Rushing emissions plan a costly mistake

Dr Eric Crampton
29 March, 2022

A funny thing happened on the way to Wellington’s draft Economic Wellbeing Strategy.

It’s a tale as old as time. Central government demands that local councils take on some new regulatory responsibility. Local government complains about the unfunded mandate imposed by central government and demands funding to perform the task or measures that would reduce the cost of the mandate, or both.

Council’s draft Economic Wellbeing Strategy was then a bit of a puzzle. Wellington Council is actively seeking to take on a costly mandate far outside of its core responsibilities, in an area already managed by central government.

But checking further into things made me more than a little concerned about central government’s Emissions Reduction Plan to be announced in late May. Last year, the Climate Change Commission produced its sector-by-sector carbon budgeting in such haste that the underlying workings could not be released with the plan.

It looks like the problem may be repeating itself with the final Emissions Reduction Plan. The Ministry for the Environment has been struggling to assess more than 10,000 submissions on its draft plan on a tight deadline.

Where the plan is meant to be guiding the government’s climate policy for the next 15 years, with huge stakes for the environment and the economy, another rush job may not be best for either.

But let’s begin with Wellington Council’s draft Economic Wellbeing Strategy.

The strategy, now under its own consultation process, was released this month. It argues that Wellington Council should shift from economic development to economic wellbeing, with a lot of emphasis on Kate Raworth’s Doughnut Economics model, circular economies, and zero-carbon goals.

Raworth’s work is trendy in government bureaucracies but has less cachet among academic economists. Victoria University’s Professor Arthur Grimes ably pointed to some of the flaws in the work three years ago.

Council jumping on to that bandwagon was disappointing but predictable.

Council deciding to take on carbon emissions was stranger. Urban centres have a lot of carbon emissions, but urban emissions are covered by the Emissions Trading Scheme.

The ETS now has a binding cap on net emissions. Every litre of petrol sold comes with 2.45kg of emission credits purchased and surrendered by the fuel company to cover that litre’s emissions. The cost of those ETS credits works its way into fuel prices.

If a city banned internal combustion engines, it would do nothing to affect the country’s net emissions. It would simply free up emission credits for someone else to purchase instead. And while the government could take the opportunity to reduce the number of ETS credits it sells every year, it could do that even if council had not implemented the ban – and at less cost to the country.

The draft wellbeing strategy is vague about how council might create a zero-carbon city. It mentions green building standards to reduce building energy use, but energy for heating and cooling are already covered by the ETS. Expectations of rising carbon prices will already drive many hard-nosed decisions in building design. It is difficult to see how council could help, but it is easy to see how it could inadvertently push up building costs.

Imagine if central government had told councils that they would need to come up with council-level carbon plans. Councils would rightly protest that carbon accounting is technically difficult, that it requires expertise beyond councils’ abilities and that emission reduction is best handled by central government. But Wellington, despite being incapable of managing its core responsibilities in water services, seemed to yearn to take on a substantially more difficult task – a task already handled by the Emissions Trading Scheme.

Submissions on the draft Emissions Reduction Plan closed in late November. 
The New Zealand Initiative’s submission had highlighted the futility of measures targeting emissions that were already covered by the ETS’ binding cap. Council-level initiatives aimed at reducing emissions would face exactly the same problem.

I was curious what other submissions may have had to say about the problem and whether there was anything important I may have missed. It would help in putting together a submission on Wellington’s plan.

Submissions on the draft plan had closed four months ago, but none of the submissions were yet available on the relevant website. So I asked the Ministry for the Environment where I may find them.

The ministry’s response was rather worrying:

"Consultation on the draft Emissions Reduction Plan resulted in over 10,000 submissions being made, and our team is currently reviewing each of these submissions to incorporate what we have heard into the ERP as part of the ongoing policy work on this significant document.

"The ERP is due to be published in May, and we are aiming to publish a Submission Analysis Report shortly afterwards to capture the submissions we received. We will endeavour to give you a heads up when we have a confirmed date for the release of that report."

While the final plan will be published in May, the relevant decisions must be made well before that date.

That only a summary of submissions would be made available, and only after the plan had been published, suggested a very rushed process.

Compared with other legislation and regulation, the Emissions Reduction Plan has complexity and consequences where substantive submissions would add more value than is usually the case.

Submissions from affected sectors could reveal detail critical to any successful plan, self-interested special pleading, or a complicated mix of the two requiring judicious treatment. Hurried treatment of submissions would be a mistake.

On making inquiries around Wellington, we were told that sector-level decisions were close to being finalised or had already been finalised.

A good process would have submissions considered well before plan finalisation. But inquiries around Wellington suggested that plan finalisation had to run in parallel with analysis of submissions because of the tight timelines and the volume of submissions.

It makes for a risky process. If a submission providing critically important detail is not unearthed until much of the plan is finalised, it would be too late to fix things.

I put these process concerns to the Ministry for the Environment late on Friday morning. I also asked whether they had considered extending the deadline for the final Emissions Reduction Plan so that submissions could be appropriately weighed.

The ministry had not provided a response to the substantial questions before the filing deadline for this column, late Monday.

But it did tell me that 7,311 of the 10,050 submissions had used Green Party, Forest & Bird, or World Wildlife Fund templates. Short-form web-based submissions made up another 1,259.

The ministry would have dealt with almost 1,500 longer submissions on a tight deadline spanning the Christmas and summer holidays.

The Emissions Reduction Plan is meant to guide the next 15 years of climate policy. It deserves more than a rush-job. Those who put a great deal of time and effort into their submissions may not even be able to tell whether their work was read before the plan was finalised unless it is directly cited.

Reducing net emissions matters. Rising carbon prices through the ETS will already be helping. But rushing the more detailed Emissions Reduction Plan would be a more costly mistake than Wellington Council trying to take over the Climate Commission’s job.


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