Southerly by David Haywood

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Southerly: A Tale of Two Iceblocks: Part 2 (Or A Hopefully Helpful Pointer For Politicians & Policy Makers Who Wish to Reduce Greenhouse Gas Emissions)

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  • David Haywood, in reply to Bart Janssen,

    It occurs to me that don’t you have a problem that once this is in place then governments have an incentive to increase greenhouse gas emissions in order to increase their tax take.

    Yes, the perennial problem with excise taxes (you probably recall that the US federal government couldn't levy income tax before 1920-ish and had to rely on excise tax (from alcohol, etc.) to run the country).

    That's what I was talking about when I mentioned that the rate of tax would have to be varied and "... could (and probably should) also be used as part of a cap system." Also when I talked about "the revenue split between income tax and consumption tax (I’d personally favour collecting more government revenue via income tax)".

    The counter-balancing factors here would be the ability (and indeed necessity) to easily raise the PGST rate to maintain revenue, as well as (I would suggest) an annual cap on emissions in order for the country to reach the targets we've signed up to. Also the ability (as with now) to shift the balance between income tax and consumption tax.

    Ultimately, of course, one would hope that NZ would come close to being zero emissions. But that will be a long time away (the average age of a car in NZ is 15 years, and currently there's no commercially available solution for zero-emissions heavy vehicles); I don't expect it to be much of a problem until towards the end of my lifetime.

    Setting aside the impossible task of getting a new tax put in place worldwide …

    Now I've become paranoid that I'm being misunderstood everywhere. Just to be clear: I'm certainly not suggesting "getting a new tax put in place worldwide" -- exactly the opposite! I'm suggesting a new tax only within NZ because there appears no chance for a binding global agreement to reduce emissions. (Although I'm hopeful that you already understood this!)

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • Moz, in reply to Bart Janssen,

    a problem that once this is in place then governments have an incentive to increase greenhouse gas emissions in order to increase their tax take.

    That's a feature, not a bug. The higher that tax the lower emissions will get. Usefully, even at zero net emissions that proposed PGST will still raise revenue, probably significant revenue, because by design it excludes most negative emissions (they only "count" if they happen internally to a net emissions process).

    Sydney, West Island • Since Nov 2006 • 1120 posts Report Reply

  • David Haywood, in reply to Moz,

    Physically, I thought that the long timescale was the whole point behind taxing everything as CO2 rather than having separate rates for all the different gases of concern, specifically methane? I thought you were arguing that since CH4 and CO2 have one carbon each, they pay the same tax. Or at least you seemed horribly confused as to how they could work differently in the short term when over a few decades the CH4 decays to CO2 and they become identical. That was where I got lost in working out what timescale you cared about, because that matters a lot.

    Okay, the problem here is that I’ve assumed that there is stuff that everyone knew – whereas clearly it’s not well known. There are standard tables of Global Warming Potential values defined by the IPCC that state the effect of various chemicals (over a given time period, typically 100 years) in comparison to carbon dioxide. For example:

    Methane*: GWP100 = 34
    Nitrous oxide (N2O): GWP100 = 298
    HFC-134a: GWP100 = 1550

    When I say that emissions would be taxed on a carbon-dioxide-equivalent basis – I mean methane at 34 times the standard tax rate (i.e. US$13.60/kg in my ball park calculations) and nitrous oxide at 298 times the standard rate (i.e. US$119.20/kg in my ball park calculations).

    It would be a brilliant stroke of engineering if you could end-run any political problems with a tariff by calling it a consumption tax, but this is the first time you’ve bought it up, when I would have expected it to be the main point.

    From my original blog:

    It is important to note, however, that PGST is not an ‘import duty’ since—as with the GST that it would replace—it is also applied to goods and services produced within New Zealand.

    Not my idea, but a solution suggested to me by an actual tax expert (!) when we were discussing a carbon tax in the context of New Zealand.

    Politically, you’re clearly working on a timescale where taking a few extra years to talk before starting to act is acceptable. Otherwise this proposal would start from where we are today, not from scratch, and it would be concrete and largely political rather than abstract.

    Where New Zealand is today is a non-functioning ETS (emissions trading scheme) which has the effect (from my analysis) of slightly increasing global greenhouse gas emissions, i.e. exactly the opposite of its intended goal.

    The reason that I’ve suggested only the “basic ingredients” for a workable alternative is that I’m not a tax expert. But hopefully a proper tax expert could take my pointers and develop a (hopefully) much better scheme than I’ve used as an example here – though that would require lots of iterative modelling & detailed analysis.

    My ballpark calculations suggest that such a scheme is not infeasible in terms of overall tax take and price increases for high dirty energy products.

    [*Note that no distinction is made between biomethane and fossil methane in terms of GWP100 – whereas it seems that there should be…]

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • Michael Homer, in reply to David Haywood,

    No, I wouldn't say so. By having the PGST refunded to exporters (as with GST now) then the PGST can have neither an incentive nor disincentive effect. My view is that we should neither subsidize clean energy in exports or punish dirty energy in exports because we don't have control beyond our borders, and can't anticipate the effect that the modified price signals would have in terms of encouraging/discouraging greenhouse gas emissions elsewhere.

    I'll try to write out an example where it happens. Ultimately it seems to be the category definitions that matter.

    Suppose that Exporter A is the only aluminium exporter in the country, and has high emissions (100/unit). Exporters B and C both export steel. Let's assume that aluminium is a perfect substitute for steel (but not vice-versa), and both are only used overseas.

    Exporter B has zero emissions, and exporter C is roughly in the middle of A and B (50/unit). C uses a different process than B that is dirtier, but produces more steel for each unit of iron input, so if C stopped producing altogether and all their inputs went to B, B would not be able to output the same volume (say, only 40% as much). A can scale up with demand.

    Exporter C is a net payer, which makes their product more expensive to their overseas buyers than both A and B. Exporter A is PGST-neutral, and exporter B is subsidised by C for the moment.

    C should cease operating under those conditions soon enough, so we can set them aside and allocate their iron input to B, who then produces 40% more steel than before. The other half of C's old production must be filled by A. Both A and B are PGST-neutral now, having no competitors.

    Let's assume that in the absence of PGST, aluminium and steel have the same value, and all three exporters have equal sales.

    Before, total emissions per three units exported were 100 + 0 + 50 = 150. With the PGST, 40% of C's exports go to B, for zero cost, and the other 60% go to A. Total emissions are now 160 + 0 + 0 = 160. Total exports and prices are unchanged.

    Written out, my vague sense of unease looks extremely complicated and unlikely. It doesn't seem completely out of the question either, however. The category-based refund does the lifting.

    I'd actually see the definition of industry categories as being the greatest difficulty with my demonstration proposal.

    This was my next question. The hypothetical doesn't happen if aluminium and steel are in the same category, which pushes for quite broad categories. On the other hand, the price modulation aspect seems to fall apart if the categories aren't reasonably specific. There's an incentive to try to game them either way.

    Wellington • Since Nov 2006 • 80 posts Report Reply

  • David Haywood, in reply to Michael Homer,

    Written out, my vague sense of unease looks extremely complicated and unlikely.

    I certainly admire your ingenuity, Michael! I hope that you're putting your intellectual energy to work as a tax lawyer or some such.

    Yes, all sorts of weird effects may be possible at hypothetical extremes -- the question is, of course, if there's anything really like that in the economy. It's at such a level of detail that I can't say anything here except that this is the sort of thing you'd have to investigate with your modelling & analysis when deciding on an optimum configuration for your tax system.

    My children have exhausted me today -- I'm off for an early night...

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • Moz, in reply to David Haywood,

    I’ve assumed that there is stuff that everyone knew – whereas clearly it’s not well known. There are standard tables of Global Warming Potential values defined by the IPCC

    I tried to get you to understand that an exponential decay and a linear average is a bad combination, but you kept coming back to "methane decays to carbon dioxide so they are the same", which confused the heck out of me. That is largely why we spent about 3 pages of comments talking about it.

    This comment from you seems to contradict your latest explanation:

    I don’t even understand how biomethane from cattle can be considered to have the same effect as fossil methane ... since biomethane doesn’t leave net residual carbon dioxide after the methane breaks down

    So are there two categories, "organic methane" and "conventional methane" (I kid, I kid, they're "bio" and "fossil"), which have different effects, so one is taxed and one not? Your statement above admittedly makes me boggle every time I read it, so I might be missing something important.

    It's not really so much the methane as the residual carbon dioxide (or not) after the methane has broken down.

    Apparently being polite about this didn't work, so: David, this is wrong.

    Think of it like heating a house. If I visit you, that adds 500W of heat to your house, so it'll be a little warmer. But if I bring my 25kW heater with me, and turn it off after half an hour, your living room is going to be quite unpleasant for that half hour. The heater is the methane, I'm the "decays to CO2" ... because I also decay to CO2 over the 100 year timescale you're talking about :)

    When I say that emissions would be taxed on a carbon-dioxide-equivalent basis – I mean methane at 34 times the standard tax rate

    I dunno how to put this in a way you can understand. There's an exponential decay of methane after release, starting at about 150x and dropping to 70-odd after 20 years. Saying "34 times" is assuming that we can take 100 years to address the problem, and also requires that you ignore the next 20. I think you should instead evaluate everything over the next electoral cycle, and where the exponential decay comes into play is when some boffin tries to work out the methane balance based on this years emissions and bunch of other factors. For tax purposes we do not care.

    Part of the difference is non-linear effects. Imagine that we know exactly how much heating it takes to cause the Greenland ice shelf to collapse. Pick a number, 4 degrees warmer than average for five years, say. Imagine also that your scheme works brilliantly and drives net emissions to zero, resulting in a halt to warming in, say, 50 years time (the climate has a lot of inertia). Assume that according to your system we can afford an extra 1GT of methane this year, because over 100 years that 34GT CO2e is acceptable. But that's 150 GTCO2e for the first year... when that hits the global climate I reckon heatwave in years two and three ... that melts Greenland. And melting Greenland is a one way process, even over the century or two that you're looking at. So after a century we have stable climate at +3 degrees, but no Greenland ice shelf even though your calculations say it should still be there, because on average for the century we stayed under +4, but for a critical decade we went to +5.

    It doesn't have to be thresholds that dramatic to be a problem - even minor stuff like locally elevated concentrations causing local heating can mean that while Siberia is about two degrees warmer this year than it is on average, some bits are 10 degrees warmer because the permafrost has melted and is black instead of white. Those bits get even warmer, the melted area spreads, a few years later it catches fire, and then people start saying "is that bad? It looks bad".

    Sydney, West Island • Since Nov 2006 • 1120 posts Report Reply

  • Moz,

    After talking to my partner, I think my objections/questions can be summarised as follows. I'm kinda thinking of them as review questions/comments, but then I keep thinking "this is a mass media article about ice blocks" and it doesn't reaqlly seem like the right approach, or good questions. But anyway... if you were going for a 20,000 word publication, here's what I think is missing :)

    * you seem to have pre-compromised on 100 years as your CO2e period. Why do that rather than use the more accurate one year figure?

    * Why do you not want to distinguish between embodied energy in a stable material vs an unstable one? Say, meat vs structural timber? If you tax structural timber, that seems like "make emissions worse" at the margins (use a wood substitute with immediate emissions because those are lower "in the long term" than wood).

    * how is a PGST conceptually superior to an ETS, when we have known hard limits on how much we can emit? Allowing "pay to exceed" seems like a major flaw. Political problems only apply here if the PGST has much fewer of them than an ETS, I think.

    * Why would a government unwilling to fix the ETS be willing to fix the PGST?

    * How would you modify your PGST to encourage negative emissions? Why have you not done so?

    * I think all your proposed differences from a conventional carbon tax can also be applied to a conventional carbon tax - border controls, including agriculture and arbourculture, wholesale vs retail. The conceptual differences seem to disappear in practice. What have I missed?

    * Your proposal has a significant time delay built in while the details are tidied up, the relevant treaties are renegotiated, and new legislation drafted. How is your suggestion distinguishable from the "deny defer delay" position in practice? Viz, how would we know whether the government is adopting your suggestion purely as a way to delay action another decade, or with the intention of taking the most effective action as soon as possible?

    (my questions about your misunderstandings are entirely separate from these questions about how a PGST would be better in practice than the ETS that is just acting as a place-holder now while we wait for a government who thinks AGW is a problem worth addressing).

    Sydney, West Island • Since Nov 2006 • 1120 posts Report Reply

  • David Haywood, in reply to Moz,

    So are there two categories, “organic methane” and “conventional methane” (I kid, I kid, they’re “bio” and “fossil”), which have different effects, so one is taxed and one not? Your statement above admittedly makes me boggle every time I read it, so I might be missing something important.

    Yes, you are.

    I certainly don’t think that methane and carbon dioxide are the same thing; I certainly never suggested that fossil methane should be taxed and biomethane not.

    Those GWP100 values are not my idea. They’re used by thousands of people in the field to calculate greenhouse gas emissions according to the UNFCCC conventions.

    For example, the calculations of New Zealand’s greenhouse gas emissions use these values when they do the “accounting” to add everything up as carbon-dioxide-equivalent tonnes.

    I was querying the official GWP100 values that are used for carbon-dioxide-equivalent calculations of methane in the UNFCCC calculations.

    I won’t repeat my query but you can read it here again if you so wish.

    To put it into the context of your heater example, the IPCC’s GWP100 values appear to assume that:

    – Turning OFF a 500W heater, and then turning ON a 25kW heater for 12 years, and then turning our original 500W heater back on for another 88 years…

    Is the same as:

    – LEAVING a 500W heater ON, and then turning ON a 25kW heater for 12 years, and then turning ON ANOTHER 500W heater for another 88 years…

    The GHG accountants may have a method for taking this into account (they almost certainly do) but I have yet to be able to find out what it is…

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • David Haywood,

    To answer your other questions, Moz:

    you seem to have pre-compromised on 100 years as your CO2e period. Why do that rather than use the more accurate one year figure?

    It’s not me who decided on 100 years as the CO2e period. All the official data is based on those values. That’s the data that governments and other bodies consider to be our official emissions. I used this data to do some ball park calculations of TAX. Nothing else, just TAX.

    Why do you not want to distinguish between embodied energy in a stable material vs an unstable one? Say, meat vs structural timber? If you tax structural timber, that seems like “make emissions worse” at the margins (use a wood substitute with immediate emissions because those are lower “in the long term” than wood).

    Because the lifetime emissions of a product depends on the way it is disposed of (e.g. aerobic vs. anaerobic decomposition)

    – the embodied dirty energy that’s taxed on imports is the dirty energy used to produce the good or service (from which the emissions have already been released to atmosphere by the time of arrival at New Zealand’s border).

    – If something like meat or wood breaks down in a landfill then the methane emissions to atmosphere is accounted for (and taxed) at that point via the landfill operator.

    – If a product doesn’t decompose then there are no more emissions.

    – If a product like meat or wood decomposes aerobically then it simply returns the carbon dioxide to the atmosphere that was absorbed in the first place during photosynthesis at the beginning of the energy chain – and so you don’t attempt to tax that, of course.

    how is a PGST conceptually superior to an ETS, when we have known hard limits on how much we can emit? Allowing “pay to exceed” seems like a major flaw. Political problems only apply here if the PGST has much fewer of them than an ETS, I think.

    Because you can’t implement an ETS in isolation from the rest of the world (or, at least, the vast majority of other countries in the world) for a small exporting nation like New Zealand. The ETS adds a cost to your goods & services that producers in other countries don’t have. Therefore you end up with distorted price signals which may actually increase global GHGs, i.e. as with our current ETS system in New Zealand.

    As I said, a PGST (or similar system) can be combined with an annual (sinking) cap on emissions to meet eventual emissions targets as defined by the “hard limits” of the atmosphere. But I certainly don't see it as the whole solution to GHG emissions by itself, of course (and never claimed that it was). It's only part of the solution.

    Why would a government unwilling to fix the ETS be willing to fix the PGST?

    Because a different government is elected? The Greens are calling for the ETS system to be scrapped, for example.

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • David Haywood,

    Continued…

    How would you modify your PGST to encourage negative emissions? Why have you not done so?

    I’m not sure as to your definition of negative emissions, Moz. Some researchers describe the conversion of a dairy farm to crops as a negative emission – but I (and a PGST) would see this as an improvement in energy efficiency. Crops would attract less PGST than dairy and so that would therefore be incentivized.

    As I said elsewhere there is a finite amount of land in New Zealand that can be converted into permanent forest – and I’m very suspicious of the current approach of buying a photograph of forest regeneration in Uzebekistan and calling it a negative emission for New Zealand.

    Also, as I said elsewhere, this is most easily dealt with by a separate system in my opinion (which perhaps could also deal with sequestration of carbon dioxide as carbon compounds in soil if this approach pans out.)

    [EDIT: Of course, from an administrative point of view it would be trivial to refund PGST for carbon sequestration. I’m just explaining here why I didn’t include it in my demonstration proposal, i.e. because it opens up a whole complicated kettle of fish.]

    I think all your proposed differences from a conventional carbon tax can also be applied to a conventional carbon tax – border controls, including agriculture and arbourculture, wholesale vs retail. The conceptual differences seem to disappear in practice. What have I missed?

    Well only that in New Zealand no-one is suggesting a comprehensive carbon tax that takes into account embodied dirty energy. Hence why I’m pointing it out here.

    And, as I’ve said ad naseum, in my demonstration proposal I’m only suggesting the “ingredients” that such a system would need. The PGST as discussed in the blog is supposed to be a helpful “thought experiment” not a ready-to-implement scheme. (Obviously it hasn’t been helpful in your case, however – sorry about that!)

    Your proposal has a significant time delay built in while the details are tidied up, the relevant treaties are renegotiated, and new legislation drafted. How is your suggestion distinguishable from the “deny defer delay” position in practice? Viz, how would we know whether the government is adopting your suggestion purely as a way to delay action another decade, or with the intention of taking the most effective action as soon as possible?

    As I’ve said, I don’t believe that international treaties have to be renegotiated (indeed the whole raison d’être of my demonstration proposal is to show what can be done in absence of binding international agreements).

    At the moment we have a half-arsed ETS that does the opposite of what it’s intended to do (as far as I can see). That’s our starting point. There’s no more time delay here than with any other proposed solution (and much less than some).

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • Ian Dalziel,

    Trees a crowd...

    While tropical forests continued to decline, a remarkable change is happening: tree cover on agricultural land has increased across the globe, capturing nearly 0.75 Gigatonnes carbon dioxide every year. A new study titled "Global Tree Cover and Biomass Carbon on Agricultural Land: The contribution of agroforestry to global and national carbon budgets" provides insights into the patterns of this tremendous change at global, regional and national scales

    Read more at: http://phys.org/news/2016-08-trees-farms-link-carbon-accounting.html#jCp

    Christchurch • Since Dec 2006 • 7743 posts Report Reply

  • Ian Dalziel, in reply to David Haywood,

    now ya see em, now ya don’t…

    ad naseum

    What is this – some kind of advertisement for a museum of network attached storage devices?
    :- )

    Discussed or disgust?
    Argumentum ad nauseam or argumentum ad infinitum
    https://en.wikipedia.org/wiki/Ad_nauseam#Etymology
    :- )

    Christchurch • Since Dec 2006 • 7743 posts Report Reply

  • Bart Janssen, in reply to David Haywood,

    I’m certainly not suggesting “getting a new tax put in place worldwide” – exactly the opposite!

    Yeah I get that you aren't asking other countries to put in place the tax, but you are expecting to be allowed to apply tariffs to imports which is just as difficult.

    I guess for I look at what you're proposing and my immediate thought is how quickly will the big accountancy firms set up a business unit whose sole function is to provide advice on how to avoid the tax.

    No matter how you structure it the accountants will figure out a way around it. That's why I really hate economic solutions to real problems.

    Auckland • Since Nov 2006 • 4431 posts Report Reply

  • Ian Dalziel, in reply to Bart Janssen,

    That’s why I really hate economic solutions to real problems.

    ergo real solutions to economic problems need eco-logic not ego-logic...
    ;- )

    Bean counters never factor in the plant!
    even when they have a 'hill of 'em'!

    Christchurch • Since Dec 2006 • 7743 posts Report Reply

  • David Haywood, in reply to Bart Janssen,

    but you are expecting to be allowed to apply tariffs to imports which is just as difficult.

    No I’m not, Bart. A consumption tax is not an import tariff.

    GST is a consumption tax (i.e. not an import tariff) as well – hence we can change the rate of GST (or even decide to take it off fresh fruit and vegetables) without recourse to changing trade agreements. As I said in the blog:

    It is important to note, however, that PGST is not an ‘import duty’ since—as with the GST that it would replace—it is also applied to goods and services produced within New Zealand.

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • David Haywood,

    Ian Dalziel wrote:

    While tropical forests continued to decline, a remarkable change is happening: tree cover on agricultural land has increased across the globe, capturing nearly 0.75 Gigatonnes carbon dioxide every year.

    Just to be clear, Ian, I’m certainly not saying that atmospheric carbon isn’t sequestered in trees – but rather that I don’t think that a carbon tax refund (or a PGST refund in my demonstration proposal) is necessarily a good way to manage it.

    The usual criticism is that it could be used to delay the transition to clean energy. Imagine a coal thermal power station being subject to an emissions tax – but being also able to have that tax refunded by cheaply planting trees. That removes some of the price signal that would otherwise be transmitted to consumers, and allows the coal thermal power station to operate economically further into the future than otherwise – which, in turn, delays the implementation of clean energy alternatives to coal thermal power plants.

    Also often cited are issues with land use for food. Given our finite land area then carbon sequestration via permanent forests is not a permanent solution to continued emissions of fossil fuels. At some point, it’s argued, land used for carbon sequestration via permanent forests will encroach on land used for food.

    None of this is really in my field of expertise. But I know enough to realize there are potential problems.

    I did have a section on this in an earlier draft of my blog (related to the ball park calculations) but it seemed that it was too much of a distraction from the main message. However given that several people have now brought up the subject then it probably does need to be mentioned. I’ve added a brief sentence in my blog that hopefully will be helpful in this regard:

    A PGST scheme could also, in principle, be used via a tax refund to encourage negative emissions, e.g. atmospheric carbon dioxide sequestered as carbon in forests. Various counter-productive results might be possible with such an approach, however, and careful analysis would be required prior to implementation.

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • Moz, in reply to David Haywood,

    Because the lifetime emissions of a product depends on the way it is disposed of (e.g. aerobic vs. anaerobic decomposition)

    If you want to lock in your 100 year timescale, I think you have to use a 100 year timescale, you can’t say “this thing over 12 years, this one over 100 years, this one over 10,000 years”. Either methane is 34x CO2, and structural timber is forever (the 100 year window), or try to use accurate models and over the next 10 years CH4 is 100x CO2, but structural timber is negative CO2, then over 1000 years CH4 is CO2 and structural timber is CO2. Old Parliament House is not “the oldest building made of gas in NZ”, it’s made of wood. Century-old wood.

    I know, and I hope you accept, that the IPCC lives at the intersection of politics and science, and is consistently wrong as a result. Whenever there’s a choice to be made they chose the one most consistent with BAU. So they use 100 year figures for GHG, because that’s the compromise between scientists saying “now matters” and politicians saying “it’s all CO2 eventually”. When they release “best guess” warming predictions their worst case is consistently too optimistic, largely because of the BAU bias they’re forced to use.

    If you want to use IPPC numbers you really should take the IPCC carbon budget as gospel and have a concrete plan to make sure NZ can’t possibly exceed it. Your “pay to pollute” plan isn’t trying to do that. From that link:

    just 269 billion tonnes of carbon left. To stay within the budget, global emissions would have to peak by 2020, and then become negative

    By the time a PGST could be implemented NZ would need negative emissions within an electoral cycle or two, so it would have to strongly encourage them from day one. Note that I think that estimate errs on the side of understating the problems and overstating how much CO2e we can emit.

    Because you can’t implement an ETS in isolation from the rest of the world… for a small exporting nation like New Zealand. [Edit to add end of quote: DH]

    The US has various “cap and trade” ETS-in-all-but-name, the EU have one, China has several, I think saying they can’t “be implemented” is a claim that needs substantiation.

    the embodied dirty energy that’s taxed on imports is the dirty energy used to produce the good or service

    I think you’ve fallen for the Economists Fallacy: “all consumers have perfect information at zero cost”. What you’re actually going to tax is a wholesale estimate, spending whatever you feel you can get away with to get that estimate. I suspect this means starting from “the embodied energy is XJ, country of origin emits Y gCO2e/J, therefore the gCO2e is X * Y” then negotiating based on some combination of diplomatic leverage, industry power, and NZ willingness to stand up to bullying.

    Because a different government is elected? The Greens are calling for the ETS system to be scrapped, for example.

    I don’t think The Greens will be in a position to fundamentally reshape New Zealand’s tax system in the foreseeable future. Barring a miracle your proposal needs the support of at least two of: the population, Labour and National. Realistically it will need substantial support from all of them. Relying on The Greens not just overtaking Labour, but also overtaking National (or Labour deciding that they would welcome the chance to be a junior partner in a Green coalition)… is … optimistic.

    Aotearoa and Australia have both seen good AGW responses neutered by pro-warming governments. To avoid your PGST suffering the same fate it needs to be like the anti-nuclear policy. Right now we have Labour leading the population on this issue, and the population somewhat grudgingly ahead of National but crucially, not willing to change their votes on the issue (The Greens are off on the fringe, and the Climate Emergency people might as well not exist). With the nuke policy it was a vote-changer – people were outraged at the the suggestion that Bolger was going to renege on a key policy, National plummeted in the polls and the Somer’s Report vanished back into the swamp. But in 2014 when given the choice between The Greens, Labour and National, “more warming” got an absolute majority, only spoiled by the strategic National vote split with ACT.

    It might be worth looking at the electorate of Grayndler in NSW in the last election. When the Murdoch press was faced with a left-wing Labour member vs a Green fighting for that seat, they came out swinging for that particular Labor candidate even in the middle of a nationwide blitz against Labor. This is a man they have previously run photoshopped as a Nazi on their front page and regularly denounced as a communist or lunatic. But when there was a chance a Green could take his seat suddenly he was their best buddy. Think about how much more strongly people like Murdoch would react if The Greens stood a chance of being elected as a majority government.

    Sydney, West Island • Since Nov 2006 • 1120 posts Report Reply

  • David Haywood, in reply to Moz,

    Thank you for your thoughts, Moz. I’ve altered your third quote above to include the full text (which I feel is an important part of what I said).

    I do appreciate your comments, and they’ve certainly highlighted various parts of my blog where I’d made assumptions about pre-existing knowledge. Many thanks!

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • Moz,

    The Conversation have an interesting article, suggesting that rather than try to reshape the consensus on reducing emissions directly, we work on redirecting the economy a bit instead.

    Yeah, I know, I write too much and address points you'd rather not talk about. I'll go away now.

    Sydney, West Island • Since Nov 2006 • 1120 posts Report Reply

  • andin,

    while we wait

    Know that alright..

    assumptions

    About people ? nah mate dont do it
    I'm for the idea, how its put into practice...pass
    Though I think a multi pronged approach and more than a few "lifestyle" changes is the only option left. Some just wont take it, well, seriously.
    All those financiers offspring can look forward to being foresters, gardeners or farmers

    raglan • Since Mar 2007 • 1715 posts Report Reply

  • CCH,

    Lots to chew, and I wish I had time to engage more deeply, but here's a few quick thoughts. (I'm a tax policy nerd for a US think tank, but views here mine alone).

    (1) The tax/econ jargon for the popsicle problem is "leakage" addressed through "border adjustments." A *lot* of work has been done on these issues; see slides 3-5 here! Including work on points that earlier comments have raised, e.g. deciding between broad v narrow goods categories for border adjustments. I recommend this Resources for the Future paper for a general summary of the issues that's not too dense (whether or not you agree with their conclusion that border adjustments aren't worth it). The Congressional Budget Office (non-partisan official US federal budget scorekeeper) also has a fairly accessible piece.

    I vaguely remember NZ-specific work on border adjustments too (considering NZ's carbon-intensive exports and the fact that NZ is unlikely to affect global carbon prices unilaterally).

    (2) Population aging, growing healthcare costs, and other structural factors mean NZ has a long-term fiscal problem. If new revenues don't help address that issue, it will mean more eventual real cuts in public investments and services. I'm not optimistic that eventual spending-side changes will fall on those who can most easily bear them. So I'd look to carbon taxes for new revenues (with some of the revenue used to protect low-income consumers) rather than to pay for cutting GST.

    (3) If instead of a tax switch, a carbon tax is used as a new revenue source, there's a variety of ways to protect low-income consumers while making sure that price signal reduces carbon consumption, with some revenue left over. This piece by a colleague is written for a US audience, so the detailed delivery of rebates isn't so relevant, but the general discussion about the need to protect low-income consumers is.

    (4) If switching GST for a carbon tax, I'd worry about ending up with less revenue and a more regressive tax system. Low-income households tend to spend a larger share of their consumption on energy-intensive necessities (fuel, home heating/cooling) than do high-income households. So I'd expect a carbon tax that generated the same revenue as the GST to be more regressive. On the revenue front, as you note, consumers substituting to "cleaner" goods could have a big impact on the "static" calculations of potential revenue over time.

    For a GST switch to be a revenue wash and not increase the tax burden on low-income consumers, the carbon tax rate might therefore have to be set to generate more initial revenue than the current GST, with the excess being used for rebates or other offsets to prevent low-income households from being made worse off by the switch.

    Also need to consider that low-income households often can't as easily substitute to low-carbon goods/services, as they may be less able to afford upfront costs often associated with doing so (weatherproofing, fuel-efficient vehicles, etc.). For the the carbon-reduction goal, that's the type of of consumption change you want, as you note. Policies to facilitate that transition (and associated cost) also worth thinking about.

    (Been lazily saying "carbon" -- but substitute CO2e or GHGs or whatever universe of things you want to capture!)

    Washington DC • Since Aug 2016 • 1 posts Report Reply

  • David Haywood, in reply to CCH,

    Many thank for your very interesting and helpful comments, CCH!

    I really appreciate all those links. Not being a tax expert myself, I don't know the jargon, and it's hard to even identify the correct search terms for the literature.

    There's a lot to digest in both your comments and the papers you've recommended, so I'll go away and have a good read and spend some time thinking through everything...

    Thanks again!

    Dunsandel • Since Nov 2006 • 1156 posts Report Reply

  • WH,

    There’s a US company called Brilliant Light Power that says it’s on the cusp of transforming the way the world produces and uses energy.

    BLP is developing a prototype ‘SunCell’ generator that it plans to field test in 2017. The discovery underpinning the device is said to consist of a means of catalytically generating a high energy plasma using previously unknown properties of hydrogen. The very large amounts of energy released by the plasma is harnessed by concentrator solar cells within the BLP device, which is about the size of your oven.

    The company’s detractors – a group that includes several winners of the Nobel Prize in physics – have noted that BLP’s theoretical claims are inconsistent with quantum mechanics. That said, many of BLP’s experimental results have been reproduced by physicists, engineers and other collaborators working with the company on agreed terms. Some of the verification reports and the CVs of those involved are published here. The company has also published a number of papers purporting to set out the spectroscopic and calorimetric evidence for the existence of the process it says it has pioneered.

    As one US professor of chemical engineering who has worked with the company wrote in 2012:

    "To summarise, when first hearing of the claims of BLP, it would be irrational not to be very skeptical, and prior to meeting [company founder] Randy Mills I was extremely skeptical. However, after having visited BLP, having participated in experimental design and execution, and having reviewed vast amounts of other data they have produced, I have found nothing that warrants rejection of their extraordinary claims. […] To be able to use hydrogen from water as a cheap and nonpolluting source of power would represent on of the most important technological breakthroughs in history."

    I’ve been following BLP for a long time but 2017 is scheduled to be a very important year for the company. We’ll soon see whether it can deliver on its extraordinary public commitments.

    Since Nov 2006 • 771 posts Report Reply

  • Ian Dalziel, in reply to WH,

    Daft Vaper – I am your sun!
    I hear one can get cheap oven shells made in Mexico…
    and ’ten thousand suns in a coffee cup’ sure does have a ring to it (or is it a torus?) Joe to Go!
    …but seriously, over at ‘Time Division’* they are working on perfecting the meter so they can charge per charge I’m sure – now I see they have shaved another layer of time away, we can now measure in zeptoseconds!
    Trillionths of a billionth of a second – all billable!
    https://www.newscientist.com/article/2112537-smallest-sliver-of-time-yet-measured-sees-electrons-fleeing-atom/

    Seems to me though, that every time they find a smaller time unit (or particle) it all perceivably ’goes past’ faster… until that moment when all our christmases come at once …the unwrapture!


    *Ian Curtis could’ve been a great Doctor…

    ** are there Harptoseconds, Chico and Grouchtoseconds?
    – Life = Marx Time©

    Christchurch • Since Dec 2006 • 7743 posts Report Reply

  • Joe Wylie, in reply to Ian Dalziel,

    ** are there Harptoseconds, Chico and Grouchtoseconds?
    – Life = Marx Time©

    They certainly had a way with numbers:

    Rufus T. Firefly: Gentlemen, Chicolini here may talk like an idiot, and look like an idiot, but don't let that fool you: he really is an idiot. I implore you, send him back to his father and brothers, who are waiting for him with open arms in the penitentiary. I suggest that we give him ten years in Leavenworth, or eleven years in Twelveworth.

    Chicolini: I'll tell you what I'll do: I'll take five and ten in Woolworth.

    Duck Soup, 1933.

    flat earth • Since Jan 2007 • 4586 posts Report Reply

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