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Christopher Horner

Kyoto Realities

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The New Zealand government is discussing various forms of a “global warming” tax to pay for an alleged, looming Kyoto liability. What they apparently have not informed the public is that this rationale, or rather excuse, for new taxation is actually something that does not and does not need to exist.

This is for several reasons. First is that no obligation could be incurred until after approved calculations of the five-year average of covered greenhouse gas (GHG) emissions for2008-2012 (the government projects this will be 2015); this could only be assessed in a successor to Kyoto, as the agreement expires at the end of 2012 and the proposal to make the initial pact enforceable under its Article 18 was defeated in 2005. Further, there is no reason a successor treaty, even if agreed, must include such liability andfor New Zealandto move forward with discussions, having not ruled out any such condition, would merely bend over backwardto retroactively changing these realities to the great detriment of its taxpayers.

All of this makes the government’s stance ever more puzzling and, inescapably, gives more fodder to those many who argue that Kyoto and its domestic implementation schemes are mere opportunities for revenue- and authority-grabs.

Kyoto’s Terms, New Zealand’s Reality

None among the handful of covered countries can be held financially obligated unless they agree to be so held as part of a post-Kyoto successor. That is to say that – presuming sanity among and responsible taxpayer representation by New Zealand’s negotiators – New Zealand is only “liable” under Kyoto if it volunteers under “Kyoto II” to be so. Whether such voluntarism is acceptable is a question for New Zealand’s taxpayers.

Kyoto is inherently a mere political gesture, with zero chance under any scenario or set of assumptions of having a detectable impact on climate, even if perfectly implemented for decades. The same is true of any successor that continues to exempt China, India, Mexico, Brazil, Indonesia, South Korea and other top emitter, as all such emitters insist. As such, nothing could be more apparent than the fact that Kyoto II’s champions need New Zealand – and all among the few who have agreed to this wealth transfer scheme – more than New Zealand or any country needs Kyoto II.

It thus seems inconceivable that Kiwi negotiators would even allow such a demand to rest on the table for more than a moment. Then again, the same could be said about entering even the first iteration of a selective, growth-inhibiting scheme which transfers larges sums in the name of combating something that continues to refuse to show itself (aberrant or dangerous Man-made warming). But we would not be having this conversation had that decision not gone the wrong way, so anything remains possible in this realm.

Still, at bare minimum New Zealand would be prudent to wait until after the Copenhagen talks to see what shape things will take in the future rather than rushing in now.

However, if a government is determined that the public will pay for any potential Kyoto liability it chooses to incur on their behalf – never forget that key point – it makes little sense to immediately impose an emissions trading scheme (ETS) – which is universally recognized as an indirect tax on energy that raises prices, while lowering growth, output and productivity – or direct tax be imposed early rather than when the manufactured liability can be assessed and charged against the sectors/producers at the final count (2012 or 2013 at the very earliest).

It makes little sense, that is, unless this is done is for the purpose of collecting taxes each year instead of only once, and continuing such collection into the future. As the scheme would doubtless not have a near-term expiration date, this is another sign that the taxpayers can read into as they wish.

Adding to the folly is that ETS schemes applied to carbon dioxide have proven to be ineffective in reducing emissions – Europe’s emissions actually went up each of the three years for which we have official figures, despite the promised “certainty of emissions” being a reduction. Also, there is the observed reality of the past approximately 15 years of no warming, even while CO2 emissions rose faster than projected. The latter truth shows that the General Circulation Models (GCMs) on which the entire enterprise is premised are wrong, and necessarily assume an atmosphere that is far more sensitive to CO2 – a marginal GHG to which Man contributes at the margins – than is the case, in order to create their lurid future scenarios.

All of this is to say that there is simply no argument to be made that this tax or ETS is required, or climatically meaningful. It is in every ways a gesture, if an expensive one.

Conclusion: Run, don’t walk, away

The government is touting how New Zealand is now in a “net position” as regards GHG emissions, pointing to he effects of the drought on agricultural production as being responsible for a large proportion of the turnaround. On this basis it wants to convince taxpayers to accept a tax to pay for future Kyoto liabilities that it nonetheless foresees.

New Zealanders would therefore be wise to view this call for taxation as no different than the absurd, late-night infomercials offering “no money down!!!” pitches, luring people who ultimately cannot pay for that to which they are committing with the promise of essentially a free and rewarding ride…until the real cost emerges once the buyer moves beyond the phony construct enabling the freebie (say, when the drought ends).

They should recognize the growing chorus about how the cap-and-trade schemes replicate artificial, state-enhanced or created bubbles such as the sub-prime mortgage fiasco. In fact, in the U.S., green pressure groups and left-wing economists are now loudly sounding that specific alarm.

Run, don’t walk, away from such scams which, like this one, would lead to New Zealanders praying for continued drought in order to lessen their tax burden. Such a scheme is all pain and no gain, is nothing that New Zealand is obligated to inflict upon its taxpayers, and is something that, e.g., the European Union has avoided through its clever baseline selection for Kyoto of 1990 (allowing “credit” for prior, unrelated economic collapse), among other artifices. This proposal is at best a very expensive gesture.