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Heather Roy's Diary

Friday, August 29, 2008

Heather Roy's Diary

It's been quite a time in Parliament this week, with Foreign affairs Minister Winston Peters continuing to dominate headlines and refusing to answer perfectly reasonable questions around the donations that he and/or his Party received from different sources.

Mr Peters' troubles have been magnified by the conflicting reports of various donors - particularly Owen Glenn, who gave Mr Peters $100,000 to assist with the legal costs of defamation cases the NZ First Leader was (and still is) pursuing.

Yesterday was particularly action-packed: the Serious Fraud Office officially announced it would be investigate Mr Peters, and the House passed the second reading of the Climate Change (Emissions Trading and Renewable Preference) Bill with last minute support from NZ First.

Despite questions and allegations around whether Mr Peters has acted ethically in receiving and using donations - with revelations of secret trust funds and disgruntled donors claiming their donations haven't gone where they ought - he has had Helen Clark's steadfast support.

Miss Clark stood by her man, repeatedly saying she accepts Mr Peters' word that he acted honourably. It appears, however, that she was so desperate for his support on the ETS that she prolonged his political life until she had it tidied away. Now, with evidence mounting - and increasing calls for Mr Peters to be stood down - her deaf ears may become unstoppered.

With the ETS Bill having now passed its second reading, Miss Clark has said she will talk with Mr Peters and there are expectations he will be stood down. A cynic like me might conclude that the only reason she stuck by him is because she desperately needed his vote on the ETS Bill.

The Climate Change (Emissions Trading and Renewable Preference) Bill
Many may ask why the ETS Bill is so very important to the Labour-led Government - especially to the Prime Minister. The answer is that Miss Clark has staked a claim to being a world leader at tackling man-made carbon emissions and, so, must now back her words up with action.

The sense of this is lost on many people - including me - given that New Zealand contributes only around 0.02 percent of the world's total carbon emissions.

But over the years talk has reached fever pitch around greenhouse gases, global warming –since re-named climate change - Kyoto Protocol requirements and carbon trading. As such, New Zealand is about to launch head-first into a complex carbon trading scheme that is likely to have little effect - if any - on carbon emissions.

While having absolutely no effect on world carbon emission levels or global weather, the ETS WILL have an effect - it will raise electricity prices, fuel prices, and trade. Farmers have the most to lose and - while Labour is yet to explain how the ETS will improve anything other than Miss Clark's future career prospects - many face the prospect of losing their farms and livelihoods.

The real issue should have been: do we need an Emission Trading Scheme at all? Science and commonsense seem to have been placed on the back burner but they should certainly have been the basis of sensible decision-making.

The Greenhouse Effect
By day the Earth is warmed by the sun's rays, with some of that energy radiating back into space as infra-red radiation at night and being captured by ' Greenhouse' gases. Unfortunately, the ' Greenhouse' effect has been given a bad name - without it the Earth would be bitterly cold.

The most effective greenhouse gas is water vapour - more commonly known as cloud. As most people know, there is seldom a frost after a cloudy night as the cloud traps the ground's heat.

The second most important greenhouse gas is carbon dioxide. Although naturally-occurring, CO2 concentration in the atmosphere has risen over the past 200 years - which is blamed on human activity, especially burning coal and oil. These rising CO2 levels are blamed for global warming - which, it is widely purported, will cause more storms and a rising sea level.

Other scientists argue that the CO2 variation is largely a result of natural factors. Therefore, our very expensive efforts to reduce CO2 emissions are wasted. I do not fully subscribe to the mainstream view, for which the science is inconclusive ... but there can be no doubt about its political consequences.

The Kyoto Protocol
In 1997 an agreement was negotiated in Kyoto to decrease CO2 emissions by five percent from the level in 1990. While most participants made no undertaking to decrease their emissions, New Zealand did and has undertaken to decrease our output by five percent by 2010.

Since then, our actual production has risen 27 percent - and there are penalties for failing to meet targets. While Labour seems unable to cope - its plan to tax methane burping from cows (the Fart Tax) was laughed off stage - any government paying huge cash penalties for exceeding targets will be very unpopular.

Carbon Emissions Trading Scheme
Which brings us back to the calamitous carbon trading scheme - aka the devilishly complicated Climate Change (Emissions Trading and Renewable Preference) Bill or ETS.

Under the ETS, certain businesses will carry ' obligations' to cover carbon emissions. The Government will decide who carries obligations - it is easier to target businesses, for example, than every Kiwi who emits carbon through driving their car. It is expected that there will be around 200 points of obligation, and these businesses will be forced to participate in the New Zealand trading scheme.

Oil companies are an example of a business likely to be ' under obligation' for having created CO2. They will have to pass the cost to the consumer to offset the cost to themselves. Businesses producing CO2 will have tradable emission units, ' New Zealand Units', to cover their CO2 production. NZUs can either they will be purchased, or allocated free of charge.

While the Government has indicated that it will freely allocate NZUs in many sectors, entities that can pass the cost on to customers - such as electricity generators and fuel companies - will have to purchase their NZUs through auction. Overseas experience shows that trading schemes can be subject to abuse, with the buyer and seller colluding to prop up the price.

If you're confused, you're not alone. But we're still forging ahead - thanks to Winston Peters receiving a political lifeline to enable Helen Clark to look as though she's doing the right thing.

Only ACT opposed the ETS at its first reading and we remain opposed to this dopey legislation. If anything is needed - and we're not convinced that's the case - a fairer way is to introduce a carbon tax that would see the polluter pay. The incentive then, would be to keep emissions low.

This is deal-making at its very worst, which will disadvantage those least able to afford it in our communities. Thankfully the election isn't far away and the people will get to have their say.


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