Sinogetically stuffing the basins?

Pulling a few strands months apart together, is there a link between Paul Sheehans story (below) about how the expansion of Coal Seam Gas production is going to impact water availability for downstream food producers with last years agreement to sell Cubbie station to a Chinese consortium (now completed).

We'll reap what we deserve
Paul Sheehan, SMH

Consider this remarkable statistic: according to the maps published by the Queensland Murray-Darling Basin Authority, the area covered by mining leases in Queensland's Murray-Darling catchment area is now 40 per cent.

Think about that. Mining is water intensive. It consumes as much water as agriculture. It is going to be impossible for extensive new mining operations in Queensland not to impinge on the production of food downstream.

Last week, the Federal Minister for the Environment, Tony Burke, granted approval to expand coal seam gas projects in NSW that represent a potential 500 per cent increase in the state's coal seam gas production.

Last month, Cubbie Station, the vast cotton-producing and water-diverting farm operation in the head of the Murray-Darling catchment area in southern Queensland, was sold to a Chinese-led consortium for $240 million.

This was a golden opportunity missed. According to the CSIRO, the cotton industry uses about 1600 litres of water to generate $1 of output. During a 12-year drought, in 2009, Cubbie went into voluntary administration with a debt of $320 million.

Well, how much water are we talking about here? The ABC has the numbers.

How much water will the CSG industry use?
Jun 28, 2012

Australia's Great Artesian Basin and its underground aquifers are a vital source of water; farmers and other bore users are given allocations for their use.

By 2014, the Commonwealth will have spent nearly $150 million under the Great Artesian Basin Sustainability Initiative, capping bores and fixing pipes to conserve water.

The coal seam gas industry is entitled to remove massive amounts of water from groundwater systems.

The Queensland Government says that if CSG mining causes groundwater levels to drop below specified "trigger" points then companies must "make good" to affected water users. The trigger points are:

a five-metre drop in bore-water levels for sandstone and fractured rock aquifers;
a two-metre drop in bore-water levels for alluvial aquifers; and
a 20-centimetre drop in the water table surrounding springs.

While the Queensland Government has set out the make-good arrangements, there is concern over how these will actually work in practice.

There is a fierce debate about the amount of water the coal seam gas industry will extract from underground, and what impact it may have on the sustainability of the Great Artesian Basin.

The industry suggests it will pull out somewhere between 126 gigalitres and 280 gigalitres a year, while the National Water Commission puts the figure above 300 gigalitres a year.

Others, including the Water Group advising the Federal Government, suggest it is higher still.

Which by a happy coincidence is about the same amount as the combined tradable water entitlement of Cubbie Station

Should the CSG bound for China stuff up the Great Artesian Basin, the new imperial overlords owners of Cubbie Station are free to sell (or lease) their water to whomever they so choose. The presence of other large Chinese interests in the area that might be interested in tradable water rights is purely coincidental.

OF course water from Cubbie would never be pumped back upstream in the "unforseen" event that farmers could not use Great Artesian Basin water - which is no ones fault - not even the imperial over owners of Cubbie. What affected farmers upstream could receive is the right to have the water.

Just speculation of course, but I'm reminded of Russ Hinzes convergence of interests.

New Zealand’s double dealing and special pleading over the second Kyoto Protocol period: part the second

As the New Zealand Government decided not to join a second commitment period of the Kyoto Protocol, today is the last day New Zealand has an international greenhouse gas obligation. To mark the end of the Kyoto first commitment period, Robin Johnson's Economics Web Page provides the second of two posts on New Zealand's Kyoto opt-out.

Is New Zealand's Minister for Climate Change Issues Tim Groser a Kyoto pariah? Or a Kyoto visonary? A global emissions reduction emissary or is he tar-sanded with a Canadian brush? I once more try to make sense of New Zealand's double dealing and special pleading over the Kyoto Protocol second commitment period and the Doha hooha. This time with the aid of the man himself. Tim Groser has written an opinion editorial in the New Zealand Herald.

Tim Groser, New Zealand's most forthright Minister for Climate Changes, has a shocker of an Op Ed in the New Zealand Herald.

When I first read it, I wrote down my responses to what seemed the most misleading claims. The headline shocker is that either Tim Groser is so out of touch with his portfolio that he has no idea what the current price of carbon in New Zealand, or he is so incompetent that he can't tell US dollars from NZ dollars.

But there are shockers for all of us. I present Groser's quotes in italics and in indented blockquote format, followed by my response in plain text and no indents.

TG: "It's time to move past Kyoto agreement"

Canada o Canada. Groser is channelling Canadian Minister of Environment Peter Kent "Kyoto for Canada is in the past."

TG: "The unrelenting emphasis (on Kyoto) has sucked energy out of debate, diverting attention from the real problem."

This is a classic PR spin tactic of diversion. Groser wishes to divert attention towards the USA, China and India and away from New Zealand's double dealing.

TG "The science, as I interpret it, remains pretty clear"

Yes, Tim Groser does not deny the science, it's just that National and Mr Groser have no intention acting domestically in any way consistent with the science. Perhaps that makes him a 'policy denier'

TG "The international community needs to develop a more robust approach involving far more of the major emitting countries. Whatever New Zealand does will be completely irrelevant unless the major emitters participate."

Canada o Canada "We support a new international climate change agreement that includes commitments from all major emitters. That is the only way we are going to achieve real reductions and real results" Canadian Minister of Environment Peter Kent.

TG "some of the confusion has been deliberate"

Ah the old fifth column within, the extreme green economic traitors, those awkward truth telling ecologists like Mike Joy, Ha I can just find some with other opinions.

TG "First, the ETS has not been "gutted" by the changes passed recently in Parliament"

No, because the NZETS was "gutless" from day 1, as it has no cap, and it always allowed unlimited importing of international units. In 2012, National did defer indefinitely agriculture's entry and extend indefinitely the provisions for half-price emissions for emitters (2-for-1 deal).

TG "No New Zealander - no household, no company - has to pay more, or subsidise anyone because of this decision"

Except New Zealand Aluminium Smelters Limited and Norske-Skog Tasman.

TG "Our top priority is to strengthen the recovery in extremely difficult international economic times."

That really means Groser's top priority always was to have an emissions trading scheme with a more-or-less zero carbon price.

TG "the (NZETS) legislation was, in effect a , a one-way bet taken on the last day of the Labour Government's life in 2008 that the 2009 Copenhagen Summit would deliver a 'single, comprehensive and ratifiable climate change agreement' (the political mantra of the day)."

That statement is a totally revisionist Chairman Mao-like rewrite of history to suit a political agenda. The staggered entry of sectors dates back to Helen Clark's MOU with agriculture signed after the Belch Tax debacle. It also reflects political lobbying by Business NZ and the need to find votes of support from Peter Dunne to get the legislation passed.

TG "We no longer have to pass amending legislation to avoid an automatic ramping up of the scheme, irrespective of either economic conditions or international progress."

By saying this Groser lets us know that for National the delayed entry dates and the apparent all-sectors design were a "Potemkin village". National never had any intention of bringing agriculture into the NZETS.

TG "At current low international carbon prices - they move around but they are clustered around $5 - there is indeed little petrol in the ETS tank. But that is exactly the way it was designed - to be aligned to world prices, whatever world prices are, up to a cap"

To me this is so gobsmacking it's...Hekia Parata. Groser has no idea what the current NZ carbon price is! Groser can't even read the price of a New Zealand unit (NZU) off the Bloomberg website without confusing US dollars and NZ dollars. What an idiot!

Here is the chart Groser can't read

The NZU price is NOT "around $5" Its around $NZ2.50/tonne

So Tim Groser says the NZETS is designed to import the international carbon price and thats a good thing. If it is so good being wedded to international prices, why has he taken us out of the Kyoto Protocol second commitment period?

TG "The domestic political debate has confused the structure of the policy with the international drivers of the carbon price."

Thats just adding insult to financial injury to the Kyoto forestry sector where some have has lost 80% of the value of the post-1989 Kyoto forests. It's a double blow, as the Government is keeping forestry removal units (earned for the same forests) to itself to fudge the Kyoto net position.

TG "watch what happens to the carbon price when the international recession is over and the EU moves to strengthen carbon markets and, hopefully, more countries start adopting carbon policies. You will then hear, no doubt, the exact opposite of the current political debate. Foresters will be happier as the carbon they sequester becomes more valuable (paper profits unless they sell them) and emitters will be less happy as they pay a higher carbon price."

Thanks for lecture on prices, Tim. By the time the Eurozone has dealt with the over-allocation their carbon markets, and if they ever do, it will be way past 2015 or 2016, and New Zealand won't even be in Kyoto's second commitment period and Tim Groser will probably have canned the NZETS by then anyway!

TG "NZ continues to make remarkable progress in increasing the share of our electricity coming from renewable energy - it is 77 per cent and climbing."

Tim Groser is taking credit for past Ministry of Works hydro projects. Does he really think the public are so stupid as to see that argument as in any way relevant to climate change mitigation? Meanwhile the younger generation are calling for the power shift to 100% renewable electricity. How long until Groser calls them 'extreme greens'?

TG "So is this a great time to put new costs on our major exporting industry when we have a huge need to increase our exports?"

I could say how else could a carbon price work if it is not a real cost? How can any NZ carbon price policy be effective if half the economy is out? This is Groser's and National's real policy bottom-line. Exports uber alles! Exports above all else! National truly and obviously have no intention of pricing New Zealand's domestic greenhouse gas emissions.

TG "Our agriculture sector is, by and large, the most carbon efficient agriculture sector in the world."

Thats very Bruce Wills of him. So agriculture will be fine with a no-exceptions emissions trading scheme or carbon tax.

TG "This is the Global Research Alliance on Greenhouse Gas Emissions, which we lead."

Great but what pays for it? Thats right, taxpayers. So that's a subsidy, then. Having agriculture in the emissions trading scheme would help pay for it.

TG "A few days ago we joined another international initiative on climate change - the Climate and Clean Air Coalition"

Great! so now we mitigate climate change by friending someone's Facebook page. I think I will let William Nordhaus know he doesn't need to run carbon pricing on the DICE global model anymore as it's all on Facebook.

TG "It is time to move beyond Kyoto and find a solution that can have a real environmental impact."

Canada o Canada. "Kyoto for Canada is in the past..","Copenhagen and Cancun agreements, which were negotiated in 2009 and 2010 as the world stared down the end of Kyoto, are the future." Peter Kent, Canadian Minister of Environment.

TG "We are on track to meet or exceed our Kyoto commitment to 2012."

Only because of the "Kyoto escalator" of the gross 1990 baseline for the net target forest fudge.

From 1990 to 2010, New Zealand's gross emissions grew by 20%, from 60 million tonnes (mt) to 72mt. Net emissions grew by 59% (from 32mt to to 52mt (data New Zealand's Greenhouse Gas Inventory 1990-2010) So both gross and net greenhouse gas time series show a relentless upward trend.

So for my conclusion, I might just recycle some from a previous post. But with one difference.

1. When we hear Tim Groser talking of focusing on a global climate solution that involves 86% of the emitters that can have a real environmental impact, we now know he is just recycling speech notes from Canadian Minister Peter Kent and diverting attention from New Zealand's policy shambles.
2. Tim Groser and National have absolutely no intention doing anything domestically to reduce emissions of greenhouse gases.
3. Tim Groser and National also have absolutely no intention of imposing any real carbon price on New Zealand's industrial and agricultural emitters.

New Zealand’s double dealing and special pleading over the second Kyoto period: part the first

As the New Zealand Government decided not to join a second commitment period of the Kyoto Protocol, today, the 31st of December 2012 is the last day New Zealand has an international greenhouse gas obligation. To mark the end of the Kyoto first commitment period, Robin Johnson's Economics Web Page provides the first of two posts on New Zealand's Kyoto opt-out.

Is New Zealand Climate Change Minister Tim Groser a Kyoto pariah? Or a Kyoto visonary? Is he a global emissions reduction emissary or is he tar-sanded with a Canadian brush? I try to make sense of New Zealand's double dealing and special pleading over the Kyoto Protocol second commitment period and the Doha climate change talks hoo-ha.

I am very confused about New Zealand's climate change policy since the Doha international climate change talks (COP18) and New Zealand opting out of a second period of the Kyoto Protocol back on 9 November 2012.

The Kyoto part two opt-out is described as a lose-lose decision that shuts New Zealand out of the Kyoto international carbon markets and is a shambles and a disgrace.

So I have a question for all readers.

If New Zealand Minister of Climate Change Tim Groser is serious about New Zealand's 2020 greenhouse gas target, why would he forego formally lodging the 2020 target into the existing Kyoto Protocol framework (where the national institutions and arrangements are already up and running), in favour of pledging to meet the target on a voluntary basis?

Let me break that question down into several parts.

1. Imagine you are the Minister for Climate Change in the government of a small developed nation.
2. This nation has signed an international treaty with a few other nations which states a short-term national target for emissions of greenhouse gases (GHGs).
3. This nation enacts the treaty by creating some new institutions; a national register for emissions units, national inventories of greenhouse gas emissions, national surveys of afforestation, and a process of reporting the predicted progress towards the national target.
4. The nation has adopted several policies relying on the treaty institutions; an emissions trading scheme, forest sink schemes, research alliances, and international trading of emissions units.
5. The nation has a second publicly stated medium-term target for reducing greenhouse gas emissions for the years following the expiry of the first target.

If you are serious about that second greenhouse gas emissions target, why would you pledge the target on a voluntary basis, when you could have formally lodged your target into the existing treaty (where the national institutions and arrangements already exist)?

Any answers? Anyone? Would you like to phone a friend?

Okay, here's a hint. The Parliamentary Commissioner for the Environment has said that New Zealand is on track to exceed the 1990 greenhouse gas baseline by 30% rather than meet the 2020 target of reducing greenhouse gases by 10 to 20% compared to 1990.

Figure 3.2 from page 18 of Parliamentary Commissioner for the Environment, “Lignite and climate change: The high cost of low grade coal”, December 2010. Data from MfE 2009. Fifth national communication under the United Nations Framework Convention on Climate Change, Ministry for the Environment, Wellington.

Now just because New Zealand's net emissions are likely to consistently increase through to 2020 doesn't automatically mean New Zealand would not meet the 2020 target if translated into a Kyoto second commitment period target. We could just buy extra emissions units from the international Kyoto carbon markets.

That is, if there was a sensibly designed emissions trading scheme. Such a scheme would be 100% "emitter pays", with emitters making their own market-based decisions to either reduce emissions or to buy the emissions units. Well we certainly don't have that.

So my conclusion is that it is not just that Tim Groser has absolutely no intention doing anything domestically to achieve the 2020 target of a 10 to 20% reduction in greenhouse gases. Groser and the National Government clearly have absolutely no intention of imposing any real carbon price on New Zealand's industrial and agricultural emitters.

Will the last business lobbyist to leave please turn out the light at the end of the tunnel to an effective NZ emissions trading scheme?

In this post Robin Johnson's Economics Web Page channels General Westmoreland and his Vietnam flashbacks to look at the National Government's latest change to the New Zealand Emissions Trading Scheme (NZETS). The NZ Parliament has just (8 November) passed amendments that indefinitely defer any greenhouse gas obligations for agriculture and indefinitely discount obligations to industries.This is a 'last helicopters off the Saigon hotel roof' point in the sad history of the always-doomed-to-fail New Zealand Emissions Trading Scheme.

According to cultural folklore the humiliating end of American engagement in the Vietnam war was foreshadowed by graffiti;

Will the last person out of the tunnel please turn out the light?

Or, alternatively

Would the last Marine to leave Vietnam please turn out the light at the end of the tunnel?

This was in frank contrast to the early (with hindsight, unjustified) optimism of General Westmoreland, who had said in 1968 that he could see the light at the end of the tunnel of the war in Vietnam.

So why am I writing about graffiti from a war that ended 37 years ago? Well, to make a 'bonkers' analogy with the New Zealand Emissions Trading Scheme, of course! Getting the NZETS established was of course more or less a civil war, and when the Labour Government in its final days in office in late 2008 finally coalesced a coalition of compromise to pass the Climate Change Response (Emissions Trading) Amendment Act 2008, it seemed there was 'light at the end of the tunnel' in terms of reducing New Zealand's emissions.

However, with the adoption last night (8 November) of the National Government's latest emitter-inspired fiddle; the Climate Change Response (Emissions Trading and Other Matters) Amendment Act, I believe we can now just be honest with ourselves and see the latest amendments to the NZETS as the last helicopter off the hotel roof and the last act of the NZ emissions trading approach, which was futile from the beginning.

I have posted before about the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill, noting that the amendments will;

1. indefinitely exclude emissions from pastoral agriculture from the NZETS, instead of including them from 2015, which was already a delay from 2013.
2. extend indefinitely the discount to industries, the 'surrender one unit for two tonnes' of emissions (half price!) that was to end this year (“maintain the 1-for-2 surrender obligation after 2012, without specifying an end date in legislation”)
3. extend indefinitely the price cap, (“maintain the $25-a-unit fixed price option after 2012, without specifying an end date in legislation”)

.

And I have previously posted that the worst aspect of the NZETS is not the corporate welfare in the form of excessive free allocation to industries.

For me the worst aspect of the NZETS is it's absolute exposure to the international carbon markets which has the effect of knee-capping the NZ carbon price down to the rock-bottom international carbon price. Today (9 November), the highest offer for a NZU for a tonne of CO2-e is $2.55 (See today's price and trend chart from OMF Ltd).

So I concluded I agree with Jeanette Fitzsimons that the NZETS is so bad at reducing GHG emissions, it no longer matters what amendments are made to it.

That is why I think that the light at the end of the NZETS tunnel was always going to be eventually turned out. The final bit of the Vietnam analogy is who was going to turn out the light. I give that role to the professional big emitter's lobby groups, led by Business New Zealand and its astro-turf subsidiary the Greenhouse Policy Coalition.

Nicky Hager in his Bruce Jesson lecture, describes how lobbyists such as Business NZ and the Greenhouse Gas Coalition have manipulated the under-resourced media to give prominence to ideas pushed by their clients;

"...the public spaces are cluttered with paid spokespeople and commercial agendas" whose technique is to establish "usefully biased ideas" by creating “some common lines that become the ‘mantra’” and then, 'keep repeating it endlessly' " so that "the angle, timing and quotes (in the media), do not come from journalists’ observations or journalists’ questions, but from the calculated efforts of PR and marketing people", and, as a consequence, the political debate is dominated by "endless hectoring from the business lobby groups"

The media 'mantra' pushed by the lobbyists is that if the NZETS establishes an effective carbon price on emitters, then jobs and exports and GDP will be lost (See GPCNZ 2008 and Business NZ 2012). Over the years of the debate over the NZETS, we have been endlessly hectored by business lobbyists that business trade competitiveness will be affected by the NZETS. Ministers Nick Smith and Tim Groser have long ago joined in and 'costs on businesses' is now routinely given as the reason for the lack of any real bite in the NZETS.

The endless hectoring that the "NZETS will affect exports and jobs" has been so successful that the big emitters wound up the the Greenhouse Policy Coalition back in March 2012. I guess they had a helicopter to catch, after they turned out that light in the tunnel.

And when I awoke I was alone the exporter had flown Norwegian wood isn't it good

Norwegian wood and newsprint transnational Norske Skog Tasman (NZ) Ltd 'exports itself'. Robin Johnson's Economics Web Page looks at the flight of another manufacturer and CO₂ emitter and exporter as it lays off staff and reduces production. Wasn't the very generous free allocation of units in the New Zealand Emissions Trading Scheme meant to keep exporters like Norske Skog Tasman in New Zealand? Or have we just removed the price signal from exporters for no valid reason and stuffed the NZETS?

The New Zealand Herald reports that the Norwegian-owned newsprint-maker and transnational Norske Skog Tasman NZ has joined the ranks of export businesses like Rio Tinto Alcan NZ/NZ Aluminium Smelters who are exporting jobs off shore. Incidentally Rio Tinto Alcan NZ/NZ Aluminium Smelters have just been described as New Zealand's biggest bludger.

Norske Skog is shutting down one of two newsprint machines at the Tasman Mill, in Kawerau, due to lowered demand for newsprint.

At the same time Norske Skog is investing $A84 million in new plant at the existing Boyer Mill in Tasmania with some substantial help from the Australian Federal government (A$28 million grant) and State government (A$13 million loan).

The NZ Government has been asked "what is being done for jobs"? And the NZ Government's "market will take care of everything" approach has been called naive.

The NZ Herald mentioned the NZ emissions trading scheme (NZETS) only briefly in passing, as they noted the rock-bottom NZ carbon price and the poor despairing carbon foresters.

So that prompted me to look at how Norske Skog Tasman NZ fits into the NZETS. What are the greenhouse gas emissions of the Norske Skog Tasman newsprint mill? Is Norske Skog Tasman regulated by the NZETS? Have they received a free allocation of emission units (like NZ Aluminium Smelters Ltd) to reduce the net number they have to buy? Which is meant to be the point of free allocation; ostensibly to protect their international competitiveness and to keep the jobs in NZ. Is the free allocation of units enough? Is it even a reasonable idea that free allocations of units make any difference to transnationals?

Norske Skog Tasman uses geothermal steam from the Kawerau geothermal field for heating and electricity generation in its newsprint mill. Geothermal steam naturally contains carbon dioxide and methane which are released when the heat energy is transformed.

The use of geothermal steam for energy is covered by the NZETS as an energy sector emission. So Norske Skog Tasman must report its greenhouse gas emissions and obtain and surrender emissions units to comply with the NZETS.

The Ministry for the Environment provides a specific emissions factor in the Climate Change (Stationary Energy and Industrial Processes) Regulations 2009 for calculating the mass of greenhouse gas emissions from Kauwerau's geothermal steam. The factor is 0.0275 tonnes CO2-equivalent per tonne of geothermal steam used.

Norske Skog Tasman's production of newsprint is classified as an emissions-intensive trade-exposed activity. They are therefore eligible for the highest level of assistance; covering "90%" of their production in the form of a free allocation of 0.4911 emission units per tonne of uncoated newsprint.

So far, so much like NZ Aluminum Smelters/Rio Tinto Alcan NZ. Except there is the peculiarity that the free unit allocations are calculated from a different variable from the GHG emissions. Emissions are calculated from tonnes of geothermal steam used, and free units are calculated from tonnes of newsprint.

Let's start with a 'back of envelope' calculation of the units Norske Skog Tasman should surrender (the NZETS gross carbon price).

According to the Kawerau Geothermal Field Background Study, Mighty River Power supplies 285 tonnes of geothermal steam per hour to Norske Skog Tasman, who on-sell 26 tonnes to Carter Holt Harvey Wood Products. So net use is 259 tonnes per hour.

Assuming 24/7 production, the annual use is 259 * 24 * 365 = 2,268,840 tonnes of steam per annum. And 2,268,840 * 0.0275 = 62,393.1 tonnes CO2-e. So in a typical year, Norske Skog Tasman should be surrendering very roughly about 62,000 emission units under the NZETS.

How many free emission units were allocated to Norske Skog Tasman? In both 2010 and 2011, Norske Skog Tasman received the fifth largest free allocation of units (after the Smelter, NZ Steel, Methanex and Fletcher Concrete). In 2010, Norske Skog Tasman received 122,826 New Zealand Units (NZUs) for the six-month 2010 NZETS compliance period. In 2011 Norske Skog Tasman received 237,752 NZUs.

Assuming 24/7 production in 2011, Norske Skog Tasman was allocated 381% more units than it needed to surrender (237752/62393.1 * 100 = 381.0550). Thats a way more excessive free allocation than NZ Aluminium Smelters!

However, I might not have the right numbers. My calculation may be wrong. Why don't I ask the Environmental Protection Authority under the Official Information Act for the exact number of units surrendered by Norske Skog Tasman. Watch this space.

Alternatively lets look at Norske Skog Tasman's annual financial statements (PDF) as filed at the NZ Companies Office for the 2011 calendar year.

Note 24 helpfully records that Norske Skog Tasman received 119,646 units in 2010 and 241,825 units in 2011. They surrendered only 10,754 units and sold 160,000 units, and had 190,717 units left at 31 December 2011.

The accounts show that in 2011 Norske Skog Tasman was allocated 22 times more units than it needed (241,825/10,754 = 22.49). The units allocated to protect jobs and export competitiveness, were not 90% of units surrendered. They were not 100% of units surrendered. The units allocated exceeded the units surrendered by a factor of 22!.

I can still here an echo of voice saying "You have left out the electricity allocation factor! You are wrong wrong wrong!" Well, yes, the industrial free allocation factor of 0.49 units per tonne of newsprint allegedly includes compensation for NZETS-related electricity price increases our manufacturing emitter is subject to. This rationale and the factor of 0.49 units per tonne were approved in this Cabinet paper. However, the cabinet paper provides no explanation of how the factor of 0.49 units per tonne of newsprint was calculated.

The electricity allocation factor has also been the subject of a consulation process and there is an emitters contact group for it as well.

However I think the idea that manufacturing emitters need compensation for NZETS-related electricity price increases is a smoke-screen. Norske Skog Tasman has not had its electricity price increased by the NZETS.

According to the Kawerau Geothermal Field Background Study (PDF), Norske Skog Tasman and Mighty River Power (MRP) have "..a power purchase agreement whereby NST (Norske Skog Tasman) contracted to take a majority of MRPs generation. Due to the fact that MRPs plant is grid tied, this is effectively a financial agreement offering NST price certainty and MRP a customer contracted to take the majority of supply."

The Tasman Mill is not just a plant connected to the grid. It was built to use geothermal power, just as Tiwai Point Smelter was built to use Lake Manapouri's hydro power. The Tasman Mill is joined at the hip to the Kawerau geothermal field. The newest Mighty River Kawerau geothermal generation plant was built on the Tasman Mill site (see picture above). Norske Skog is buying geothermal steam from Mighty River Power and paying MRP as if it was electricity via a financial derivative contract.

To conclude the free allocation part of the analysis; for Norske Skog Tasman, the NZETS free unit allocations are not just a discount of part of the full NZETS carbon price, the allocations are a transfer of substantial corporate welfare. The units allocated exceed the units they have to surrender by an estimated factor of 22.

And in terms of protecting the international competitiveness of Norske Skog Tasman and keeping jobs in New Zealand, the free allocations have not made the slightest difference. Thats in spite of National Party scaremongering back in 2008 that the NZETS would cause the mill to close.

And Catherine Beard of Business New Zealand (formerly boss of the big polluters advocate the Greenhouse Policy Coalition) is still scaremongering in October 2012 that any real cap in the NZETS will cause more job losses Talk about slamming the stable door after the horse has bolted.

Lets look at the real factors affecting whether a transnational commodity manufacturer stays in a country like New Zealand or Australia.

If you are a transnational like Norske Skog, you always have the choice of playing off more than one jurisdiction. The country with the smaller economy, like New Zealand, can't match the money of a larger economy like Australia. If Fletcher Challenge had not sold the Tasman Mill to Norske Skog in 2000, this 'regulatory arbitrage' would not be possible.

Corporate aquisitions that seemed a good idea before the Global Financial Crisis, look much more risky after the Global Financial Crisis. In 2000, Norske Skog paid $NZ5 billion for Fletcher Challenge's paper and pulp assets. Those assets included both the Tasman Mill in Kawearau and the mill at Boyer, Tasmania. In 2011, Norske Skog was faced with falling international demand and prices and it was considering selling some assets to avoid default on its debt.

Incidentally, Rio Tinto Alcan shares most of these international commodity trader issues; the over-priced debt-funded purchase of Alcan and Comalco by Rio Tinto before the GFC, the Rio Tinto's plan to sell Pacific Aluminium (including NZ Aluminium Smelters Ltd), the low demand for aluminium from the stagnant economies of the Eurozone and the USA and the price and supply competition from Chinese smelters in the huge and growing Chinese market.

Imagine a fictional conversation between NZ Prime Minister John Key and the CEO of Norske Skog.

"So, Yon, you don't mind if I call you Yon? For the Tasman Mill, you kiwis are all online, the demand for newsprint is down. You give me quarter of million of these NZ units that are worth $NZ3 each. No other ETS accepts them. Thats pretty low quality carbon credit, Yon. Now, Yulia Gillard, she gives us $A28 million for new plant at the Boyer mill in Tasmania. Can you match that, Yon? Can you?"

That is the bottom-line, isn't it? New Zealand could never have matched $A28 million, either as a direct grant, or through manipulation of the NZETS free allocation provisions.

To me, the Norske Skog Tasman job losses are a good demonstration of how futile it was to have an NZETS designed mainly to completely avoid any carbon price on transnational exporters. The carbon price has not just been reduced or discounted to Norske Skog, the sign has been reversed so that its an off-balance sheet transfer of corporate welfare to them in the form of emission units. Such transfers are no doubt sought by local managers who are rent-seeking, but they will be irrelevant to the international commodity trade movements that will ultimately determine whether these transnationals stay or go.

Brother can you spare $3.10 for a tonne of carbon dioxide?

In which Robin Johnson's Economics Web Page laments the homelessness and begging now seen each day on Lambton Quay in Wellington. And a lament for both the downward spiral of the NZ Emissions Trading Scheme and the downward spiral of the New Zealand spot price for a tonne of carbon dioxide - now less than the cost of a flat white. Brother, can you spare $NZ3.10 for a tonne of carbon dioxide?

The other day I looked up the old Tin Pan Alley song "Brother can you spare a dime?" The experience of poverty and the Depression in America summed up in a popular song. The lyrics were written by Yip Harburg in 1931, and the music was composed by Jay Gorney. The version by Al Jolson is very well known, but I like this version by Charlie Palloy and his Orchestra.

I looked up "Brother can you spare a dime?" as I was thinking about homelessness and poverty in New Zealand. I am not the only one. Churchs, charities, politicians, experts and academics are also concerned about poverty in New Zealand.

I see homelessness and poverty every weekday in Wellington's main CBD thoroughfare, Lambton Quay. I walk along Lambton Quay looking forward to the first coffee of the day. I usually note how many people are begging. There are almost always a few people begging on Lambton Quay. 'Brother can you spare a dime' is alive and well even on Lambton Quay.

Except it's sad cardboard signs saying 'Homeless and need help'. Also its at least $3 to $4 for a coffee.

The other price thats less than the cost of a flat white is the spot price of carbon dioxide in NZ. The carbon trader OMF reports NZ spot prices each day at CommTrade Carbon. Guess what? On 17 October, the day Parliament's Finance and Expenditure Select Committee reported on the latest amendments to the NZETS, the last trade of a New Zealand Unit ('NZU', a tonne of carbon dioxide) was at $3.10.

OMF also display a chart. It shows the collapse of the international carbon price reflected in our own plucky little battler NZETS. It certainly looks pear-shaped.

As the political philosopher Simon Caney and economist Cameron Hepburn note with a little British understatement, when the demand for permits falls to the extent that the permit price approaches zero, it is difficult to conclude that an ETS is working to reduce emissions.

Can any sane person look at this chart and reach any other conclusion than the NZETS has completely failed as a carbon price policy incentivising reduction in GHG emissions?

OMF originally committed the chart sin of not starting the vertical (price) axis at $0. However, reality has intruded. As the New Zealand Unit (NZU) price has relentlessly declined towards $0, they keep having to move the bottom of their chart closer to zero. That would almost be a small bit of humour in a pretty sad story. If it wasn't the empirical evidence of the failure of the design of the NZETS as a policy to price greenhouse gas emissions.

If the $3.10/tonne NZU price is the death notice of the NZETS, the funeral must be the latest Finance and Expenditure Select Committee process to amend the NZETS. On 17 October 2012, this committee released its report Climate Change Response (Emissions Trading and Other Matters) Amendment Bill

This is the National Government's bill to further weaken the NZ Emissions Trading Scheme. You know, indefinitely delay the entry of agriculture, make the half-price "two-for-one" transition permanent.

If you can quickly recover your will to live after digesting page after page of bureaucratic and political policy denial and excuse-making, and the complete failure of the National Government majority to engage at all with the minority political parties or submitters or ENGOs or the Parliamentary Commissioner for the Environment, download and read the 117-page report.

Otherwise, just read Patrick Smellie's report "No restrictions on foreign-sourced carbon credits confirmed"

"The Climate Change Response (Emissions Trading and Other Matters) Bill was reported back to parliament by the finance and expenditure select committee with only technical amendments, and a decision that capping the use of foreign credits would compromise the emissions trading scheme principle of "least cost of compliance".
The policy has seen major emitters such as oil and electricity companies snap up some of the lowest cost carbon units available on global markets, where prices have slumped to as little as $2 a tonne.
New Zealand Units, issued by the government, continue to be worth slightly more, at around $3 a tonne, but well below the $25 a tonne maximum price put on carbon when the ETS was introduced in 2009."

Or just read the press release from WWF-New Zealand.

This is another nail in the coffin for New Zealand's credibility on climate change and suggests the government has no intention of trying to set this country's emissions on a downward path. Other parties in the UN climate talks will rightly see New Zealand's claims to be doing something to reduce emissions as all spin and no substance."

What a complete shambles! Why didn't we just have a no-exceptions carbon tax in the first place?

They used to tell me I was building a dream,
and so I followed the mob,
When there was earth to plow, or guns to bear,
I was always there right on the job.
They used to tell me I was building a dream,
with peace and glory ahead,
Why should I be standing in line, just waiting for bread?

Once I built a railroad, I made it run, made it race against time.
Once I built a railroad; now it's done. Brother, can you spare a dime?
Once I built a tower, up to the sun, brick, and rivet, and lime;
Once I built a tower, now it's done. Brother, can you spare a dime?

Once in khaki suits, gee we looked swell,
Full of that Yankee Doodly Dum,
Half a million boots went slogging through Hell,
And I was the kid with the drum!

Say, don't you remember, they called me Al; it was Al all the time.
Why don't you remember, I'm your pal? Buddy, can you spare a dime?

New Zealand's Minister of Economic Development Steven Joyce goes ferally pro-coal and attempts to influence the Environment Court and Court of Appeal

Today I was absolutely gobsmacked by a statement by Steven Joyce, the New Zealand Minister of Economic Development, in an official New Zealand Government press release.

Joyce explicitly took the side of and promoted the cause of Australian coal miners, Bathhurst Resources, in two up-coming court cases.

Joyce said:

"The Escarpment Mine is an open cast mining project that is ready to go and would provide 225 jobs and incomes for workers and their families on the West Coast straight away. The developer is being held up from opening the Escarpment Mine by on-going litigation that has gone through the Environment Court, the High Court and the Court of Appeal. These on-going objections are to resource consents which were granted more than a year ago. The whole consenting process for this development has now taken a staggering seven years. I call on those objectors to the mine to reconsider their appeals and consider the economic future of the West Coast and its people."

I know Joyce is very pro-development, Joyce even has his own archive of posts on the Hot Topic blog, where Joyce's preference for fossil fuel developments is obvious.

But this time he has crossed a line. Joyce is using his position as a Minister of the Crown to explicitly try to influence decisions yet to be made by the New Zealand Environment Court and the New Zealand Court of Appeal on the resource consents sought by Bathurst.

Joyce is breaching the Sub judice rule.

Let me back up and start at the beginning. The resource consents for Bathurst's open cast Escarpment mine proposal were applied for in August 2010. Not seven years earlier as alleged by Joyce. Bathurst took over the project from L and M Coal Ltd.

In August 2011, the hearing commissioners acting for the West Coast regional and district councils considered with some anguish that resource consents could be approved.

This was in spite of the many adverse effects on native species habitat, water quality and the coal-measure limestone landforms within the Mt Rochfort Conservation Area. Yes the proposed mine is within a conservation area. The commissioners refused to factor in climate change effects from the eventual release of carbon dioxide from the coal. In other words, it was a pretty marginal decision.

However, the resource consents are not legally granted, as environmental NGOs Forest and Bird and the West Coast Environmental Network immediately lodged appeals with the New Zealand Environment Court. This is Joyce's second factual error; in an appeal of a resource consent, the council's decision ceases to exist. The Environment Court starts from a blank piece of paper, examines the facts and makes it's own decision. It considers consent appeals on a 'de novo' basis.

Then Bathurst started the cycle of litigation - by applying to the Environment Court, separately from the consent appeal, to have the effects of climate change barred from the consent appeal. Bathurst succeeded. So Forest and Bird and the West Coast Environmental Network appealed that decision to the High Court. Bathurst won that appeal. However, Forest and Bird and the West Coast Environmental Network have appealed the High Court decision to the Court of Appeal.

So there are two court hearings yet to happen.

1. The Environment Court is yet to decide on the facts; if the resource consents 'promote sustainable management' of resources as required by the Resource Management Act and may be granted.

2. The Court of Appeal is yet to decide on the law; whether it permits or prohibits the Environment Court considering the greenhouse effects of the carbon dioxide emissions from the downstream combustion of the coal.

Now Steven Joyce, a Minister within the Executive branch of Government, is expressing an opinion on what the outcome of the Court's process should be.

This is contrary to the 'sub judice' rule; which is simply speaking "Don't comment on undecided Court cases".

Or as set out in Parliament's Standing Order 112.

"112 Matters subject to judicial decision
(1) Matters awaiting or under adjudication in, or suppressed by an order of, any New Zealand court may not be referred to in any motion, debate, or question, including a supplementary question, subject always to the discretion of the Speaker and to the right of the House to legislate on any matter or to consider delegated legislation."

Or as set out in the Office of the Clerk of the House of Representatives document "Sub judice rule". Chapter 16 in 'Parliamentary Practice in New Zealand'. New Zealand Parliament (14 October 2010).

"The Standing Orders prohibit reference in any debate to any matters awaiting or under adjudication in a court from the time the case has been set down for trial or otherwise brought before the court, if it appears to the Speaker that there is a real and substantial danger of prejudice to the trial of the case...This is the implicit acknowledgment by the legislature that the proper forum in which to resolve legal disputes is the courts and that the legislature, above all other institutions, should take extreme care not to undermine confidence in the judicial resolution of disputes by intruding its views in individual cases...The House's sub judice rule takes effect in criminal cases from the moment a charge is made and in other cases from the time proceedings are initiated by filing the appropriate document in the registry or office of the court."

Or as set out by the Speaker, Margaret Wilson, on 16 October 2007, in "Speaker's Rulings Sub Judice Rule Operation.

"It seems to me that it is important in any consideration of it to emphasise the high constitutional nature of the rule. It stands as an expression of the relationship between the different branches of government; the legislative branch and the judicial branch. This House determines what the law should be, but it is for the courts to determine in each particular case how the law is to be applied. In criminal matters, it is not for this House to decide guilt or innocence. That is a matter for a court of law."

Obviously, Joyce and the rest of the National Government just don't give a stuff about anything of a high constitutional nature or the rule of law, or Joyce driving his Bagger 2000 coal excavator through the 'sub judice' rule. Clearly such things are just the concerns of those pesky people who obstruct progress when government tries to remove roadblocks in the way of business development.

Even not-so-stellar Minister of Energy Phil Heatley knew better than to comment on the Bathurst Environment Court appeal when he was asked about it on a Q and A interview.

"Well, you appreciate, Shane, this is before the courts. I'm a bit limited about how much I can discuss this. But the reality is Denniston, like any other application, has to go through a process, and there is a balance between the economic benefits and the- what impact it'll have on the environment."

Kevin Hackwell of Forest and Bird has responded promptly to Joyce's call and raised the issue of how independent other decision making may be, such as the Minister of Conservation's decision to grant Bathurst access for mining in a conservation area, which is also yet to be made by the Minister Kate Wilkinson.

"There would be a serious question, given his public advocacy, about whether such a decision has been influenced by government policy."

That's an important point. Especially since the Government wants to make stop the Minister of Conservation making the decisions on mining access to conservation areas on the basis of conservation purposes.

The Government has just introduced amendments to the Crown Minerals Act which add the Minister of Energy as joint decision-maker and add economic matters to the mandatory conservation purposes the Minister of Conservation must consider.

We will have to see how this 'sub judice' breach plays out for Joyce, given his party and Prime Minister have no problem with John Banks and his unknowingly non-anonymous donations.

However, I could not think of a better reason to reject the proposal for mining access over conservation land to be a joint Ministers decision based on economics and conservation criteria, than Steven Joyce's attempted interference in the Environment Court and the Court of Appeal cases concerning the Escarpment mine.