The Environmental, Economic and Social Rationale for Pricing Carbon and Taking Effective Climate Action, and a Case Study of the New Zealand Emissions Trading Scheme.

Abstract

Climate change poses one of the most difficult challenges that humanity must collectively overcome to ensure that a just, peaceful and prosperous world is maintained for future generations to enjoy. The difficultly in ensuring any climatic change is limited to “acceptable” levels, commonly interpreted as a limit on temperature increases to less than 2 degrees centigrade, is immense. This will require serious effort from all countries, whether they are large or small, prosperous or poor. There are powerful moral, economic and environmental reasons for ensuring the impact of today’s development and prosperity do not endanger the survivability of our planet. Ensuring equity and justice between current and future generations, between rich and poor, and between those who historically contributed the most towards climate change and those who will suffer the most from its effects, are also powerful reasons for rapid and effective action. Tragically, if unchecked, the future impacts of climate change will undoubtedly impact the lives of every single human being on the planet. Given the need for worldwide, collective action on climate change, it is necessary to examine the theoretical underpinnings of the economic and environmental thinking behind “pricing in” the impacts of climate change, and to benchmark our own country’s policy response against “best practice” policy measures. With our reliance on our “clean and green,” “100% pure” national branding, it is vitally important that our policies on climate change are strong and ambitious. This thesis will therefore focus on New Zealand’s core climate change policy instrument, the Emissions Trading Scheme. The thesis will critically examine the impacts of recent changes to the scheme’s effectiveness at reducing the emissions of greenhouse gases, and how fairly it distributes the financial burden of doing so between the individuals and organisations in New Zealand will be critically examined, and will ultimately find it lacking as an effective tool for reducing emissions and mitigating New Zealand’s contribution to climate change, at least in its present form. The thesis will analyse the reasons for these changes, and will expose the weakness of our commitment to climate action in times of economic uncertainty and crisis, and the paucity of thinking which treats the environment and the economy as a zero-sum game, instead of two totally inter-related and dependent issues.