New Zealands Emissions trading scheme stepped up another gear on 1 July 2010 when stationary energy and liquid fossil fuel industries came into play for a first transition period. I'm not going to go into details on the scheme, information regarding the scheme can be found here: http://www.climatechange.govt.nz/ and here: http://en.wikipedia.org/wiki/New_Zealand_Emissions_Trading_Scheme.
There are two interesting points to note. Firstly, at this point in time the NZETS is not a conventional cap'n'trade scheme. There is no cap other than that required by Kyoto, no sunset clause and no output reduction. The government will issue unlimited emissions units (NZU's, one NZU is equivalent to 1 tonne CO2eq). Only forestry can 'earn' NZU's, which can be bought nationally and traded internationally. If the national emissions exceed the Kyoto cap then the government will be buying abroad to acheive compliance. The cost of surrendering carbon is fixed at 25NZD per NZU. This has effectively been halved for energy, fossil fuel and industry participants as they are required to surrender on NZU for every 2 tonnes CO2eq, so effectively a price of 12.50NZD per tonne CO2eq.
Secondly, The cost to industry participants of buying NZU's will be passed on to consumers. It is estimated the the price of electricity, fuel and food is to rise with consumers meeting 52% of the overall costs in this transitional period (1). Estimates indicate this could be in the region of $400 per year (approx £200 at current exchange rates). Whilst it seems this ought to be a clear signal to consumers to reduce their consumption it is unlikely to do so. The weekly fuel bill, the shop and filling the car up is likely to only be in the region of a few dollars, worth a grumble but not likely to be painful enough to warrant reducing consumption. Furthermore, the opportunity to make reductions in our emissions is limited. For example, many many studies show that typically energy efficiency results in a saving of between 10-30% of our overall direct energy consumption. Much of the emissions are produced before the consumer turns on the plug or fixed in the efficiency of the engine in the car.
What then is the incentive when consumers are dependant upon and consequently trapped into using the power produced by energy generators and the goods, food and services produced by industry and the rise in price of energy, fuel and food isn't that noticeable? And where's the incentive for the providers of energy and goods, food and services to reduce their emissions if the consumer is paying?
I am left unsure how this is supposed to stimulate these industries to make radical and fast reductions in emissions or invest in efficiency. I guess we will have to wait and see if the signals are loud enough and clear enough or whether NZ Ltd will have to find the cash to foot the bill for exceeding its Kyoto committments.
P.S It seems that there really is nothing that can't be sold on internet trading sites such as ebay and trademe: http://www.trademe.co.nz/Business-farming-industry/Carbon-credits/auction-301199406.htm
1 Sustainability Council of New Zealand http://www.sustainabilitynz.org
Tuesday 13 July 2010
Sunday 4 July 2010
Plenitude solving unemployment
I caught Juliet Shor, Professor of sociology at Boston College, on Radio New Zealand National talking about her new book ‘Plenitude: the new economics of true wealth’. This is a brief synopsis.
The BAU economy is based on purely economic growth and is a profoundly dysfunctional debt funded consumer boom based monoculture that is in a state of collapse. We all know this but it appears that ‘they’ (or we?) seem to be resolutely and stubbornly ignoring the evidence that the system is broken.
Schor argues that this paralysis is because there is not a suitable model to replace it and argues that this is probably why the powers that be are pushing back quite stubbornly and refusing to change as evidenced by the recent G20. Schor argues that the reason that we are unable to move forward Is because the argument seems to have stagnated and narrowed to two opposed models which view the free market economy from two points. Both of which view the environment from a classical economic view of integrating the environment/environmental protection with a trade of mentality. Which is if we want more environmental protection then we are going to have to suffer /do without/require austerity. So we either have to rely on the market to regulate itself or, the opposing model, government has to regulate the market because it can’t be trusted. She sees this as misguided. What about the centre ground? Clearly BAU is not working but the current debate is stagnating, are there other models to consider?
Schor thinks that change is inevitable and it will be the new growing economies that will bring the change and not the current first world economies as these collapse and become unstable as we move into a resource constrained future. She sees the recent economic crisis and growing unemployment as evidence of this collapse. Schor suggests that change will happen at local scale because of this economic collapse and people beginning to do things for themselves because they will have a time abundance (i.e. unemployment).
Schor is pragmatic an advocates consumerism but with a difference.
She argues that the nature of scale has changed, technology now makes it possible to operate businesses at much smaller scale and more efficiency. If you look at scale it’s the small ones that generate employment they generate innovation and this is where economies need to go to smaller scale much more localised and regional scales.
We have to stop viewing wealth as a narrow single monetary objective but have a broader definition including time, social capital, creativity etc. And she poses the question: What is an economy that will give us meaningful lives on this planet? Her answer to this is Plenitude, the tag line ‘solving unemployment through new uses of time’.
Plenitude principles:
1. New allocation of time: making sense of changes at the individual level. We have become so specialised and dependant on the market that, under BAU, it will be less lucrative for individuals, and consequently, a declining asset. Therefore, at the individual level, it makes sense to diversify. And our investment in the market is our time. The more time spent on economic activity in the market the more money spent on goods from the market. But when we no longer are able to trade our time on the market (i.e. in jobs that are becoming scarse and unemployment rising)...
2. High tech self providing: It makes sense to be using our time that is no longer traded on the market to invest that time in making and doing more for oneself. She evidences the US. IE replacing what you would have purchased from the market by producing it for yourself and re-skilling. Which, consequently will lead to a growth in local economic activity. And, Schor brings in some ideas from ecology and biology, Decentralised small scale systems are more diverse and consequently more resilient conversely the current market is a monoculture and vulnerable to instability and crisis. And not just BAU economic but alternatives such as time banks and the free exchange of goods/services. Which is antithetical to the previous notion of the global time poor superconsumer.
3. Genuine Materialism: Schor advocates that we have to become different kinds of consumers. From fast fashion cyclers in the current BAU disposable materialism (‘the giant churn of goods’). to consumers of goods that are longer lived and produced with a lower environmental footprint. We know nothing about how our goods are produced. So consumers are going to have to become more connected to the production processes (ethical, environmental resource) whether it’s local or global. She sees localism as the way of the future. And this has particular relevance to an export based economy like NZ. She argues that such countries need to become more based in a regional economy rather than exporting to EU/America.
4. The use of interpersonal wealth: Investing in each other (aka social capital). Money is just paper. It is ultimately founded on a social contract (this I think is a fundamental principal that seems to have been forgotten somewhere along the way). In a crisis, when the system breaks down paper money is meaningless it is nothing more than just paper. In such times all ultimately rests on human relationships. When we build on each other in a community we build up credits and debits and we share and cooperate that is a form of wealth that it tremendous. Schor advocates brining more of that back into our society.
The interview can be found on http://www.radionz.co.nz/national/programmes/sunday and Juliets blog can be found here: http://www.julietschor.org/2010/06/solving-unemployment-through-new-uses-of-time/
The BAU economy is based on purely economic growth and is a profoundly dysfunctional debt funded consumer boom based monoculture that is in a state of collapse. We all know this but it appears that ‘they’ (or we?) seem to be resolutely and stubbornly ignoring the evidence that the system is broken.
Schor argues that this paralysis is because there is not a suitable model to replace it and argues that this is probably why the powers that be are pushing back quite stubbornly and refusing to change as evidenced by the recent G20. Schor argues that the reason that we are unable to move forward Is because the argument seems to have stagnated and narrowed to two opposed models which view the free market economy from two points. Both of which view the environment from a classical economic view of integrating the environment/environmental protection with a trade of mentality. Which is if we want more environmental protection then we are going to have to suffer /do without/require austerity. So we either have to rely on the market to regulate itself or, the opposing model, government has to regulate the market because it can’t be trusted. She sees this as misguided. What about the centre ground? Clearly BAU is not working but the current debate is stagnating, are there other models to consider?
Schor thinks that change is inevitable and it will be the new growing economies that will bring the change and not the current first world economies as these collapse and become unstable as we move into a resource constrained future. She sees the recent economic crisis and growing unemployment as evidence of this collapse. Schor suggests that change will happen at local scale because of this economic collapse and people beginning to do things for themselves because they will have a time abundance (i.e. unemployment).
Schor is pragmatic an advocates consumerism but with a difference.
She argues that the nature of scale has changed, technology now makes it possible to operate businesses at much smaller scale and more efficiency. If you look at scale it’s the small ones that generate employment they generate innovation and this is where economies need to go to smaller scale much more localised and regional scales.
We have to stop viewing wealth as a narrow single monetary objective but have a broader definition including time, social capital, creativity etc. And she poses the question: What is an economy that will give us meaningful lives on this planet? Her answer to this is Plenitude, the tag line ‘solving unemployment through new uses of time’.
Plenitude principles:
1. New allocation of time: making sense of changes at the individual level. We have become so specialised and dependant on the market that, under BAU, it will be less lucrative for individuals, and consequently, a declining asset. Therefore, at the individual level, it makes sense to diversify. And our investment in the market is our time. The more time spent on economic activity in the market the more money spent on goods from the market. But when we no longer are able to trade our time on the market (i.e. in jobs that are becoming scarse and unemployment rising)...
2. High tech self providing: It makes sense to be using our time that is no longer traded on the market to invest that time in making and doing more for oneself. She evidences the US. IE replacing what you would have purchased from the market by producing it for yourself and re-skilling. Which, consequently will lead to a growth in local economic activity. And, Schor brings in some ideas from ecology and biology, Decentralised small scale systems are more diverse and consequently more resilient conversely the current market is a monoculture and vulnerable to instability and crisis. And not just BAU economic but alternatives such as time banks and the free exchange of goods/services. Which is antithetical to the previous notion of the global time poor superconsumer.
3. Genuine Materialism: Schor advocates that we have to become different kinds of consumers. From fast fashion cyclers in the current BAU disposable materialism (‘the giant churn of goods’). to consumers of goods that are longer lived and produced with a lower environmental footprint. We know nothing about how our goods are produced. So consumers are going to have to become more connected to the production processes (ethical, environmental resource) whether it’s local or global. She sees localism as the way of the future. And this has particular relevance to an export based economy like NZ. She argues that such countries need to become more based in a regional economy rather than exporting to EU/America.
4. The use of interpersonal wealth: Investing in each other (aka social capital). Money is just paper. It is ultimately founded on a social contract (this I think is a fundamental principal that seems to have been forgotten somewhere along the way). In a crisis, when the system breaks down paper money is meaningless it is nothing more than just paper. In such times all ultimately rests on human relationships. When we build on each other in a community we build up credits and debits and we share and cooperate that is a form of wealth that it tremendous. Schor advocates brining more of that back into our society.
The interview can be found on http://www.radionz.co.nz/national/programmes/sunday and Juliets blog can be found here: http://www.julietschor.org/2010/06/solving-unemployment-through-new-uses-of-time/
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