There’s a good case for meeting emission targets with free-market remedies rather than central planning

Richard  Prebble,  in his  column  in the NZ Herald, is  dismissive   of the Climate Change Commission’s draft plan to reduce carbon emissions to fulfil  NZ’s  obligations  in meeting the global warming threat.

He contends the commission is proposing to  centrally plan  the economy for the next 35  years — but it’s impossible to plan 35 years out .  “It  would be like today’s economy having been planned in pre-internet 1986”.

Prebble  writes:

“So when faced with an existential  threat  like global warming why would a  government respond by using an economic tool, central planning, that has never worked?”.

The  commission intends

  • The closure of aluminium and methanol production,
  • a switch from coal, diesel and gas to electricity,
  •  dairy, sheep and beef animal numbers reduced by around 15%,
  • phase out imports of light internal combustion  engine vehicles,
  • no further natural gas connections to the grid or bottled LPG, and
  • more walking, cycling  and public   transport.

Prebble  argues politics will decide what is fair.  Some firms will be given privileged allocations and then have their competitors’ products banned.

Bureaucrats will decide which  businesses  to  reward   and  which to ruin.

“It  is  time  to  stop gesture politics. Put  the whole country under  the  Emissions  Trading Scheme, set a cap on  emissions, and  let the free market do its  work”.

The  points  Prebble  makes   will resonate in some  quarters.  Certainly  the  Ardern government’s own  performance  in its  first term on such complex  issues as  housing, infrastructure or  child poverty  doesn’t  inspire  confidence  in its capacity  to  resolve complex  issues.

Yet   societal  pressures  to  combat the  visible  impacts   of  global  warming  are  mounting,  and  the  government  can  hardly   dismiss summarily  the  commission’s draft  plan  as it  did the Cullen report  on a  capital  gains  tax  or the  Bolger  report  on  fair pay.    

Could  Prebble’s  champion — the  free market — itself  come to  the government’s  rescue?

There   are  signs   that enlightened   business  leaders are   seized   with  the  need for  action.  This week, in Australia, the ANZ  Bank  is  reported  to have  decided  to  withdraw  from lending funds  for  coal  port development  at  Newcastle.

Elsewhere  the  big international insurers  are pulling  back  from   covering risk in the  coal industry.  Whether  this   was  the  issue   behind the  decision of Bathurst Resources to close   its Coalgate mine  in Canterbury  is  not  clear, but  it  means   that  Fonterra’s  milk-drying plant at Darfield  will  have  to find  another  mine  to  supply  the  90,000 tonnes of  coal it needs — or else  switch  to a  green energy source  as  climate change warriors have been urging for some time.

With  banks  no longer  lending to the  coal industry,  which at  the  same time  can’t get  the  risk insurance   it needs for its operations, companies   will  find their  viability  coming  into  question.

There  is  a  lesson here for other  industries — the  dairy industry, for example, should be  strengthening its green credentials  by  moving  to cut  methane emissions.   

As  this  trend  expands, the  big international investment  giants, like  the  US  Black Rock , will  channel  their  new funds  towards environmentally  friendly  industries  rather  than coal mines  and  oil producers.  This  trend   will strengthen  as  those    companies  which can boast   they are on top  of the drive to  cut their carbon emissions steal a  march  on competitors,  and  win the   kudos of  analysts.

In  this country, the  NZ  Superannuation Fund   has for  some  time  been  eschewing directing  any investments in businesses  which  haven’t towards the  sustainability  a  climate-conscious world  demands.    

 

One thought on “There’s a good case for meeting emission targets with free-market remedies rather than central planning

  1. When is someone in authority going to ask about the elephant in the room: where is the EVIDENCE (as distinct from computer guess work and almost religious belief) that “emissions” (presumably Carbon Dioxide – all 0.0415% of it from all sources both natural and animal) can or does warning that hasn’t happened before and to which we have always been able to adapt?

    Liked by 1 person

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