KEY POINTS:
Prime Minister Helen Clark's ambition to make New Zealand a world leader in sustainability is smart politics.
It's particularly so as British and European interests begin to wage war against New Zealand's prime agricultural trade, citing environmental concerns, as the reform of Europe's Common Agricultural Policy undercuts the fat subsidy-enhanced profits of EU farmers.
That war will be given impetus by the focus that will now go on small, isolated trading countries like New Zealand after the Stern Report, released by the British Government this week, highlighted the environmental impact of transporting exports long distances to markets.
But only time - and the type of skilful execution that has so far eluded the Clark Government on climate change reforms - will tell whether her ambition is also smart economics, or a foolhardy step that will lead to a lessening of New Zealanders' overall standard of living if we turn out to pay too big a price for taking a first-mover position.
Taking her aim to make New Zealand carbon neutral at face value is a risky scenario as far as business is concerned.
The agriculture sector, which remains New Zealand's lifeblood, is responsible for 49.4 per cent of our total greenhouse emissions. But previous plans to clamp down (remember the fart tax?) came a cropper after resistance from Federated Farmers president Charlie Pedersen, whose celebrated rant against arrogant environmentalists this year may need to be refocused before Clark speaks to the Feds next week over her plans.
"Shame on the people who elevate environmentalism to a religious status, shame on you for your arrogance, shame on all of us for allowing the environmentalists' war against the human race to ... take hold," was the Pedersen refrain in his July speech.
But the reality is that if Clark is to realise her ambition, the agricultural lobby will have to come to the party instead of continuing to despoil our rivers and lakes through an excess of nitrogenous waste and our air through methane emissions.
Many businesses are committed to sustainable economic futures and are prepared to take measures to ensure they are world-class in practice, as was obvious at the recent climate change conference organised by the Wellington Chamber of Commerce.
But leading businesses and their lobbies will want to ensure they are fully consulted by ministers as policies are developed for Clark to announce via next year's speech from the throne. At the very least, economic and business impact reports will need to be commissioned from the Treasury, and reviewed by independent outside sources to ensure decisions are made on credible grounds.
Business should not need reminding - but politicians may - of the absurd furore over the Government's initial plan for a carbon tax, which was abandoned after pressure from Labour's confidence-and-supply partners.
Labour ministers like Pete Hodgson had earlier trumpeted that New Zealand stood to make a net gain from carbon credit trading under the Kyoto Protocol. But revised projections later showed that this country was likely to exceed its Kyoto target for net emissions of greenhouse gases by 36 million tones of CO2 in 2008-12, a reversal that could cost taxpayers $1 billion or more.
Ironically, the switch to a net deficit position was in part due to economic growth, which had led to more emissions from vehicle exhausts, factories and power stations than had earlier been predicted. New Zealand was a victim of its own success.
But if we are to achieve the sustained economic success that Finance Minister Michael Cullen spoke about yesterday, the emissions problem will get much worse before it gets better.
In fact, little of real merit has happened on this score.
Our vehicle fleet is a disgrace and is causing hundreds of Aucklanders, in particular, to die before their time because of the pollution emitted from exhausts. But, despite the many reports on the issue, the Government is yet to firmly clamp down and order the polluting cars off the road.
Pollution caused by coal and gas power plants is an issue. But nuclear power is not allowed to be discussed openly. This is the type of ideological roadblock that business should pressure the Government to overcome in the interests of economic sustainability.
Environment Minister David Parker suggested that the decision not to implement a carbon tax, or any other broad-based tax in the first commitment period under the Kyoto agreement, was because the proposed tax would not cut emissions enough to justify its introduction. But the Government says it is still committed to meeting New Zealand's international obligations under Kyoto and will do something about it after the first phase ends in 2012.
The whole-of-government review on climate change that Parker has been overseeing is expected to result in either a more narrowly based carbon tax, or a cap and trade system on emissions. The argument is that polluting companies (or farmers) would have to buy rights to increase CO2 emissions, or plant forests which capture carbons as an offsetting measure.
But these policies are still in the melting pot.
Even before former British Cabinet minister Stephen Byers suggested taxing agricultural goods because of the energy and carbon costs in getting them to Britain, New Zealand was facing a simmering trade war.
It's not just the environmental campaign being waged against New Zealand's prized Anchor brand - the butter of choice for many British housewives - by Fonterra's local competitors, who argue that such products are not climate-safe because of the energy burned getting them across oceans to supermarket shelves.
Another campaign being waged in Britain claims that the chilled New Zealand lamb being sold to housewives is not as safe as that from European countries like Denmark, which can deliver meat products that are fresh, not old.
This is a major challenge to New Zealand's trading system and requires just the sort of whole-of-government response Clark's Cabinet team is now using to combat the climate change scenario.
