Climate change was a topic in front of us constantly prior to Covid. The media pushed the issue, young mothers worried what sort of planet their children will grow up on. Public opinion built up a considerable head of steam on the issue. But few topics exhibited more clearly the inadequacy of human public debate. The discourse was deeply polarised. In one corner, President Trump et al don’t believe climate change is happening (so there is nothing to talk about). In the other corner, David Attenborough, Green politicians and an increasingly large section of the population worry that the planet is heading for imminent disaster. Schools and media seem at times to be setting out with something of a religious fervor to pursue the cause and bring us and our children around to their point of view. Emotion plays a big part in formulating respective positions on both sides of the argument. The economic implications of taking steps to minimise climate change play a large part in formulating the sceptics’ position.
For what it is worth, here are my thoughts on the subject. First, the climate is definitely getting warmer. As a former skier I saw the snow level gradually moving up Mt Ruapehu over the years. Have a look at glaciers around the world, they are all receding. I am not on top of the science but it seems to me it is probable there are multiple factors at work causing this climate warming. Multiple causes are always problematic in a public debate – each side latches on to the factors that support their case and ignores the rest of the evidence. That has surely happened in the climate debate.
Since warming is definitely occurring, it is difficult to believe the burning of fossil fuels – oil, natural gas, and coal – on the scale the industrialised world has seen since 1950, has not increased carbon in the atmosphere, especially CO2. Whether this has contributed to the climate warming we are seeing, is debated. But it is surely hard to believe putting such large amounts of additional carbon into the atmosphere would not have had SOME impact on the world and its climate.
In 2019, world oil production was 80 million barrels PER DAY. It has increased approximately five fold since 1960. Coal production was 1.4 BILLION tons in 2018- up 66% over the last 20 years. Natural gas production in 2018 was 4000 BILLION m3 – up 100% since 1990. World energy currently comes 34% from oil, 27% from coal, 24% from natural gas, 7% from hydro generation, 4% from nuclear power and 4% from renewables (solar and wind). The world is still heavily dependent on fossil fuels and still burning massive and increasing amounts of these fuels each year.
Over 60% of CO2 emissions come from four countries: China 29.4%, USA 14.3%, Europe 9.8%, and India 6.8%. The cheapest source of energy, and the most dirty source, is coal. It is most used in China, India, and Southeast Asia. Cheap energy helps produce cheap goods, which the wealthy West has then purchased and imported. Any move away from coal, any attempt to make fossil fuels more expensive (a carbon tax, or whatever), will add to the cost of living, especially the cost of electricity, petrol and natural gas. Policies to counteract climate change hit consumers in the pocket. Therein lies a major political conundrum.
Changing vehicles from petrol or diesel to electricity in many parts of the world is going to do little to reduce carbon emissions because much of the world’s electricity is produced from fossil fuels. In countries where electricity mainly comes from coal it is actually counterproductive because it is less polluting to have a car burn petrol.
The major international agreement on tackling climate change is the Paris Accords of 2016. Countries agreed to a set of aims called 20/20/20: a 20% reduction in CO2 emissions, a 20% share of renewables in the world’s energy and a 20% increase in energy efficiency. But individual countries were left to set their own targets which are not binding at international law in any event.
In 2020 fossil fuels still heavily dominate the world’s energy sources. China and India are planning to increase their coal consumption. The Paris Accords are so far having very limited impact on changing carbon emissions around the world. To the extent increasing carbon in the atmosphere does lead to global warming, the world has so far been unsuccessful in turning the position around.
There is a cost in moving away from fossil fuels. People around the world want to have their cake and eat it. They are worried about climate change but are unwilling to pay more for their energy. The Liberal-Country Party Coalition in Australia won re-election last year against most predictions, by ditching climate concerns and keeping energy costs down. Coal remains Australia’s most valuable mineral export. Short term economic considerations still appear to have the upper hand, in the world’s response to climate change.
The capitalist system of the past 250 years has successfully lifted billions of people out of poverty and transformed the world. It is currently transforming Asia, which is wonderful for the large part of the world’s population who live there. For New Zealand, developing and nurturing a successful economy remains in my view the most important determinant of wellbeing for our children. But capitalism undoubtedly has unwanted consequences such as climate change. As a country and a world we should move to limit the adverse impacts of climate change as much as reasonably possible.
So I agree it is sensible to have policies to limit activities which unnecessarily add to greenhouse gases. This is happening with the move to more fuel efficiency in planes and cars, and more electric cars, more public transport, incentives for providing solar and wind power. Battery technology is being worked on, and as it improves it seems probable that considerable advances in reducing greenhouse gases will be achieved. I develop some further proposals later in this chapter which would further limit the environmental impact we humans are having on our planet. But I see all these as evolutionary rather than revolutionary changes to the economic system. In that overall approach, I suspect I am a couple of steps behind climate change activists who seem to want revolutionary change.
Take the parallel subject of tariffs and free trade. Until recently there was a worldwide consensus that lower tariffs and free trade were important benefits for the world to pursue. New Zealand has led the world in pursuing the cause of free trade, with some of the lowest tariffs and least trade impediments of any country. Maybe we are showing the world by example, what a good country we are in not only supporting free trade but in practising free trade. Does that mean the rest of the world has then dropped its agricultural tariffs and treated us fairly in return? Or does it mean the rest of the world has taken the favourable trade positions we have offered them, and given us nothing, or as little as possible, in return? Yes, we may feel all virtuous as a nation in respect of our positions on free trade. No, they have largely not been reciprocated by the rest of the world. Why should we believe blazing another altruistic path on climate change is going to generate any more dividends for New Zealand than our support of free trade has brought us?
When you look at the figures above for China, USA, Europe and India, it is obvious where major world greenhouse gases are coming from. Unless and until those polluters really address change, what is the point of New Zealand putting more costs onto our economy, destroying more jobs, and going out on a limb?
Over two evenings in May 2020 TV3’s Newsnight broadcast reported on sheep and cattle stations inland from Gisborne that have been sold and planted in pine trees to be grown for carbon credits. It is not clear the trees will even be pruned and eventually harvested for timber. They may be left to stand indefinitely, having no future economic value to the country at all. The programme showed how using the land for trees, not farming it, costs jobs and economic value. Employment has dropped in the area and the local communities are being damaged. The area is prone to erosion and periodic easterly cyclones, so if the trees are milled, erosion and environmental damage in the future is possible. The news items certainly raised questions about the value of large scale afforestation of the area for carbon credits. I asked myself, why is New Zealand doing this? It does us no good. China, India, Indonesia continue to burn increasing amounts of coal as we cease farming our land and plant it with trees, thereby generating much less value. All we are doing is putting some valuable carbon credits into the hands of overseas investors, who can then trade and sell them at a profit. As a country, we are being naive in pursing these policies, in my view. Worse, the price of the carbon credits is steadily increasing. In theory it will be economic to buy increasingly valuable farmland and put it into trees.
The present Government has taken steps to restrict and ultimately close down oil and gas exploration in New Zealand and the seabed around it. When that happens, will we all stop driving cars and stop using natural gas to heat and cook? Or will this measure simply mean we have destroyed jobs in Taranaki and ensured that we have to import all our oil and gas in the future? My guess is we will still use the products but will have to buy all we need from overseas. So the policy has hurt our economy, but will not even reduce New Zealand’s greenhouse emissions.
Would the quantities of oil and natural gas we might have produced in New Zealand had exploration continued , have made any material difference to the 80 million barrels of oil produced in the world EVERY DAY? It is difficult to believe New Zealand’s oil and gas industry would have ever been a polluter on a global scale had it continued. This is another policy where the sentiment is no doubt admirable but I question whether the steps we have taken have been in New Zealand’s long term national interest.
With abundant hydro-electricity resources and some useful thermal energy, New Zealand already has an exceptionally high proportion of its energy coming from renewable sources. With a low population by world standards, we are an insignificant contributor to global carbon emissions (even if our farm animals pass too much wind). We would surely be unwise and naïve to adopt early strong measures to minimise climate change. We should wait until the world’s major emitters start really changing their ways before we take too many significant steps ourselves. There is little point in taking stern measures, damaging our economy but making no real difference to the world’s carbon emissions, while the world’s major polluters retain their cheap, dirty energy and laugh all the way to the bank as we import their cheap production produced with the help of dirty energy.
Let famous economist Milton Friedman have the last word:
‘Even the most ardent environmentalist doesn’t really want to stop pollution. If he thinks about it, and doesn’t just talk about it, he wants to have the right amount of pollution. We can’t really afford to eliminate it – not without abandoning all the benefits of technology that we not only enjoy, but on which we depend’.
The cause of climate change, like the cause of free trade, is an admirable and correct one, but the appropriate response from New Zealand on climate change is surely a measured one. It is not in our national economic interest to seek to lead the world in responses to climate change issues. I worry we have not yet appropriately calibrated our climate response policies fully to reflect that more measured approach.
TWO OTHER GREEN ISSUES
POPULATION
It is surely obvious that the larger the world population, the greater pressure we place on the world’s resources. With more people we need to farm more extensively to feed ourselves. We use more energy, we build more infrastructure, more houses and buildings, we generate more waste. The larger the world population, the more difficult it is going to be to limit the environmental impact we cause.
Until about 100 years ago, three things primarily kept human population growth in check: pestilence, famine and war. As for pestilence, in 1730 it was estimated an incredible 75% of children born in London died before the age of 5 years. Vaccination, sanitation, and modern medicine over the past 100 years, have (until Covid) basically eliminated pestilence as a ceiling on the human population. Life expectancy has increased from 30-40 years 200 years ago, to exceed 70 years now, and in some countries such as New Zealand, 80 years.
Famines still happen in backward parts of Africa but improved genetics in both crops and animals, plus improved science in agriculture, have dramatically boosted output over the last 100 years. These agricultural advances have essentially eliminated famine as a second ceiling on human population while economic progress has enabled people to purchase such abundant food. Diets have improved significantly. Humans are steadily getting both healthier and larger. And finally, we have not had a major war for 75 years.
The impact on the world’s population from eliminating these three constraints has been dramatic:
| World population- Billions | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
|---|---|---|---|---|---|---|---|---|---|
| Year | 1804 | 1927 | 1960 | 1974 | 1987 | 1999 | 2011 | 2024 | 2042 |
| Years taken to add 1 billion | – | 123 | 33 | 14 | 13 | 12 | 12 | 13 | 18 |
The present world population is around 7.7 billion. What is going to limit the growth? Well, drops in fertility are being observed in young males. Perhaps evolution is already at work, and is moving naturally to limit the dramatic growth in numbers of the human species. Secondly, as the standard of living in a country rises, birth rates in that country drop. So in first world countries, populations have plateaued and in a number of countries are falling. The population of Japan for example has declined by 1.4% – by 1.8 million people- since 2010. The population of Europe is projected to fall from 740 million in 2012 to 734 million in 2050. But over the same period, by contrast, the population of Africa is projected to more than double, from 1052 million in 2012 to 2478 million in 2050.
So the biggest thing the world could do to limit environmental damage is to limit birth rates – in New Zealand and everywhere in the world-but especially in underdeveloped countries. When green parties around the world start to advocate that as one of their primary policy initiatives, I would seriously look at voting for them.
Closer to home, I have already questioned strongly the significant population growth we have allowed to occur in New Zealand over the past six years, particularly as a result of high immigration. We are one of the last underpopulated parts of the world. It is a tremendous advantage, which we have been rapidly squandering. Five million is a good number to aim to stay at. We don’t need any further increases.
There is one other significant world demographic statistic. The world’s population is not only growing, it is also becoming significantly more urbanised. The UN says 55% of the world’s people are urban dwellers now, which is expected to rise to 66% by 2050. Developed countries are already more that 75% urban. In Asia the current figure is around 50% urban. In Africa, 43% are urban dwellers. We need to plan for an increasingly urban world in the future and how that will impact on the environment.
BUILT-IN OBSOLESCENCE
Technology threatens to displace more unskilled workers than society can usefully redeploy. It also threatens to produce more than mankind can consume. We still have a fridge which came from my family home. It is probably 40 or even close to 50 years old. It is still going. A few years ago we bought a new fridge guaranteed for five years. It broke down and wasn’t economic to fix after six years.
Built-in obsolescence has happened worldwide but particularly as manufacturing has moved to Asia. The world, especially China, has made it an art form to manufacture things that look good, are relatively cheap and have a limited life. Close by our law office on Auckland’s North Shore in the 1980’s and 1990’s was a home appliance repair shop. It repaired kettles, toasters and the like. It has long since shut. Now if your kettle breaks down, you throw it out, and buy a new one.
Companies now actively increase the cost of things such as consumables for older machines to force you to buy the latest model. They stop supplying parts for older models, so it becomes impossible to repair them and you have to buy a new one. Software companies intentionally stop supporting their software to force you to buy the updated replacement.
The commercial world is now able to produce more than we humans can consume so it has to force further production onto us. This is not just by advertising, it is by actively trying to ensure products have a limited life. Fifty years ago, when you married you bought a fridge which might last 25 years. You would expect that over your married lifetime you would buy one further fridge. Those two fridges would serve you for your lifetime. By comparison, how many fridges will be needed by the couple marrying today? If we are really generous, and said fridges now last on average 10 years, they will need to buy five fridges over their married lifetime where their parents needed only two.
And this phenomenon is not limited to home appliances. Modern houses will last for far fewer years than houses built 50 years ago. Nothing is built to last in the modern world, which means person for person we are building, consuming, and disposing far more than our parents.
Buying five fridges over your adult lifetime, rather than two, has a major impact on the world’s environment. There are 7.7 billion people at present. Lets say 5 billion of them are within the 50 year period of having their own households. Divide that in half for two person households and that is 2.5 billion households now buying five fridges each over their adult lifetimes – 12.5 billion fridges. Compare this to 50 years ago when there were probably 1.2 billion households buying two fridges each: a total of 2.4 billion fridges over their adult lifetime. These figures are very rough but essentially we are now manufacturing (and at the end of their shortened lives, dumping) five times the number of fridges we were 50 years ago. And the same calculations apply to all our household appliances; our garden tools, our furniture and many other manufactured items we use. The impact on the environment from the modern ‘cheap, short life and throw it out approach’, is dramatically more intrusive.
Do we see green parties with major platforms to drive longevity in manufacturing? A successful reversal of these ‘early obsolescence’ trends would certainly do much to benefit our environment, and could be potentially as important as reducing our carbon emissions.
SUMMARY
So yes, we are right to consider our environment and not just economic growth. But I am not yet convinced climate activists are as yet fully and correctly on target when key environmental issues are examined. Neither do I support New Zealand adopting overly strong measures to lead the world in tackling climate change. By all means let us take reasonable measures to limit greenhouse gas emissions; but we will do ourselves economic harm and make little impact on the behaviour of major polluting nations, by taking a significant lead.
| << Chapter 10 | Chapter 12 >> |
Covid – Catalyst for Change 