Transparency, please

Dr Oliver Hartwich
Insights Newsletter
26 February, 2021

On Tuesday, the Climate Change Commission extended the deadline for submissions on its draft recommendations by two weeks.

The short extension would give the extra bit of time needed to receive crucial information from the Commission before submissions close.

But the extension will be for nothing if the Commission does not now release the assumptions and coding behind its modelling.

Few people realise that the almost 900 pages of the Commission’s report are only the visible tip of an invisible modelling iceberg. Without knowledge of what lies under the surface, it is hard to make sense of the Commission’s proposals.

The Commission’s model has produced a few surprising policy recommendations, including a much faster transition towards electric vehicles.

A typical family car emits 2 to 3 tonnes of carbon dioxide per year. Under the Emissions Trading Scheme (ETS), motorists purchase carbon certificates for this. Fuel retailers include them in the price at the pump.

The current carbon price is $39 a tonne. It is likely to increase to $50 over the coming years. The typical car uses up certificates costing around $100 to $150 per year.

At this level, few motorists would transition to much more expensive electric vehicles, even given the lower cost of electricity as opposed to petrol and diesel. This is why the ETS has not had much effect on transport so far. Other emissions reductions initiatives such as replacing coal boilers can give you a bigger bang for your buck – for now.

There is an obvious tension between the ETS and the Commission’s transport recommendations. New Zealand may be in danger of going down an expensive but ineffective pathway to lower emissions. We need to see what assumptions the Commission used to reach its transport recommendations.

Alas, the Commission is refusing to release their assumptions and models.

So, we have now lodged a very simple Official Information Act request for the data on the marginal abatement costs of electric vehicles used in the Commission’s models to support the draft emissions budget and plan.

Under the Act, the Commission must respond as soon as reasonably practicable, but in no more than 20 working days. Delaying release leaves submitters precious little time.

The information we are requesting is simple. Yet upon it hinges a key part of the Commission’s recommendations.

An organisation confident in its recommendations should not fear transparency about its modelling. It should simply publish its models, as our Chief Economist Eric Crampton and Auckland University statistician Professor Thomas Lumley have suggested.

We look forward to finding out if the Commission can plausibly explain its conclusions.

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