Are Trees the Answer to New Zealand’s Carbon Woes?

Listener: 13 May, 1995

Keywords: Environment & Resources; 

In order to write about the decision to require any power station built at Stratford to offset its carbon emissions into the air by growing trees, I need to make three confessions. First, I am a tanker greenie. We are unsure whether there is a serious greenhouse effect: the data is equivocal, the modelling subject to error. But we think ecologies are like oil tankers which take a long time to turn. If a possible hazard appears on the horizon it is prudent to take sensible precautions now, rather than ram into the rocks later. The greenhouse effect, which could raise ambient temperatures with unpredictable outcomes is such a possibility. It makes sense to take inexpensive measures now, before it is too late.

Second, I remain unclear whether we need another power station. The energy system has been so confused by structural changes that realistic future projections are far from obvious.

Third, I gave evidence to the Board of Inquiry on the power station, arguing that if there was to be a combined-cycle gas turbine station at Stratford it was both practical, and appropriate under the Resource Management Act (RMA), to require the offsetting of any carbon emissions (mainly carbon dioxide) into the atmosphere by a carbon sink, such as planting trees to hold an equivalent amount of carbon. The Board came to a similar conclusion, in a long thoughtful chapter presumably written by its chairman, eminent barrister David Williams. (As an aside, the finding has much wider implications than just to energy. The offset requirement is likely to be used in all sorts of imaginative ways to enable socially useful developments to go ahead without being a net detriment to the environment.)

In the case of the Stratford power station the Minister for the Environment has adopted the Board of Enquiry’s findings but allowing the possibility of other offsets than tree planting. The obvious alternative is Electricorp could reduce its use of the more carbon emitting Huntly power station.

Why dont the same provisions apply to Huntly, and other carbon emitters? There is no simple answer. In the case of Huntly, permission has been given for it to pollute away without any offset requirements. (I was involved in that inquiry too.) In other cases, such as car exhausts which make up two-fifths of total carbon emissions, there is no requirement. While all major emitters will eventually come under the provisions of the offset requirement, inconsistencies will remain, generating economic inefficiency and wasting resources.

A resolution to the confusion would be to shift from the site by site application of the offset provisions in the RMA, to national regulation. One approach would be to tax all carbon emissions. What form the tax would be has to be decided, since there are various possibilities, some of which are inefficient.

Electricorp commissioned some overseas consultants from the Tasman Institute to examine the impact of a carbon tax. The study has grave deficiencies, perhaps inevitably if you ask overseas experts to model an economy of which they are unfamiliar. However the most unfortunate feature of the study is that they chose a carbon tax which would assuredly give inefficient outcomes to the economy. The result can be derived from pure economic theory in less than a page, so it was quite unnecessary to do the modelling to get the conclusion.

To give one example of the ineptitude of the study’s proposed tax, consider levying all carbon emissions in New Zealand. Thus factories might close down because the additional costs. Instead we import the product from overseas, but because there are no taxes on their emissions the country could end up using imports that caused greater pollution. Carbon gases circulate in the whole of the world’s atmosphere, so both we and the world would be worse off from increased carbon emissions (while New Zealand job opportunities were exported overseas), under the sort of tax regime proposed by the Tasman Institute.

Obviously a shrewder tax regime would avoid that nonsense. Even so, until it is implemented we might suffer from exactly the same sort of inefficiency as a result of the offset requirements of the RMA, as we would from the Tasman Institute’s tax.

Another option, which seems to be favoured by the Minister, is transferrable permits, where polluters purchase a right to emit carbon into the air from those whose actions are creating carbon sinks. These have been used on a small scale overseas, in rather different circumstances. Their application to the carbon emissions for an entire country has yet to be explored, and may well prove impracticable. I will report on the technical papers as they become public.

So there is no easy resolution to limiting our carbon emissions, a matter further complicated by the international ramifications of what we do, and what the world does to us. The Stratford decision may be a major turning point in our contribution to the management of the global environment. At this stage no one is sure which way we are turning.