The chart above shows Aotearoa New Zealand’s exports and imports of coal. First, note that the emphasis is on timing, not absolute amounts; Imports have a different scale to Exports. Essentially, imports have been around 10% of exports.

It’s also important to note that most Aotearoan coal is exported, while coal used to generate electricity at the Huntly power station is mainly imported. These are two different grades of coal. So it is to be not unexpected that coal imports will have been high at the same times that coal exports also have been high.

And it’s important to note that these data are for values of coal, not volumes. Values will be affected by fluctuations in world coal prices and by fluctuations in the $NZ exchange rate. (Increases in coal exports from 2000 to 2002 will have reflected the historically low exchange rate then.)

Coal exports actually increased after the November 2010 Pike River explosion; that coalfield was still in development in 2010.

Generally, from 2005 to 2012 the export expansion reflected the world market; noting dips for the 2008 global financial crisis, with a subsequent export of stockpiled coal in 2009. During that coal boom period, more than half New Zealand’s coal exports were to India. There was a resurgence of coal exports to India at the end of the 2010s’ decade.

The lull in 2020/21 reflected to Covid19 crisis. Again, we see an exporting of stockpiles after the crisis eased. In 2023 coal exports plummeted, probably a mix of falling world demand as well as falling New Zealand supply. This is a good sign for global transitioning away from coal, though China’s domestic production and consumption of coal will be rising as it transitions from petrol and diesel cars to electric cars. China will be happy to be using fewer imported fossil fuels.

On the import side, New Zealand’s demand for coal from 2003 to 2020 seems to have reflected the global trend, and it will have reflected a lack of growth in renewable energy generation during the later years of the Clark-led Labour-led government. It was under National that the big fall in coal imports took place.

Coal consumption in New Zealand stabilised in the mid-2010s, but resurged again in 2018, again under a Labour-led government; although, to be fair, 2018 and 2019 mainly reflect economic growth rather than the new government’s priorities.

Coal consumption at Huntly in recent years also reflects drought, meaning less hydro-generation of electricity. There is likely to be a lull in coal imports over the next few months, given that the hydro lakes are full, and the El Niño weather forecast is for a strong contribution from wind generation.

My sense is that increased use of electric vehicles – and increased charging capacity – will lead to another temporary resurgence in coal imports. The 2023 quasi-recession, engineered by the Reserve Bank, may however lead to some offsetting reductions in energy demand. My guess, though, is that there will be a short-lived consumption boom in Aotearoa in 2024 and 2025, as high interest rates pull in hot-money from overseas, holding up the $NZ exchange rate, and leading to a further ‘blow-out’ in New Zealand’s current account deficit; a 30.6 billion dollar annual deficit (7.6% of GDP), slightly less than the record high of nearly 9% of GDP earlier this year.

I look forward to hearing about the new government’s plans for expanded renewable electricity generation, and hope that these plans will not mean the loss of wild rivers such as the Mokihinui. Time will tell; soon, in 2024. This government needs ‘runs on the board’ – outcomes, not just proposals – if it is to survive beyond 2026.

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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

The supposed end of the 20-year standoff between environmentalists and farmers was announced last week, with the release of the Interim Climate Change Committee’s report on “Action on agricultural emissions”. It was celebrated as an “historic consensus” between farmers and environmentalists, as the agricultural sector was agreeing to pay for part of their methane emissions.

Since then, however, the “devil in the detail” suggests that the situation is much more complicated and disputed than it might have first appeared. There now seems to be a long way to go before a real agreement or consensus is found for getting farmers to pay for emissions.

There should be no doubt that this new stage of discussions is significant. For the best overall coverage of what it all means, see Thomas Coughlan’s news report, Farmers exempt from 95 percent of emissions charges under new proposed rules.

This reports that a consensus now exists for farmers to pay for emissions by the year 2025, with the likelihood that each individual farmer will be brought into the Emissions Trading Scheme (ETS). As Coughlan explains, “The ETS works by forcing polluters to pay a price for their emissions, whilst paying a credit to owners of ‘carbon sinks’ like forests.”.

Coughlan reports that “Labour had campaigned on bringing agriculture into the ETS by 2020 with National claiming the push-back to 2025 was a ‘backdown’.” The reason for this backdown is mostly related to the technical issues. Farmers need to first be able to measure, manage and report those emissions.

According to David Prentice, the chair of the Government’s Interim Climate Change Committee (ICCC), “there is significant work involved in developing accounting and reporting systems to enable this… We estimate this to be at least five years off” – see RNZ’s Farmers propose agriculture sector-led approach to emissions plan.

With 2025 agreed upon as the earliest date to bring farmers into a permanent system of emissions payment – probably via the ETS – the main disagreement is currently about what to do in the meantime. The ICCC has put forward one proposal, involving levies to be charged on “processors” of agricultural products – such as Fonterra dairy factories. This money would be funnelled back into research on technologies to help farmers reduce emissions. This system would also involve rebates to farmers who achieve emission reductions.

The second proposal is put forward by farming groups, who want to pay for the research themselves via levies through their traditional sectoral groups. Submissions are now open for four weeks on these two proposals. But the Government has already indicated that it prefers the first option, recommended by the ICCC.

Farmers not keen on Emissions Trading Scheme

Although farmer groups have been reported as welcoming and being amenable to the new recommendations for agricultural emissions charges, the consensus doesn’t necessarily go much further. Certainly, the idea that in 2025 farmers will be part of the ETS is not accepted – see 1News’ Federated Farmers: We have not agreed to any Emissions Trading Scheme.

As this item reports, “Speaking this morning to TVNZ1’s Breakfast programme, Federated Farmers CEO Terry Copeland clarified that while his organisation has agreed to work with the Government to reduce climate change, it has not joined any ETS.”

The traditional “farmer’s friend”, the National Party, is also opposing farming being simply incorporated into the ETS. For example, today one senior National MP is clearly stating that farmers shouldn’t be in the ETS – see: Judith Collins: Government has thrown Kiwi farmers ‘under a bus’.

Richard Harman also reports: “yesterday, Leader Simon Bridges was saying National opposed farming going into the ETS or any levy system until farmers had the technological and mitigation tools that would enable them to reduce their emissions. The party’s Climate Change spokesperson, Todd Muller, said that the Government was saying they had reached a historic agreement with the sector on a five-year work programme before on-farm pricing was established” – see: Now it gets hard – making farmers pay for methane.

Also, according to Harman, “96.5 per cent of Federated Farmers Members have responded to a Feds survey saying they would oppose farming being part of the ETS without significant conditions.”

The Business NZ lobby group is also putting forward the arguments against farmers being too heavily hit by emissions pricing, with its chief executive, Kirk Hope, saying it’s too early: “The problem for farmers is that there is no way currently for them to reduce emissions other than by reducing stock numbers. Science and technology will provide solutions over time – low emission breeds, low emission feed –  but those technologies are not here yet” – see: The risks for farming from emissions charging agreement.

Hope also argues that an overly-aggressive pricing system for farmers would create overall negative outcomes: “If New Zealand’s agricultural production declined as a result of emissions policies, the gap would easily be filled by less efficient agricultural producers overseas. The overall result would be higher global emissions, higher food prices globally, and a poorer New Zealand.”

Consumers are also like to face higher costs as a result, according to Gerard Hutching’s article, Farmers’ greenhouse gas emissions bill will lead to higher food prices. He also points out that the current prices being considered by the Government could rise quite significantly. Examining the prices, Hutching says that based on the current price of carbon ($25/tonne) the average dairy farmer would pay about $2000 a year, and the average beef and sheep farmer about $1000. But many think the price of carbon will rise as high as about $200, leading to about a $20,000 annual payment for the average dairy farm.

And although this is all based on the notion of farmers paying only five per cent of the costs of emissions, Mike Hosking suggests that this rate is likely to rise: “It’s like tax or tolls, once you get the sign off, they do nothing but increase or go up. And so it will be with farmers. Now that they have a sweetheart deal at 95 per cent, that number will only ever go down. Getting them to sign isn’t the end goal, making them pay like everyone else is” – see: Climate change – how can five per cent be a pass rate for farmers emissions deal?.

Criticisms from environmentalists

Although there’s been plenty of celebrations about the consensus, a number of environmentalists are unimpressed by what is being proposed by the Government, and even less impressed with the reaction of farming leaders.

In his article above, Thomas Coughlan reports that the pricing level for emissions by farmers is a “sweetheart deal” because Labour has agreed with New Zealand First to cap that pricing at only five per cent of the cost of those emissions – essentially providing farmers with a 95 per cent subsidy on those pollutants. In practice, “That would equate to a charge of just $0.01c per kilogram of milk solids and $0.01 cent per kg of beef at the current ETS price of $25 a tonne of carbon.”

Is that enough to push farmers to find ways to reduce emissions? Not according to Greenpeace’s Russel Norman: “It’s truly astounding that the strongest option put forward by the Government to deal with our biggest emitter is to delay action for another two years, after which agribusiness will pay a paltry 5 percent of their emissions” – see Zane Small’s Jacinda Ardern defends ‘laughable’ 5 percent tax proposed on farming emissions.

Norman also labels the proposed emission price as “laughable” and says Agriculture must be immediately brought fully into the ETS so that New Zealand’s biggest polluters are finally forced to start paying for their massive climate bill.

The same article quotes Victoria University of Wellington Professor of Climate Change, Dave Frame, agreeing with Norman, calling the level of pricing a “poor idea” and saying “The price implied by the ICCC’s recommended approach is too small a disincentive against further expansion of the dairy herd, because the price is simply too small to change behaviour.”

Similarly, blogger No Right Turn says that the Government’s pricing proposals allow for a continued free pass for fertiliser use, which is a big part of the problem, and should be discouraged through environmental pricing: “rather than subsidising farmers to produce this gas, we should instead be making them pay the full price of the emissions it causes – and removing the artificial cap on ETS prices so that the price can increase to its natural level. Farmers will no doubt complain that if they have to pay the full cost, they’ll have to stop using it” – see: We should not subsidise fertiliser emissions.

A proper market signal about the environmental costs of fertiliser would help ensure it is used wisely: “If there are high-value uses which justify the emissions cost, then they’ll be able to afford to keep using it (or they’ll make out like bandits by switching to alternatives). But for low-value uses, like fertilising marginal grass to grow cows and pollute rivers, we are all better off if people stop doing that.”

Farmers have therefore managed to win some big concessions in their negotiations with the Government, and economist Rod Oram is extremely unhappy, saying “The red meat and dairy sectors are holding New Zealand’s economy, climate, natural environment and international reputation hostage to the political power of the lowest common denominator in their ranks” – see: ‘Let true farming leaders lead’.

Oram argues that although farmers have expressed basic support for paying for emissions, they want only tiny reductions, plus lots of money from the government to pay for this. Therefore, he concludes: “If these are the only climate commitments dairy and meat leaders can come up with the Government and country can’t afford to leave farming’s future and ours in the hands of those leaders.”

Finally, for satire on climate change, see my blog post, Recent cartoons about the environment in New Zealand.

The solution has been relatively well-received, because it has an elegance in its “cost-neutral” approach of putting a penalty tax of up to $3000 on the purchase of new higher-emitting vehicles, and using the proceeds of that revenue to offer up to $8000 in subsidies for those buying new energy-efficient cars such as electric vehicles (EVs).

But is it enough? Does it really match the scale of the problem? And what negative consequences will it have for those who can’t afford, or aren’t able to use, electric and low-emissions cars?

A well-received policy

Newspaper editorials have been especially positive towards the Government initiative. Yesterday, the New Zealand Herald argued that the policy is a “clever” way to encourage greener car purchases, and that the public is likely to be highly supportive in the same way that the plastic-bag ban has been accepted – see: Clean cars the right road forward.

Similarly, the Otago Daily Times labelled it a “smart policy” because of its “moderate” and light-handed approach to changing consumer behaviour. The newspaper editorial emphasised that this meant the policy was likely to be enduring: “It is also sufficiently restrained to likely survive any change in government” – see: Nudging car fleet changes.

The paper praised the “nudge” component of the approach: “It is a variation of the ‘nudge’ theory, recognised in marketing circles and human psychology. Rather than use education, enforcement and over-the-top rules, it adjusts the costs of new and imported used vehicles. While how much impact that will have can only be estimated, the plan would lower one of the high hurdles to electric and hybrid ownership, the relatively steep purchase price.”

The Dominion Post has also praised the policy as “practical, maybe even elegant”, and has defended the scheme from critics who “lamented the Government’s lack of boldness” – see: Better late than never for a plan to lower vehicle emissions.

A number of other voices have been very positive about the proposal, including the motor industry. And even National is generally supportive of the subsidies for greener cars.

But attention has also been focused on those sectors of society that might be negatively affected by the cost of many cars going up – especially the poor, but also farmers and tradespeople – see Jason Walls’ National says the Government’s plan to get greener cars on the road could hurt NZ’s poorest.

National’s Brett Hudson says: “There is a risk that a feebate system could turn out to be regressive in its nature; that lower-income workers and working families might see themselves worse off compared to some people on better incomes”.

Similarly, the Taxpayers’ Union says “this is a tax on Otara vehicles to subsidies Teslas in Remuera” – see Rebecca Moore’s Government’s proposed vehicle tax taking from the poor to benefit the rich, Taxpayers’ Union says. Executive Director of the lobby group, Jordan Williams, says “Just because something is shrouded in environmental branding doesn’t make it any less nasty to the poor”.

Lacking boldness and ambition?

Is the new policy ambitious enough? After all, given the climate change emergency we face, is this policy sufficiently bold and radical to meet the challenge?

So far, environmentalists have been less than impressed. Greenpeace energy campaigner Amanda Larsson has welcomed the policy in general but questioned the penalties being imposed on the less-efficient petrol and diesel vehicles, saying that the upper level fee of $3000 is disappointing. She points out that the French equivalent is about $10,000 – see Jason Walls’ Greenpeace wants the fee charged on higher emitting vehicles to be a lot higher than $3000. Greenpeace is also calling “on the Government to set a timeline for banning the sale of new petrol and diesel vehicles.”

This is a point also made by blogger No Right Turn: “As the Cabinet paper points out, a dirty car imported today stays on our roads for 19 years on average. So the quicker we turn off that tap, the better. But more importantly, we need to turn it off permanently. Other countries have announced phase-out dates for fossil-fuel vehicles, typically aiming to ban new sales in 2030 (and non-museum-piece registrations 5-10 years after). Such a date sets market expectations and helps drive the push for people to make their next car electric. But there’s no mention of one at all in the Cabinet paper – the necessary action seems like too much for the government to take” – see: Climate Change: Timid and unambitious.

The blogger also takes issue with the timeframe of the Government’s initiative, saying “the government needs to do more than this, and it needs to do it faster. They should be pushing this through the legislative process as quickly as possible, and implementing it immediately, rather than with a 5-year phase-in.” He points out that “the government is planning to apply a vehicle fuel efficiency standard Japan and Europe had five years ago in 2025”.

Drawing attention to Jacinda Ardern’s promise of a “nuclear-free moment” in combating climate change, No Right Turn says “contrary to the Prime Minister’s rhetoric, we’re not seeking to lead on climate change, we’re not even being a ‘fast follower’. Instead, our government is dragging its feet, just like its always done.”

On this issue of whether the Government is intervening enough, business journalist Liam Dann discusses why strong intervention is required: “Left to market forces alone, the widespread adoption of electric vehicles looks a long way off – too late for the world based on current predictions of a climate crisis. So if New Zealanders collectively want to hit current climate targets and reduce fuel emissions – it seems we need further government intervention. And that means big calls about the politics of who pays” – see: Kiwis are still too addicted to petrol, Govt had to act (paywalled).

In the end, the Government’s proposed scheme isn’t likely to make a huge difference in the take-up rates of EVs. David Linklater makes the case that current EVs simply aren’t yet very economical, even once discounted. For his “reality check” on the costs of buying an EV, and the costs of running them, see: Let’s not be fundamentalist about feebates and EV ownership.

He argues that to have a truly beneficial impact on the environment, car buyers need to be buying new EVs rather than second-hand ones, but at a cost of about $60,000 it’s hard to make the case that they are more cost-efficient over the long-term than the equivalent petrol-fuelled versions. For example, he argues that “it will take you 150,000km to recover the extra cost of a Leaf over a top-line Corolla”. Nonetheless, he says the new feebate policy isn’t designed to get everyone into an EV immediately, but just to nudge everyone into more efficient cars generally.

What is missing from the Government’s green vehicle policy?

The Dominion Post editorial, cited above, makes a recommendation for improving the Government’s green vehicle policy, suggesting that a serious investment in the infrastructure of public charging stations is required: “Charging stations remain an urban novelty, and are even rarer between some of the country’s cities and towns. That is an important next step, especially if the Government hopes to have its feebate running by 2021. We can’t afford another long wait for progress.”

Similarly, the Herald says: “There is also the issue of whether there will be an adequate network of charging stations to serve an increase in electric vehicles.

The Government also considered and rejected an array of other policies before announcing the latest green vehicle initiative. For example, a more generous subsidy for EVs could have been on offer, with the consideration of an extra $2000 being possible to reduce the costs – see Jason Walls’ article, Cabinet paper reveals the Government scrapped plans for a direct $2000 subsidy for EV buyers. The Government also decided against taking GST off electric vehicles.

Reporting on a Cabinet paper on the issues, Walls says the Government “is also exploring the possibility of a second-hand EV leasing scheme aimed at reducing transport costs for low-income households and supporting EV uptake”.

But why didn’t the Government decide to put some of their own money into subsidising EVs? In another article by Henry Cooke, the Associate Minister of Transport, Julie Anne Genter explains: “We just decided it wasn’t tenable to take away $100m from schools or hospitals or hip operations to subsidise new cars that wouldn’t work for a large amount of New Zealanders” – see: Government considered $2000 subsidy and age limit on imported vehicles instead of feebate.

According to this article, the Government also rejected a “variable annual licensing fee”, which would make registration more expensive for high-emissions cars.

Will New Zealanders really care about this EV subsidy? Talkback host Ryan Bridge suggests otherwise, arguing that “Kiwis don’t care about climate change. They say they do, but then they go buy a new SUV and have another child. They have choices already and they’ve voted big, loud, and gassy” – see: Climate change tax proposed for driving utes, SUVs.

He’s rather cynical about the policy, saying “Farmer Bob from central Otago with his Ford Ranger will be hit with a $3000 tax, while latte-sipping, lentil-eating Fabio from Ponsonby with his VW Golf Electric will get an $8000 discount.” And today’s Listener editorial on the topic adds to this, saying “there is in this policy a whiff of pandering to urban liberals at the expense of workers in the provinces.”

Finally, Judith Collins took to Twitter this week to ask: “Given that EV cars have a wee electric motor, why do the manufacturers charge so much for them?” And to explain that, see David Linklater’s article, Silly car question #53: if EVs have ‘wee’ electric motors, why are they so expensive?