The government claims that the Zero Carbon Bill “…will develop and implement clear and stable climate change policies… under the Paris Agreement to limit the global average temperature increase to 1.5 degrees Celsius above pre-industrial levels.”[1]
The government also has an expectation that it will reduce New Zealand’s emissions of carbon dioxide and agricultural methane without damaging the economy.
These policies will succeed only if they result in a reduction in global emissions and benefit the economy. In fact they will lead to an increase in global emissions, higher electricity prices and do serious damage to many of our efficient and productive industries. The Green Party, Greenpeace and others are clamouring for more. The poor will suffer most.
We are entitled to expect that the Bill has been drafted by people who have some expertise in climate science and have read the Paris Agreement. Dream on!
If they had read the Paris Agreement they would have come across Article 2 which says “… Increasing the ability to adapt to the adverse impacts of climate change… in a matter that does not threaten food production”.
The Government’s attack on agricultural greenhouse gas emissions will reduce food production, so, by including agricultural emissions New Zealand is ignoring its obligations under the Agreement. We would do more to reduce worldwide emissions by increasing agricultural production – after all, we are the most efficient in the world.
The Bill also seeks to “reduce net emissions of all other greenhouse gases to zero by 2050. Impossible! Water vapour is the most powerful greenhouse gas and is responsible for 70% to 80% of the greenhouse effect? If it was reduced to zero the earth would become a lifeless desert.
The policy on agricultural emissions does not make sense. There is considerable debate worldwide on whether or not methane is a significant greenhouse gas. Some estimates say that it has about 80 times the effect of the same weight of CO2, NIWA says 25, others say that it is only 6 and some are sure it has no effect. If the effect is small, it is not worth bothering about because methane emissions are much smaller than those of carbon dioxide. A wise government would make sure that all the whole scenario – including the Paris requirement to not reduce agricultural output – was properly analysed.
Over the last six months wholesale electricity prices have nearly doubled because of problems with not enough coal in reserve, gas supply, low lake levels in October and. gas supply constraints. Hedge prices as far ahead as Dec 2022 have increased by about 3 cents so a 10% increase in residential prices seems to be inevitable. This will result in about $1 billion of windfall profits to the generators. All because of a problem in October that would never have occurred if the system had been properly managed.
The ban on future gas and oil exploration has paralysed the industry and is likely to mean that we will have to start importing gas. Increased imports of coal will be needed to make up for the gas shortfall and to keep the lights on in a dry year. Higher gas prices will lead to another major increase in electricity prices. We should aim to produce more gas and store some of it for use in dry years and thus eliminate the burning of coal at Huntly.
The most critical factor in power supply in New Zealand is keeping the lights on in a dry year when hydropower energy generation drops by 10% of total demand. Transpower has already warned of a high risk of dry year shortages. To mitigate the dry year risk Huntly needs to have about 1 million tons of coal on its stockpile as a national insurance policy. This will only happen if Genesis is compensated for the annual cost of maintaining an adequate stockpile.[2]
Increasing the tax on CO2 emissions will further increase the cost of power. Whenever Huntly is burning coal it is likely to jack up the wholesale price that is paid to every generator. Hydro and other generators will then reap windfall profits. Every dollar paid in CO2 tax by Huntly will spawn something like $10 of windfall profits. So the perverse outcome will be that the generators will have a strong financial incentive to make sure that Huntly continues to burn coal.
Wind and solar will do little to mitigate CO2 because they require backup from thermal stations when the wind isn’t blowing and the sun isn’t shining. The records show that wind power is least during the critical autumn and early winter period and solar power is least in the wintertime. Both increase the risk of blackouts in a dry year.
Expensive policies encouraging and subsidising electric cars are likely to have little effect because the power they need will largely come from extra generation at gas and coal fired stations and battery manufacture results in significant emissions of CO2. Replacing old cars with newer, cleaner and more efficient conventional cars would be cheaper and more effective.
If the government really wanted to reduce emissions from power generation, it would be consider nuclear power generation. Small modular nuclear reactors that are inherently safe and produce cheap and reliable power will soon be available. Worldwide, 170,000 MW of nuclear generation is under construction or proposed. Our geothermal power comes from the nuclear reactor at the centre of the earth so why shouldn’t New Zealand build nuclear stations?
Another options is to seriously consider shutting down tourism because air travel, New Zealand transport and supporting services is responsible for more than 10% of New Zealand’s total emissions.
Bearing in mind the tiny effect New Zealand can have on global emissions and the huge uncertainties surrounding almost every aspect of climate change, any rational government would first make sure that man-made global warming is real and dangerous and, only if it is, adopt policies that would reduce global emissions in a cost effective manner.
[1] !.5 deg is nonsense. Temperatures have already increased 1 deg. To suggest that another 0.5 deg would bring climatic disaster is ridiculous.
[2] The embargo on gas exploration rules out the alternative of gas storage at Ahuroa even though it could provide the dry year reserve with lower emissions.