Our Climate Shituation

Despite the alarming global environmental emergency, I am so looking forward to pohutukawas in full bloom in New Zealand

The problem with reading too much world news is that you notice so many freak weather events. As I write this, for instance, there are landslides in China, and the drought in Syria is getting desperate. The recent floods in Germany, says the Guardian, were nine times more likely to be caused by climate change than just by chance. The fires in California continue and there has been rain instead of snow at the top of a two-mile-high mountain in Greenland for the first time ever. Floods in Tennessee have caused deaths of twins lost from their mother’s arms and the death toll was rising. There is a flash flood warning in New Mexico. There are fires in Greece again. And in Siberia, Algeria, Lebanon, France, Turkey, Paraguay. The 14,000 foot Mount Shasta of Northern California was just photographed without snow for the first time ever.

Of course that’s when you only have one crisis. Afghanistan is facing three – conflict, drought and pandemic. Haiti has an earthquake, an assassination and a pandemic let alone dire poverty. The Danish Refugee Council says, “Water crisis and drought threaten more than 12 million in Syria and Iraq”. The crop failure in Zimbabwe from the drought in 2017/18 is still affecting food supply and the Red Cross there says, “There are an estimated 5.5 million rural Zimbabweans to be food insecure as a consequence, with 3.8 million people in need of food assistance.”

Stop! That might be enough doom-scrolling for now and congratulation to those who have read this far.

Even in these times of uncertainty, the beauty of nature is there for us to marvel at

Climate and the growth imperative

I guess my new journey started this year when I worked on my submission to the Climate Commission. They were predicting virtually the same GDP in 2050 while emissions had dropped. I thought about the material throughput and all the “chewing up the beauty and spitting out money” (as Charles Eisenstein would say) and I concluded you couldn’t tackle just one environmental problem at a time because the others persist. I argued their brief should be expanded to the whole future so that we had a Futures Commission again.

The  Climate Commission’s assumption of continued GDP growth in rich countries seemed nonsense to me. At the end of her book, “This Changes Everything” Naomi Klein wrote, “the economy is at war with the climate”. But GDP growth results in species extinction too.  What about food insecurity from loss of pollinators? Bronwyn Hayward of the University of Canterbury in 2018 commented, “Having heard the new Secretary-General of the United Nations say at the opening of COP that nothing in these reports, of maintaining it at 1.5C, will affect economic growth, I think we are still living in magical thinking.”)

Over the last few months I have been to Extinction Rebellion websites and learnt about Degrowth. I read Jason Hickel’s Less is More and started a Degrowth column on my Tweetdeck. Would I try to start a Degrowth pressure group in New Zealand? Possible. Then during a Zoom meeting of the Living Economies Educational Trust Nicole Foss convinced me it wasn’t going to happen because it was wishful thinking that any politicians will advocate for this and expect to be elected.

Timothée Parrique, a leader in the degrowth movement has wryly tweeted, “The cool thing about working on degrowth is that everyone loves you. It’s overwhelming really. The idea sells like hot cakes, especially among economists who just cannot get enough of it.” Then he attached a list of examples of how they describe degrowthers – dogmatists, religious fanatics, anti-modern, misguided, wrongheaded, immature. Just imagine the derision that would follow from media and big business interests –and politicians of all stripes are very sensitive to the views of big business.

People asked me if I was writing a book and yes I have collected a lot of material. But I haven’t advanced it recently. I keep reading and thinking. I have understood the myth of green growth, about the declining return on energy invested (EROI) and how that makes the mining of oil and minerals more problematic, both environmentally and economically.

Looking for Components to make Electric Car Batteries. From Foreign Control Watchdog August 2021

After digesting a great article about the limits to mining of metals for renewable energy from a prominent geologist Simon Michaux I can no longer enthuse about electric cars or solar energy or wind energy. Moreover Transitional Engineering Professor Susan Krumdieck has rubbished the idea of hydrogen as a renewable energy.

Maybe rationing will do the trick

On the other hand I have enthused about David Fleming’s great invention Tradable Energy Quotas (TEQs) and advocated for them on twitter. That would prevent instability as GDP declined. And like many of us I have been on Zoom calls where experts talk about climate change and urge various actions, and they almost always finish with the reassurance that if we do a, b or c or all three we will turn it around. COP26 in Glasgow will do it.  Been there, done that.

Many alternatives to GDP have been proposed (OECD etc) but the GDP ‘mindset’ suits the ‘business as usual’ focus on economic expansion of goods and services, i.e. growth, over wellbeing. In fact New Zealand is cited as an example of a country which has wellbeing indicators, but there is no regular reporting of them in the media. In contrast business reporters regularly celebrate the growth of the economy.

Or protesting?

By chance then I watched a talk by the delightful researcher Brenè Brown who had interviewed many courageous people. She asked them if the main thing they had to overcome was fear. No, they said, it was the armour you put round yourself to justify and explain your lack of action that stopped you acting. Fear was with you all the time.

So I reflected on the armour I put on. It goes like this: I say to myself, no I am not going to do this or that because I am a researcher/writer and that doesn’t fit with my self-image. So I decided to abandon the armour and get into protest mode. Having never been a big protestor except during the Springbok Tour and a joining a big climate change protest, at the time I was suddenly incensed that the All Blacks had signed a deal with INEOS, the oil company. I bought materials to make placards and made contact with others. A date was set. I practised my sign-writing.

Then lockdown came.

I was recently at a meeting where, after a conversation about the inaction of local and national government on climate, a person I respect said, “Don’t go down that rabbit hole I would never come out.” It set me thinking.

The Limits to Growth

In 1975 I was a candidate for the Values Party, three years after the landmark report The Limits to Growth which concluded that if global society kept pursuing economic growth it would experience  a decline in food production, industrial output and ultimately  population within this century. The Values Party had the nerve to question whether GDP was always progress. Twenty years later I was to learn the role of the money system in creating this growth imperative. Forty years later Wise Response, a group of environmental academics based in Dunedin, has been making submissions pointing out the limits to growth to government for years.

Then came Gaya Herrington’s article. She works at the accounting firm KPMG and holds a master’s degree in Sustainability Studies from Harvard University. Her July 2021 report appeared to show  that controversial 1972 study predicting the collapse of civilisation was – apparently – right on time. Both of the most closely aligned scenarios  with the data (“Business and Usual” and “Comprehensive Technology”) indicate that business as usual, pursuing continuous growth, “is not possible,” even when paired “with unprecedented technological development.” Such scenarios “would inevitably lead to declines in industrial capital, agricultural output, and welfare levels within this century.” In an article for the Club of Rome she says, ” The strongest conclusion that can be drawn from my research therefore, is that humanity is on a path to having limits to growth imposed on itself rather than consciously choosing its own.”

When I  watched an hour long talk by ecological economist William Rees called “Climate change isn’t the problem, so what is?” I was struck by the graph of steadily rising emissions  in the atmosphere with several landmark climate conferences placed in it. He said there were 34 international climate conferences held over 50 years and half a dozen major agreements.. “and they don’t produce a dimple on this rising curve of carbon dioxide emissions.” I couldn’t help wondering what makes us so optimistic and that the trend will suddenly stop. What on earth is this conclusion? Are we an intelligent species or not? That version of optimism is more like wishful thinking, which decides what works and tried to force that idea to work, even if it doesn’t.

The Paradox of Post Doom 

Recently I have been reading the book edited by Jem Bendell and Rupert Read Deep Adaptation: Navigating the Realities of Climate Chaos and then my YouTube threw up a talk by a fellow I had never heard of. At first I thought he was a fraud. He was talking about writers I had never heard of. Then as we went further into his extraordinary presentation, I paid more attention. He said the decline was already happening and eco-anxiety was normal and healthy. He is Rev Michael Dowd and has a website http://postdoom.com. In his podcast section he lists his interviews with people like Shaun Chamberlin, Jem Bendell, Rupert Read, Richard Heinberg, Gail Tverberg, Steve Keen, Joanna Macy, Matt Slater, Steve Bhaerman, Paul Ehrlich and many, many others, asking them the same set of questions about the future.

I have now listened to several of these interviews. Rupert Read, who often uses the sentence, “This civilisation is over” gave a very thoughtful interview. He related the story of how in 2018 he wrote a piece and sent it on email to several colleagues, asking them not to send it on. They replied saying it was worth publishing but he was too apprehensive so published it under a pseudonym. Once again a good response. He said he had a huge surge of energy to live a good life of service to others after he went through the door of gloom and grieving. Michael Dowd and he agreed on this. It’s a huge paradox. You don’t have to get stuck in a state of despair or cynicism, you don’t need to get paralysed. Once you stop fighting the denial, once you resist falling into the trap of compulsory optimism and hope, relief sets in and you emerge energised. The unnamed unease is gone. It’s a relief to face reality and the energy you spent in denial or false optimism is now available to use.

Similarly Jem Bendell was reluctant to put his thoughts out there in public for a start and got a fair bit of flak from his 2018 article Deep Adaptation.

So what is the alternative now? Face the coming decline of our civilisation and live a good life on this wonderful planet.

My observation is that the demand for economic growth will always trump meaningful action to halt the decline of the ecosystem on which we depend. It happens within Council’s departments and in Government departments and in Cabinet. It happens when global fossil fuel corporations, fixated on quarterly reports and profits, rationalise their way to ever greater extraction of oil and gas and coal. It happens because of our systems of government seem powerless to stop them.  It happens after every international climate conference.

Why? Many years ago I did some quick research on the interlocking directorships of the major companies in New Zealand – banks, utilities, energy, transport, alcohol companies and so on and I came reluctantly to the conclusion that these few men were more powerful in many ways than the government.

Insisting on optimism in the face of so much evidence is maladaptive.

Just because our species has messed with the planet’s climate doesn’t mean there isn’t joy in gazing at beauty.

I am not sure where this will all take me. All I know is that during lockdown I am standing in awe at the miracle of spring, of emerging life. Just because I have somewhat given up hope that all my work and the work of countless others over the last decade or two on climate change will come to anything it doesn’t mean I will stop working. There is life on the other side of contraction and collapse. There are plenty of victories that can be won. There is community to build, there is my garden to tend to, there are people to care for and who care for me. There are things in our culture to save.  All civilisations eventually die and homo colossus will not be spared. But what will rise from our mistakes? What lessons will be learned? How many groups will emerge and where? Will they be more humble, ecologically sustainable and equitable?

I am no more pessimistic today than I was last year. I smile as much. I cook just as many tasty meals. I laugh and sing still. It’s just that I believe it is time to face the fact that we are spoiling our home and it is probably irretrievable. Our civilisation is dying and the die-off will not be equal or fair. It’s time to grieve and emerge from the grief stronger and more loving.

As Ronald Wright observed in The Short History of Progress, civilisations like Easter Island and the Maya civilisation often fail because of some combination of overpopulation, environmental degradation, warfare, shifting trade routes and long drought. He argues that all successful cultures eventually fall victim to “progress traps” – technological adaptations which all allow excessive collection of resource wealth leading first to luxury, and then inevitable collapse. These cultures, before they collapsed, showed evidence of the development of social elites who contributed to the environmental abuses – another example of how our human species is so fragile. But whereas in all of these cases the collapse was local this time it involves the whole planet.

Now if you will excuse me there is new growth on my tamarillo tree to marvel at.

 

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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:-

  1. Economic growth is dependent on energy growth.
  2. Therefore the economy will decline if energy use declines.
  3. 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!

 

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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.

 

 

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Why has NZ managed to increase its net emissions since 1990 while others reduced them?

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:-
  1. 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.
  2. no cap on emissions.
  3. 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.
  4. 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, the NZ 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”.

 

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We’ve had ETS since 2008 but how much has it affected you?

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.

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The danger of obsessing over stomach-churning stories about the climate emergency

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)

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How would TEQs work for those who live rurally?

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.

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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

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!!
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Tradable Energy Quotas (TEQs) – Rationing that works

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 deirdre.kent@gmail.com as we are trying to start a movement to promote TEQs.

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Councils should have power to create rates vouchers

Councils should have the power to create rates vouchers

Recently we heard from Auckland Council about their dire financial situation. The Herald reported 23 May 2020 that they had “put together a $65 million hardship package for people struggling to pay rates as a result of the Covid-19 pandemic. They were also looking at reducing some services temporarily and selling or leasing more non-core assets.”

Mayor Phil Goff “has firmed up a Herald report this week that council stands to lose $500m in the next financial year”, saying the council expects to have $550m less cash and it is conducting a review of jobs with redundancies likely.

Frankly this is not on. As citizens we rely on councils for potable water, sewage disposal, community halls, swimming pools, libraries. Without functioning wastewater systems we would have floods every time there was a downpour. After the 2001 earthquake Christchurch citizens told us how important it was to have water and it was more basic than having electricity.

In January Hutt City Councillors held initial discussions about what’s been recognised as a national challenge facing local government – funding the renewal of water infrastructure, with some estimating the investment required across the country to top $17.2 billion over the next decade.

And then there are the wastewater and stormwater systems to maintain and upgrade. The ‘three waters’ deliver public health, economic and quality of life benefits for communities.

So we solve one health crisis and are threatened with another.

For years Councils have been telling central government that they can’t continue to require higher standards for the purity of water and other legislative requirements without the matching funds to do this. The burden of climate adaptation falls mostly on councils as they struggle to get their wastewater systems upgraded to cope with more severe floods. They are faced with having to retreat from the coast after coastal erosion has made sea walls impossible to keep rebuilding.

The Fox River landfill disaster after a downfall in southern Westland was the first of many.  Almost 20 historic landfill sites in the Tasman district are at risk of being exposed by storm surges and sea level rise. Auckland has 89 of the 112 landfills nationwide at risk from just half a metre of sea level rise, and dealing with them may come down to excavating and completely moving them.

In summary Councils have too little money for too much responsibility and that includes keeping residents safe from big weather events and from health hazards of declining water standards, rising sea levels, waste pollution.

The Covid 19 situation means that local authorities now face rates defaults and deferrals, especially from business. We are now in a situation where, no matter how much we all want to support local businesses, in reality after our first burst of enthusiasm we are more reluctant to part with our dollars and just walk past the cafe. Just hold on to the money, you might need it in the future, says our lockdown brain. The problem is we have a currency that is trying to be a currency for saving and a currency for spending at the same time, and these functions clash, particularly in deflationary times.Councils need another superpower

Now we come to the suggestion. Various schemes have arisen  in communities since the lockdown.

SOScafe.nz was set up in March by David Downs following the announcement. Through the site people can buy vouchers or gift cards for their local cafe and restaurant, which can be redeemed at a later date, ‘when this is all over’.

This morphed into SOSbusiness.nz. You can now buy vouchers for businesses in 28 regions of New Zealand online. Garden centres, local hardware stores, cafes, greengrocers, hairdressers and dressmakers are all in. Everyone is asking the question: How do I support my local businesses? What can I do for my community economy? The only trouble is that to date the councils haven’t considered themselves part of the action. And of course the single store vouchers have a very limited life. A voucher is bought then redeemed at the issuer’s store and then it is all over. It doesn’t circulate any more than this.

This proposal is that only when it is redeemed at the council for rates it is cancelled because you only need one issuer, the Council. When it comes back to Council in the form of rates it is cancelled. The rest of the time it circulates as a currency in the community. Unless this local voucher is redeemable for the payment of something essential like rates  it will not circulate properly. That is what gives it its value.

Time for a New Superpower for Councils

Unprecedented times means we consider what was previously unthinkable. Local Councils have legislative power to levy rates on homeowners, but they do not have the power to issue money. As Reserve Bank Chief Economist Yuong Ha told broadcaster John Campbell on Tuesday May 19th, the Reserve Bank has this power to create money . “It’s our superpower”, he said. “Just as the Government’s superpower is to levy taxes and change them.”

So if we gave Councils the power to issue money, what would that look like? It could be in the form of a rates voucher, good for the payment of rates to that Council. The former leader of the Social Credit Party Bruce Beetham when he was Mayor of Hamilton in 1976 proposed financing municipal projects with “rates vouchers”, but the council’s lawyer advised it was illegal and it never got any further.

It is time to make these vouchers legal. In order that they facilitate as many transactions as possible and do as much good as possible they should be designed to circulate fast within the council’s area. So they should decay in the same way as ordinary goods decay. Manufacturer Silvio Gesell in the late 19th century’s Long Depression had unusable goods in Argentina warehouse, while he noticed those with money just hoarded it or increased their money due to interest. He argued that money if it is to represent goods must have the same undesirable qualities. He wrote,  “Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron and ether.”

The Miracle of Wōrgl

After decades of attracting loyal followers, during the 1930’s Great Depression, Silvio Gesell’s ideas were put into practice.  In the small town of Wōrgl, Austria 1932 the Mayor put aside 20,000 schillings and used them as backing for notes called Work Certificates. They paid their employees partly in Work Certificates. Each note had 12 spaces on the back and a stamp had to be stuck on every month to validate the note. To avoid paying for the stamp people spent the Work Certificates quickly. Locals paid their taxes early to avoid the penalty. The city paved roads, built a bridge, a reservoir and a ski jump. Unemployment declined dramatically in the area – in stark contrast to the ongoing unemployment in the rest of the country. The currency was so successful that people came from miles around to witness what they called “the Miracle of Wōrgl”. But within 15 months, after pressure from commercial banks, the government made it illegal and Wōrgl went back to unemployment.

Of course nowadays  we don’t need actual notes. Paying in local vouchers can be done electronically and this would probably require the Eftpos terminals to accept two different currencies, one local and one national. I’m sure this challenge can be met. And in these extraordinary times Government must contemplate changing the laws to make these local rates vouchers legal tender. Otherwise any venture would be short lived. They will be victims of the same bank tactics as in 1933 Austria. We must learn from history.

Safeguards needed

Of course built into the legislation there must be a provision to control for inflation. The Reserve Bank has very limited ways of controlling the money supply these days. They can keep interest rates down to stimulate lending from commercial banks and force banks in other small ways. Fortunately with rates vouchers there are two methods of controlling inflation. One is to limit the number of vouchers spent on labour. Wōrgl found that after a very short while they had to withdraw about a third of their notes because they were circulating so fast they were causing prices to rise. The second is to adjust the rate of decay. Like your Flybuy points they drop off if you don’t use them. This rate is not just -1%  a year. Wōrgl started off with a -12% rate, which was obviously too strong. So there will have to be  local currency control committees everywhere for this job, perhaps elected.

This would save councils, ratepayers, businesses, and customers precious national dollars. It would provide councils additional funding for necessary local  projects, and be especially useful for paying labour. When our very health is at risk Government can’t go on watching Councils suffer. Nobody wants libraries or pools to close or sewage to flow down the rivers. Nobody wants decaying infrastructure or broken roads.

The second safeguard is this. The late Jeanette Fitzsimons, when asked her opinion on this currency, said she would worry that the last trees would be cut down, the fish would all disappear and all the  rivers would be dammed. So it will throw up the urgent need for strong and effective resource taxes to prevent this.

“Buy local” on steroids

Public discussion so far has largely focussed largely on the huge Quantitative Easing programme of the Reserve Bank  to buy Government bonds to stimulate the economy.  Yes we need more money in the economy. But the velocity of circulation has been a neglected factor in kickstarting the economy. This can be achieved by having a well designed new currency working alongside the national currency. When vouchers have a circulation incentive they itch in your mobile phone, asking to be spent. The voucher’s design changes the consumer’s mindset. It is a spending currency. The national currency is our saving currency and is used for buying imports like petrol, machinery, spices, coffee and cars.

A voucher designed this way would stimulate the community economy like nothing else. Here is how it might circulate within the local economy. A clerk at the Council receives rates vouchers as part of her pay. She spends some of them at the dressmaker who spends it at the wine shop. The wine shop owner spends it on fruit trees at the garden centre. That owner spends some of it at the dairy. The dairy couple, who have accumulated a lot of vouchers that week, decide to pay their rates in rates vouchers early before the penalty happens.

If we want now to implement the “buy local” mantra and have thriving local economies, we have to learn from experiences in the Great Depression and step out boldly. Given the appropriate safeguards the Reserve Bank could well agree with the idea. If the Reserve Bank was happy, the politicians would hastily amend the various laws to lift us out of this awful economic crisis.

Deirdre Kent is the author of Healthy Money Healthy Planet – Developing Sustainability through New Money Systems, 2005 and The Big Shift – Redesigning Money, Tax, Welfare and Governance for the Next Economic System, 2017. She lives in Waikanae. She is involved in the Living Economies Educational Trust.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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