Economy needs carbon tax, says ex-minister

Former Environment and Science Minister Simon Upton favours a carbon tax as a step towards energy prices that tell the environmental truth.

Upton, who represented New Zealand when the Kyoto Protocol was negotiated, told a climate change conference in Wellington yesterday that it was important to get a price for carbon emissions into the economy and a well-designed carbon tax would be the least-costly way to do that.

If the steep rise in oil prices had failed to collapse the economy, it was unlikely a carbon tax would.

But to be credible, it would need broad political support.

Upton's former colleagues in the National Party were among the opponents of the carbon tax, scrapped late last year.

Dropping the carbon tax has left the Government's climate change policy in tatters. It has also become clear New Zealand will fail to meet its Kyoto target and will need to buy carbon credits to cover the shortfall.

"It makes sense to buy credits - the externalities are global - but it would be risky to assume all the emission reductions can safely be made offshore," Upton said.

Now Paris-based, he heads the OECD's sustainable development work.

He said at the international level the top priority needed to be the development of carbon capture and storage.

This means taking the carbon dioxide from large sources like coal-burning power stations and storing it in geological structures underground, instead of sending it up a chimney.

He said the consumption of fossil fuels on a huge scale would continue for the next half century.

"They are extraordinarily cheap and convenient. They will not be lightly discarded."

Upton expected significant expansion of the new generation of nuclear power plants but that option was expensive and problematic.

Solar power still needed intensive research and development, especially around the issue of storage.

Other renewables and energy efficiency were useful but not available on a large enough scale to deal with the global problem in the timeframe required.

"Because the global atmosphere is a commons, some genuinely global solution has to be found. Otherwise, the free-rider problems are intolerable," Upton said.

"But my bet is treaties are unlikely to be the driving force in reducing emissions, at least in the short term.

"Governments are betting on technologies, not treaties. They are hoping a series of techo-fixes will provide a way out."