEQs as the best option, they had examined another PCT scheme, (PCA), where trading only applied to individuals and they concluded the costs would outweigh the benefits. Chamberlin et al (2015) conclude that the working group effectively converted PCAs to a price based framework.

And so when the topic went to Defra (Dept of Environment, Food and Rural Affairs), they concluded that “personal carbon trading has potential to engage individuals taking action to combat climate change, but is essentially ahead of its time and expected costs for implementation are high.”

At that stage the government, although still interested, discontinued its research programme.

However, just a few weeks after Defra’s, the influential House of Commons Environmental Audit Committee (EAC) published its own report. It described PCT as “the kind of radical measure needed to bring about behavioural change and regretted Defra’s decision to discontinue its research programme.” Chamberlin et al say, “There were press claims that the idea had been banned by Gordon Brown at the Treasury.”.

But that still wasn’t the end. Another MP emerged. This time it was Tim Yeo, calling for a pilot scheme. But TEQs weren’t really a candidate for a pilot scheme; it was nation-wide by design and no local authority could effectively pilot it.

Three years later, in 2011 an All-Party Parliamentary Group on Peak Oil published a report on TEQs. It made a strong case in favour of TEQs and urged a second government feasibility study, questioning the cost benefit analysis previously done. There was accompanying high coverage in the British media and internationally with several high profile MPs being involved.

Interestingly the authors note, “without a public groundswell to drive political engagement, TEQ development slowed.” It remains core policy of the Green Party of England and Wales.

But while TEQs have been under discussion in the UK House of Commons and UK government departments, there appears to be no discussion of the grassroots political action and the pro-TEQ coalition building and activity?

All of which shows it is important, nay critical, to get the wider public involved and convinced. And because TEQs are a progressive policy, favoured by low energy users, many of whom but not all are in the low income brackets, low energy users must be involved too.

Chamberlin et al’s paper in 2015 led to a 2018 debate in the European Commission in Brussels, but failed to prompt meaningful action.

But aren’t carbon taxes the answer?

The difference between a scheme like carbon taxes and TEQs is that the former relies on high prices to reduce demand. But when you rely on a high price to reduce demand, it penalises the poor who can’t afford it but need energy. Effectively it is rationing by price. Moreover, there is no guarantee that targets will be met. It doesn’t embed a long term perspective into society’s decision making and it doesn’t integrate cross-sector engagement with intrinsic motivation.

While carbon taxation is a cost even to those who produce very few emissions, trading in carbon rations rewards those with low emissions, and only penalises those who exceed their allocation. Both methods use a stick, but personal carbon trading offers a carrot, too. Richard Heinberg writes in Resilience 15 March 2022, “Nearly 50 countries have some form of price on carbon, either through carbon taxes or emissions trading schemes. Economists generally agree that carbon taxes should eventually work; but, so far, the taxes haven’t been high enough, or enacted in enough places, to actually turn the tide.”

Finally, carbon taxes aren’t acceptable to the public. e.g. The Yellow Vest movement in France started when the Government imposed a green tax on diesel in 2018. It had been in operation two years but President Macron stopped it after the protests. After a turbulent political time, Prime Minister Julia Gillard was removed from office in Australia after imposing carbon taxes. It lasted from 2012-2014. Relying on high pricing is political poison because it deprives the low energy users of their rightful share.

Why not use Canada’s Fee and Dividend?

It certainly is the fairest way of doing carbon taxes. It delivers climate justice. But there are so many exceptions needed so it is heavy on bureaucracy. It still relies on the price of carbon rising which is not as effective as a reducing energy allowance. 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 TEQs involve every citizen.

All other schemes like Cap and Adapt, Cap and Share are similarly dependent on a high price for carbon.

As members of the carbon management community, we must frankly recognise the shortcomings of carbon pricing frameworks.

But isn’t the Emissions Trading Scheme doing the job of reducing emissions?

Actually, according to Catherine Leining et all in their review of the ETS, it was never the intention of the ETS to reduce emissions. And the facts speak for themselves. Since 1990 our net emissions have gone up by 57%.

ETS only covers 52% of our emissions, it hasn’t worked, it needs serious tweaking. It was never designed to reduce emissions. A Climate Commissioner Catherine Leining is a lead author of a review paper that says so.

There were many things wrong with the ETS. It became a black box game for a few insiders, who believe in efficient markets. For many years it was a Cap and Trade scheme without a cap. We cut down more trees than we planted. New Zealand was proportionately the largest purchaser of Ukrainian and Russian credits which were fraudulent. New Zealand has continued to use the dodgy credits because they’re cheap. The country’s emissions trading scheme allows companies to buy carbon credits to offset their emissions, and the money goes to those who absorb greenhouse gases, such as the forestry industry.

The ETS is dense so people won’t dig deeper into it.

Yes, the Labour government did improve the ETS in 2021, with the commencement of auctions and raising the lowest minimum price, but still it isn’t a true market, as it has a highest maximum price too. And most New Zealanders are unaffected by it and have no stake in reducing emissions other than knowing it is the right thing to do to drive less etc. Relying on voluntary actions has never worked. In fact it is naïve to imagine it could work.

But aren’t we committed to the Emissions Trading Scheme?

We are committed now to honouring our own target and there is a big financial penalty if we don’t meet it under the Paris Agreement (it looks like we will have to pay at least $1.9 billion and up to $11.5 billion).

While we are fairly embedded in the ETS, there have been many improvements to it, either implemented or signalled. Finally a cap was put on emissions in 2015. Auctions to set the price started in March 2021.The trouble is that the price of the unit of emissions is set at a range. If it gets too high the government will intervene by buying units overseas, thus decreasing demand and prices. That is allowing a rich country buying their way out of our obligation to reduce emissions. Even though the Climate Commission has recommended that the top price rise, the parties still won’t respond unless the price is really high. For example, when the price of ETS units was $38 a tonne, it only raised the price of petrol by 9 cents/litre. In March 2022, it raised the price by 18 cents a litre only and nobody seemed to blame ETS for the rise.

Could TEQs co-exist with ETS?

No. This would involve double counting. Some companies would have to surrender units twice over. And you can’t just exempt the companies subject to ETS because you would have to sustain two carbon budgets covering different but overlapping areas. And as David Fleming has written, “Even if it were possible, it would set up a market in which there were two prices for the same good – an anomaly which black market arbitrage would quickly destroy.”

TEQs have to replace, not supplement ETS.

But nearly half our emissions are agricultural emissions. Do TEQs cover them?

Dr Mike Joy in a talk on the Future of Food at an Evidence Based Eating series of lectures said, “1 calorie of food uses 21 calories of fossil fuels to produce in the States. Fossil fuels are needed all along the food chain – to plough, plant, fertilise, harvest, transport, refine, package, store/refrigerate and deliver.” With TEQs, every time a farmer, a trucking company, a food refining factory, a slaughterhouse bought petrol or diesel they would have to surrender units.

So how would TEQs work to reduce our agricultural emissions? We import a lot of inputs like farm machinery, fertilisers, pesticides, herbicides. Moreover, the Ballance Agri-Nutrients factory in Kapuni has been producing urea since 1990, with natural gas being a major input. The embedded energy can be calculated. Two thirds of our urea comes from the Middle East where the input was natural gas. Likewise the sulphur used to manufacture superphosphate comes from the Canadian petrochemical industry so the embedded energy can be calculated. It is the same for pesticides, herbicides and insecticides.

The irony is that the bulk of our milk gets dried with coal and exported, along with its embedded fossil fuel emissions. Most of it is used as additives for processed foods.

All nitrogen fertilisers are produced with fossil fuels and a portion goes out the nitrogen goes out as nitrous oxide which has 300 times more warming potential than carbon dioxide. The other part goes out in the water and the atmosphere.

Why don’t you consider Universal Carbon Credits as a Carbon Currency, as endorsed by Steve Keen?

These are similar to TEQs in that they both reduce emissions, both are superior to carbon taxes or any price based mechanism like ETS. They are both more popular than petrol taxes, frequent flyer levies, meat production controls. Both involve all citizens and give freedom to them. Both can be started by a single country and both charge units on imports. Both require a central authority to be established for the purpose of overseeing the allocation and marketing of these units.

Whereas TEQs are your units that appear on a digital card like a HOP card, “UCCs as a carbon currency” can be in the form of a digital currency as described here. But they can also be in the form of a card.
UCCs are given to all citizens similarly but some of the individual quota is held back by Government for its own functioning.
There is no tender with UCCs to set the price. Businesses and organisations (and presumably local authorities) have to get theirs when citizens buy products or services or by buying them from other businesses.
UCCs are on the price tag of all goods and services.
With TEQs you only have to surrender them when you buy petrol, diesel, gas or coal. But the UCC is more complicated in that everything needs to be priced in UCCs as well as dollars.

But wouldn’t the economy collapse with less energy?

The inventor of TEQs David Fleming knew 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. He also had read about the Japanese work after World War 2. 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 argued that people and businesses, given due warning as they would have with TEQs, can plan ahead to cope.

How will the vulnerable industries fare under TEQs?

Under the ETS, the big question for Government is what to do with Emissions Intensive Trade Exposed (EITE) sector that are protected now by exemptions from the ETS. These are the steel, aluminium, cement industries that could threaten to relocate overseas if they had to pay too much for their emissions. These have to be protected from cheaper imports. A better alternative than exemptions is border taxes or import tariffs for goods from countries with no TEQ or equivalent. According to the WTO in the December 2014 Financial Times, border tariffs are now allowed.

Border Tariffs

Since emissions are global, the idea is to put tariffs on imports from a country that doesn’t reduce its emissions. In July 2021 the EU announced its Carbon Border Adjustment Mechanism (CBAM) on energy intensive imports and the next, the United States and UK began making similar noises. This is in compliance with the WTO rules. EU’s proposal is to cover imports of iron and steel, aluminium, fertilisers and electricity.

CBAMs are also being considered by Japan and Canada. Australia’s exports will be hit badly. If China and the US went ahead and imposed it for products with embedded fossil fuels, it would spell curtains for our exports of milk powder. CBAM is fraught with political challenges. Of course, and we would have to impose tariffs on imported fossil fuels.

How would TEQs treat Renewable Energy?

The same as other products. Fossil fuels are used in the building of solar and wind power. These units and their batteries have to be rebuilt regularly, and maintained as they age, once again using fossil fuels. Fossil fuels were used to mine all the cobalt, lithium etc in batteries. Most of New Zealand’s electricity comes from hydro power stations, and while they are lighter on the use of fossil fuels, generators are often used during power outages, not just by hospitals etc but also by grid operators during peak hours. Generators need diesel or petrol to run.

And power companies which resort to using natural gas or coal to get through the peaks would have to buy Quotas, and this would put the price of their power up.

Will we also have to replace petrol taxes with TEQs?

It looks like there will have to be a big discussion on this. Currently about half the price of petrol is taxes of one sort or the other. Fuel taxes now comprise about 5% of crown revenue. Petrol taxes began in 1970 when 3c a litre was imposed. In 1974 when the newly formed ACC needed money, another 10c went on for ACC. In 1986 36c/litre went on for the expansion of the Marsden Point Refinery. Auckland has had a regional fuel tax since July 2018. By mid-March 2022, the 77 cents excise taxes imposed on every litre of petrol went to the Road Transport Fund. The Emissions Trading Scheme has also imposed a price, up to 18 cents a litre at that time. GST is then added onto all prices.

On 14 March 2022, after an outcry about the cost of living including rising petrol prices above $3/litre, the Government announced it would take 25 cents less in excise taxes and road user charges for three months.

So it’s complicated. It is clear there is more work to do to design a practicable transition to TEQs.

It is helpful to keep in mind that a TEQ system would eventually eliminate petrol as a major fuel; so the question of petrol taxes is irrelevant in the longer term. Given that we only have a few years (until 2030?) to eliminate fossil fuels, if we prioritised climate over all other issues, petrol taxes should not be a major concern. But politically it is not that simple, as high petrol prices raise inflation and cause hardship. The question becomes how to keep the government functioning with a reduced tax income from petrol taxes. Other forms of taxation may make more sense –e.g. a tax on natural resource extraction, or a tax on environmental or social externalities that need to be reduced. Wealth taxes and particularly land value taxes must be considered as an alternative, as land is our major natural resource. This could be an issue for public discussion by a process such as a Citizen’s Assembly.

Conclusion

Peak oil and climate change are coming to us at the same time and both demand we reduce our use of fossil fuels. This has been dislocated and accelerated by the Ukraine war and it coincides with widespread inflation after the Covid-19 pandemic. Unlike the 1970s oil shock, this disruption involves oil, gas and coal. Energy disruptions and energy volatility will continue for the foreseeable future. [1]
Price-based schemes like ETS and carbon tax and excise taxes don’t fit with political reality and won’t deliver unprecedented global emissions.
It is time to rely on quantity-based mechanisms like carbon rationing with trading.
Tradable Energy Quotas (TEQs) provide the best version of all Personal Carbon Trading (PCT) schemes.
We must learn from what happened during the years of consideration from the UK Parliament.
TEQs will be favoured by low energy users and opposed by high energy users or high energy businesses.
TEQs must replace all price-based schemes like ETS and eventually excise taxes on petrol, though road user charges must stay.
TEQs will liberate the ingenuity and creativeness of the whole population.
Government will not have to micromanage the energy descent.
TEQs are sure to reduce emissions.

[1] See Mar 22, 2011 article by Richard Heinberg https://www.resilience.org/stories/2022-03-18/after-the-ukraine-invasion-sobering-new-global-energy-economic-political-terrain/ After the Ukraine invasion: sobering new Energy-Economic-Political Terrain.

Contact: Deirdre Kent deirdre.kent@gmail.com 021 728 852

Many thanks to the following for their constructive comments: Jack Santa Barbara, Pat Baskett, Paul Bruce, Mike Joy.

[1] https://www.stats.govt.nz/indicators/new-zealands-greenhouse-gas-emissions#:~:text=In%202019%20New%20Zealand’s%20gross,26.4%20percent%20higher%20than%201990.

We need 700 times as much lithium as we are currently mining to electrify global transport

Mining professor Simon Michaux has done a mammoth study on electrifying the global transport sector. He worked out how many cars, trucks, ships there were and how far they travel. Since most are still ICE(internal combustion engines) vehicles he figured a great many things from there. Among his calculations were:

We need 31,670 TWH of electricity for the global fleet (Yes, terrawatt hours!)
We need 221,594m new power plants (a mixture of types)
We need 2.78 billion tonnes of lithium for the lithium batteries, but current production and reserves are nowhere near enough.
Taking the 2018 year of production, we need for lithium 707.8 years of production at the current rate.
We need 655.9 years of graphite at the current rate of production.
We need 552 years of cobalt at the current rate of production.
“Just remember it takes twenty years to bring a mine from a discovered deposit to a functioning mine.”
And this is just to produce one generation of batteries, when in ten years time they need replacing.

Continue reading “We need 700 times as much lithium as we are currently mining to electrify global transport”

Welcome to a baby born at 416ppm CO2 and overshoot

Welcome to a baby born at 416 ppm CO2 on the day of COP26 in Glasgow. This is the last chance to turn around runaway climate change. Mind you they said that last time and the time before.

You were born on the first day of COP26 –the 1st of November, 2021. I am sorry to say this, but this is what you are likely to see during your lifetime.

If you live in Auckland, New Zealand the number of hot days in summer is increasing. And I guess you will be glad you are not in remote Oodnadatta, South Australia which spends its summers in the late 40s and has a record of 50.7 degrees. It’s impossible to go outside or work outside there. The maximum temperature if you were born in Death Valley, California was 54.4 degrees last July.

Or you might live in Brisbane which got up to 37 and 38 degrees in 2017 and 2018. You have to stay inside and have air conditioning. But don’t try living in a place vulnerable to sea rise. Those marinas house a lot of fancy houses and they will face bigger storms and higher seas. Maybe they will be gone by the time you are an adult. And you will see a lot of bush fires in your life. And your hail stones will be big. This year they had one in the Sunshine Coast that was 16 cm wide.

Overshoot

But life isn’t all about heat waves, bushfires, coastal erosion and extreme storms. Let’s talk about the economy, about buying things and having enough food and shelter and essentials of life.

You have been born in a time when the whole world has had a Covid-19 pandemic for nearly two years. It’s given the global economy a heart attack. Mind you the global economy was very vulnerable even before Covid.

The fact is we have had a just-in-time global supply chain where goods get shipped and trucks all over the world and it’s worked up till two years ago. But now things are different and there is little hope it can be fixed any time soon.

So when you are a child, countries and communities all over the world will be scrambling to manufacture essential goods as near home as possible. I hope they make clothes and grow good food near you. Please don’t waste good land grazing all those animals to feed. They use too much water and pollute it, as well as using too much land. Besides eating animal protein is no good for your health. I only just found that out when I was 80 but you might as well know now.

The other thing, sorry to say, you have been born as the world faces up to the fact that the flammable fossils we found in the ground 250 years ago have been harder to get. Yes, we used to call these fossil fuels –oil, natural gas and coal. In fact your state of Queensland has had a lot of high grade coal mines and up till a year ago you shipped it to China. But human beings have binged big-time on these flammable fossils. Sorry about that.

I don’t suppose you will get to see much of the coral reefs, but hopefully they will be around in some form for a few years.

The global economy

I mentioned before that oil, gas and coal have been used. They have helped your parents, grandparents and great great grandparents live in an age of huge expansion. We have used up the easy to get oil, gas and coal and now we are at the stage where it is taking so much energy to extract them that we don’t get the return we used to get a century ago.

We are digging more wells deeper into the sea and going for the oil sands and hard to extract stuff. Darn!! They were so useful. In fact they still are. When you were born, 84% of the energy used came from this magic stuff. We run our diesel trucks and ships on them and we rely on them.

But they also, when burnt for driving or heating furnaces, sent a huge amount of gases high up into the air and this blanket round the earth is making it warmer. That is causing all the storms, rising seas, melting ice, extra big hail, extra heavy rain, prolonged droughts and bushfires. Yes you will see so much of that and I am sorry I was part of a generation that was complicit in this awful situation.

Several scholars have written now that we have reached the peak of world oil extraction. Nate Hagens and White wrote in their 2021 book Reality Blind that the peak in oil extraction was in October 2018. That means there will be less every year now. Mind you the prices will still fluctuate but it is resulting in high inflation because we have relied on cheap oil for two centuries now.

And natural gas and coal are dearer too, resulting in power cuts in many places like China, Germany, US and UK. You will grow up with power cuts in Australia I am afraid because the solar and wind power won’t be regular and you will be frantically trying to buy enough metals to rebuild them before long.

And if you try using hydrogen you will soon learn you get less out of it than you put in and the plants will be abandoned. In fact if Morrison and his government stay in, they will put their faith in other unproved technologies like carbon capture and storage (CCS) that are either going to make things worse or will waste money or both.

You see we have an economic system that is reliant on having more energy. It can’t grow without more energy every year and it is set up to grow. That way it works. If it doesn’t grow there are employment problems that have to be solved So you will grow up in an age of contraction of the world economy and because it will be unplanned, it will be fast and steep. You won’t be able to buy everything you want. There will be shortages. It will be the age of resourcefulness.

So make friends with lots of skills. Train as an electrician, a plumber, an organic farmer, a person who mend things, a person who is practical. Surround yourself with people who know things and can help each other and the community around them. Surround yourself with people who don’t drain you of energy. Make friends with kind, compassionate people, people who understand how nature works and that human beings are a vulnerable species with huge potential for compassion, innovation and heroism.

You will see a lot of sadness. Tragedies will be common.

Now suppose you are my great grandchild. Challenges will abound, but you are bred for it. Your grandfather has been skilled with his hands all his life and has made do with little. Your great grandfather John was a doctor and his father was a fabulous gardener. John’s grandfather was a skilled bricklayer. His grandmother and great aunts were humorous and alert, always aware of who is doing what.

On our side you get me, then my mother who cooked, sewed, knitted and gardened to care for her six daughters. . My father was a minister on a small salary who learned things from books and was wise. My grandfather and grandmother came to New Zealand with three little children. When my grandmother was young, she wheeled her pram into town with a toddler in front and bought stuff for her meals every day because they didn’t have a fridge and were poor.

I am sure your mother will fill you in with her side of the family and then there is all your father’s side to enquire about. Find out about their lives and how they struggled. You will struggle, but in a different economy and a different climate completely. So remember all these people came before you. Think about them.

Food

Don’t expect to live in a city all your life. There will be many more going to the country to grow food and live in small communities. Be a leader in a small community.

Climate catastrophe or inevitable after COP26?

Often during the last twenty years, climate activists have had high hopes that humanity will avert a climate catastrophe.

Thousands of scientists warned us not once, not twice but four times – in 1992,2017, 2019 and 2021. On each occasion it was that humanity was on a collision course with nature.

A search on “climate action” yields 26 million results. There are climate action groups all over the world. Even in New Zealand with a population of 5 million, there is a Climate Action Network comprising major groups like 350.0rg, Gen Zero etc. In 2017, former Green Party leader Jeanette Fitzsimons got 3000 people to sign Our Climate Declaration. Now we have Extinction Rebellion and a myriad of local groups to add to this list.

Various IPCC reports have warned us how urgent this all is.

Political interference again

COP26 is now just days away. The Sixth Assessment Report of the IPCC was compiled by thousands of scientists. But BBC revealed a leak that “Saudi Arabia, Japan and Australia are among countries asking the UN to play down the need to move rapidly away from fossil fuels.” The leak also revealed Argentina, Norway and Opec talking up the possibility of CCS (carbon capture storage). They want to emit in the hopes that new technologies will capture their carbon from the atmosphere. IPCC scientists doubt that technology is good enough.

There was still some hope in 2015 with the Paris Agreement. In 2018 the IPCC warned there was just a decade to get climate change under control. They warned “emissions would have to be on an extremely steep downward path by 2030 to either hold the world entirely below 1.5 degrees Celsius, or allow only a brief “overshoot” in temperatures.” But emissions kept rising.

In the US, Democrat Senator Joe Manchin is blocking effective action on climate. Not surprisingly he is a recipient of fossil fuel money. The Guardian reports, “In the current electoral cycle, Manchin has received more in political donations from the oil and gas industry than any other senator, more than double the second largest recipient.”

In Brazil Bolsonaro has presided over the destruction of about 10,000 square miles of the Amazon rainforest, one of the most precious ecosystems on the planet. The destruction started around 2002 but was slowing down at the time Bolsonaro became president in 2019. By July 2021 the Amazon, instead of being a carbon sink, has become a carbon source.

So when COP26 fails are we to blame Mohammed bin Salman, Bolsonaro, Scott Morrison and Joe Manchin?

Five years ago a Pakistani delegate on his way to COP21 in Paris, Adil Najam wrote in the Guardian, “I am not a cynic – just old. Old enough to remember the dashed hopes of Kyoto (COP 3, 1997), the purposeful energy of Berlin (COP 1, 1995), the naïve optimism of Rio de Janeiro in 1992 where the UN framework convention on climate change (UNFCCC) was first adopted, and even the calls for urgency when the negotiation process was first launched by the United Nations in 1990.”

The big emitting countries

China, India, the EU, and the US contributed around 60% of global CO₂ emissions from fossil fuel combustion in 2017. Add Canada, Japan, Saudi Arabia, Indonesia and Australia and the percentage rises. Few of these apart from some EU countries have reduced emissions since COP25 in 2019.

The UN warned that more than 70 countries are expected to submit revised (stronger) plans to curb emissions before Glasgow. This summit COP26 was originally scheduled for 2020 but because of Covid it is 2021. We are not holding our breath.

Only 113 countries have come up with improved plans so far for COP26. BBC News said, “Analysis of the climate plans submitted so far shows that emissions are actually set to rise by 16% by 2030, which could lead to a temperature rise of 2.7C (4.9F) above pre-industrial levels.”

Hope is fading

Ever since 1992 when UN climate summits started, global emissions have steadily risen. Despite flashes of hope throughout those many years, the relentless upward trend continues. And now that big emitters have signalled their desire to water down ambitions, our hope is fading fast again.

We could spend a great deal of time assigning blame for this succession of failures. We could blame Bolsanaro or Trump, no trouble. After 2015 the Bolivian president was one of many low emitting nations to blame capitalism.

Political tensions add to the roadblocks for COP26, with President Joe Biden stepping up the rhetoric on Taiwan, angering China. Russia hasn’t had its natural gas pipeline Nord Stream 2 approved by all the European nations yet. So Putin may be punishing them by sending them less gas. Or else Russia simply needs the gas now for their own domestic purposes.

Then there is the problem of not transitioning to renewables early enough. After shutting its nuclear plants and setting up wind farms Germany has had to return to gas fired electricity generation when the wind died down. So it is experiencing high natural gas prices (they are now six times higher than at the beginning of the year). This in turn is leading to high power prices.

Britain is also coping with Brexit, a truck driver shortage and a natural gas shortage. There are going to be many Europeans and English people shivering this coming winter.

The outlook in northern China is bleak. They are paying the price for not transitioning to renewables in time. Their coal prices have soared and their coal mines have been flooded more than once. And this is at the time that Xi Jinping has decreed that coal usage must reduce in order to meet their climate goals.

Transitioning to renewables anywhere will not be smooth or easy and anyway renewables are less energy intense than fossil fuels. In America coal fired power generation is on the rise because of high natural gas prices.

While there is a tiny chance significant progress could be made, given the difficulty of transitioning to renewables together with the interference by nations dependent on fossil fuels, it is more likely that COP26 will fail.

Renewables – can we ever get there – when energy and climate clash

Hydrolakes in Aotearoa/New Zealand have had many years of low rainfall, but it is now happening more frequently. In dry years we revert to coal generation, making the transition to renewables harder.

When New Zealand hydroelectric power stations ran low last summer, we beefed up electricity generation with another coal fired unit in Huntly. Environmentalists were shocked. How was New Zealand going to meet its climate targets now?

Genesis Energy had planned to close Huntly station in 2018 but is still using it. Greenpeace has wanted it shut for years. The Huntly power station was commissioned in 1982 to run on gas and coal. As Māui gas supplies began to run out in the early 2000s, coal increasingly became the major fuel. RNZ reported that more coal was burned in the 2021 March quarter than each of the years 2016, 2017, and 2018.

The Huntly power station was commissioned in 1982 to run The Huntly power station was commissioned in 1982 to run on gas and coal. As Māui gas supplies began to run out in the early 2000s, coal increasingly became the major fuel.

Aotearoa/ New Zealand is hooked on coal, importing more than one million tonnes of low-grade coal from Indonesia last year. The fuel was burnt at the Huntly to keep the lights on, as hydro and gas failed to meet demand.

Due to rising greenhouse gas emissions we are experiencing warmer winters and drier summers.

So will we painlessly transition to renewables as we had hoped? As we face our climate predicament, we have to realise that over 80% of the world’s energy use still comes from fossil fuels. Let that sink in. It’s big. So it’s going to be really hard to wean ourselves off them.

Of course, the low rainfall for our hydropower dams was not new. But climate change is going to make matters worse decade by decade.

Perhaps many thought then we were the only country having to revert back to fossil fuels.

Far from it. And it is often happening because an extreme weather event cut hydropower generation.

Due to rising coal prices and power rationing, there are power cuts in China, leaving families in the dark

It is happening elsewhere but sometimes it is accompanied by geopolitical tensions as well. Southern China for instance, when its hydropower capacity ran low after droughts, reverted to coal. And this happened at the same time as China, angry at Australia’s support for an enquiry in the Wuhan Covid origins, stopped importing Australian coal.

In Europe there has been a big move towards renewables, with wind and solar beefing up. But solar and wind are intermittent and less reliable. Wind comprised 27% of Germany’s generation mix in 2020. But this all changed in 2021 when the winds died down and the percentage of the total generation dropped to 22%. So they had to revert to natural gas. A great deal of their gas came from Russia. Over the last decade the EU has imported more and more gas from Russia as their own gas ran out. Gas prices have skyrocketed along with electricity prices.

The apparent reluctance of Russia to release gas at the onset of winter has been attributed by many commentators to its desire to put pressure on the remaining EU countries to approve the Nord Stream 2 pipeline from Russia to Germany. Nord Stream 2 is a twin pipeline under the Baltic Sea. It had already cost US$11 billion and was ready to go. Eastern European Countries like Ukraine and Poland and the Baltic States withheld approval for two reasons. 1) Because Russia had annexed the Crimean Peninsula in 2014 leaving 14,000 dead over seven bitter years and 2)because they feared it would give Russia too much leverage over EU and Putin too much power.

As the price of natural gas rises, so does electricity. The TV agency WION reports (28 Sept 2021) that electricity prices are spiralling out of control in France (up 149%), Spain (up 250%, UK 298%, Germany (up 119%) and the situation will get worse as winter closes in. Governments are already warning of blackouts and factories will be forced to shut down. Inflation has already arrived.

They finish by saying, “European countries are going to learn just how much their economies are reliant on natural gas.”

Brazil has also had to ramp up its gas fired generation after a bad drought.

Energy and Climate Clash in China

There is also the move from high energy coals to lower energy coals. In Northern China where coal mines were flooded in an extreme weather event in May 2021, they had to move quickly to find other coal sources for electricity. In early October 2021 a heavy downpour in China shut down 27 coal mines. So Chinese officials have ordered more than 70 mines in Inner Mongolia to ramp up coal production.

At the other extreme there is growing demand for air conditioning. CNBC said Japan, China and South Korea had extremely hot weather so the demand for power rose.

As if all this weren’t enough as the global mega-economy gets more and more complex, we just need more and more electricity. Despite a slight drop during Covid, by July 2021 a headline reported the International Energy Agency saying, “Global electricity demand is growing faster than renewables, driving strong increase in generation from fossil fuels.”

Oh yes that’s because we have to have economic growth at all costs. More, more, more as comedian John Clarke says. Everything flows from growth as he says.

Smooth transitioning to renewables is looking a great deal more difficult than we ever imagined.

At a time when climate induced droughts, extreme precipitation and heat waves are disrupting hydropower generation and storage all over the world, governments are reverting to some form of fossil fuel to generate their electricity. And this all comes at a time when electricity from air conditioning and gas or power to heat homes is under pressure. Even if Europe and UK insist they want to meet their climate targets at COP26, politicians will be faced with the alternative of leaving their families in the dark without cooking facilities – or effective climate action.

Politicians want to get re-elected. That’s why my bet is that they will choose to care for their citizens and to try to ensure its factories don’t close down through lack of electricity. China has already stated its power rationing is in order to keep its climate targets and doesn’t seem to have a renewable alternative.

And all this is without ever discussing the physics or the geology of it all. For a start fossil fuels are used in the production of solar and wind power. Secondly the energy return on energy invested for solar and wind is much less than with oil, coal, diesel or gas leaving less for the economy. Thirdly there is matter of the metals required.

Are there enough metals to transition to renewables?

Professor Simon Michaux of the Geological Survey of Finland has done a remarkable study of the probable metals required for all the batteries for all the vehicles involved worldwide and his answer in the case of cobalt, nickel, graphite and lithium is a loud NO. He says,

“The current system was built with the support of the highest calorifically dense source of energy the world has ever known (oil), in cheap abundant quantities, with easily available credit, and seemingly unlimited mineral resources. The replacement needs to be done at a time when there is comparatively very expensive energy, a fragile finance system saturated in debt, not enough minerals, and an unprecedented world population, embedded in a deteriorating natural environment. Most challenging of all, this has to be done within a few decades. “

The zen riddle for our Government is will they recognise the predicament we are in or will they opt for Business As Usual, thereby disappointing millions of climate activists once again? In my view COP26, like 25 other COPs before it, will fail once again and to a few it will be no surprise. But they might just entertain a fleeting thought…”If only….”

Climate, Women and the Feminine

Is it too late for the Great Mother archetype?

Over recent weeks I have been watching over 50 interviews on Post-Doom on YouTube. Michael Dowd has interviewed climate scientists, young leaders in the eco-anxiety space, systems thinkers, journalists, ecologists, spiritual leaders, authors and researchers of all descriptions. Many have degrees in up to three disciplines and almost all can think across disciplines. Between them they have studied books about the collapse of civilisations, abrupt climate change, consciousness, peak oil, energy and environmentalism.

All are facing up to the reality of our current global predicament. They are not taken in by the happy chapter at the end of Al Gore’s film or any number of dissertations after describing the mess we have got ourselves into as a species. They don’t blindly obey the cultural imperative to be optimistic and not scare the punters.

I was delighted to listen to Barbara Cecil, a woman who has coached women leaders. She commented that, at the time of the 50 minute interview (2019), there were four trends. First there is the movement towards totalitarianism; second the desecration of the Earth and a headlong rush into an unliveable planet. Third was the subjugation of women. She noted that in India in 2019, 5 million women had joined in a protest across the nation against violence, and the United Nations was using the new word, femicide. (think of the pain in today’s Afghanistan). Fourth was the genocide of indigenous rainforest.

She noted that the resistance against this these issues was not working. From there she said what we need is an amplified vibration the type that can break a glass with the singing of Ella Fitzgerald or can break up a kidney stone. She asked, “Where is the source of the feminine energetic?”

There must be a deep listening for the interior impulse.
They must be right placement. By that she means a relationship to others being the right distance from each other and Inbetweeners these fields are where the deep feminine is.
There must be attention paid to and respect for cycles. You must do beginning is born out of silence and do endings at the appropriate time you must tune into the natural cycle and be patient.

There is power when enough people doing it. She said the feminine creative universal force is badly needed. And she left it there.

This led me to thinking about money systems and the writings of the late Bernard Lietaer. You may think this is a strange transition but in my mind I recalled a lot of writing about the worship of the goddess in different ages. Lietaer had studied the Black Madonna and had concluded that the worship of a Great Mother happened to coincide several times in history with a just and sustainable society. He attributed this successful and sustainable society to the fact that there were dual currencies operating at the time, a yin currency and a yang currency. The yin was abundant, the yang scarce. There was no monetary monoculture as there is today.

The interview finished on the theme that the feminine creative universal force is badly needed at a time when we have seen the Earth our Mother as an “it” to be exploited rather than a Goddess to be worshipped.

Bernard Lietaer and Stephen Belgium in their 2005 book New Money for a New World explain that Jung’s four archetypes, warrior, sovereign, magician and lover needed a fifth. They suggested the missing archetype is the Great Mother.

“The Great Mother was honoured and active over tens of thousands of years and over vast geographic areas. Her presence has been documented from the earliest times of human consciousness. Image has been carved in mammoth ivory, in reindeer antlers, and on stone at the entrance of sacred caves. Great Mother effigies were the most common figures of the upper-Paleolithic period (30,000 to 9,000 BC). Her predominant importance in ancient times is illustrated by the fact that four times more feminine than masculine prehistoric figurines have been uncovered.”

“Archeologist Marija Gimbuta’s Great Mother is the symbol of unity of all life in nature. The power was in water in stone into tomb and cave in animals and birds snakes in fish hills trees and flowers hence the holistic perception of the sacredness industry of all that is on Earth.”

The Great Mother archetype maybe what has been missing from our civilisation. But is it just too late? If so, it must surely be part of the culture of any civilisation that emerges from the Sixth Extinction.

As transition engineer Nathan Surendran recently wrote on an email group, “To me, our job is to ready people for the consequences of not having found a “route to a peaceful but profound transition” in 40 plus years of ‘trying’. We’re so far into overshoot that it is a wholly unrealistic and naively idealistic aim to suggest we can plan for anything other than civilisation ending collapse. Resource depletion and environmental effects are the two blades of the scissors that Gaia will use to castrate our ambitions to avert this logical, fact based and data supported conclusion.”

It is therefore no coincidence that those who have worked on finding ways to reverse climate change like the huge team of Paul Hawken’s Drawdown Project has done, put the education of women and family planning at numbers 3 and 6 in order of importance. Paul Hawken has in a 17 September 2021 lecture, concluded that when you put these two together, “empowerment of women and girls is the number one solution to climate change.”

Government, you are going to have to make me reduce my emissions

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!

Tradable Energy Quotas or Tradable Emissions Quotas? – our discussion rages on

When you fill up with petrol you would surrender TEQ units.

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 2011 states 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.

Why are TEQs better than Fee and Dividend or Cap and Trade?

I am a recent convert to Tradable Energy Quotas (TEQs) invented by the late David Fleming in UK in 1996 for effective climate action. See

https://www.flemingpolicycentre.org.uk/faqs/

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!!

Sustainability and Money

Sustainability and money Deirdre Kent Nov 2020

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.