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.