KEY POINTS:
So you thought the global warming debate was fought and won by the likes of Al Gore and the weight of scientific opinion. Turns out it's just the firestarter to the war at home.
A broader battle is in store, pitching the Government and environmentalists against motorists, dairy farmers, foresters and electricity generators, fought with weapons such as emissions trading, polluter-pays, fuel taxes and price rises - measures which could begin next year.
It's about much more than climate change. A stocktake of our environment by the OECD shows that, even without global warming, tough measures are needed to reverse some depressing trends.
The OECD environmental performance review, examining progress in the 10 years since the first review in 1996, slipped under most radars when it was released at Easter. While New Zealand has made advances, the review sends a clear message that our lighthanded approach to environmental protection is not enough.
Water and air quality are declining, native habitats disappearing, car usage and electricity demand soaring, invasive species threaten ecosystems, and the waste mountain is rising.
More than our clean and green image is at stake: worsening air and water pollution is raising health concerns, and increasing demand for irrigation water and electricity could threaten economic growth.
Then there's the small matter of reducing greenhouse gas emissions to lessen our liabilities under the Kyoto Protocol, for which the first five-year commitment period starts next year.
Our greenhouse gas intensity is the fourth-highest in the OECD and emissions have continued to grow. Since 1990, while some countries achieved a decline, our carbon emissions grew by nearly 50 per cent.
The OECD says punitive measures, as well as incentives and national policies with teeth, are needed. Water and wastewater charges should be extended, cap-and-trade systems used to allocate water rights, ecosystem protections beefed-up, and road-user charges extended.
The 245-page report has been criticised in some quarters as being out of date, but it was a robust exercise. An OECD working party examined our environmental management of water, waste, biodiversity and agriculture, economic sustainability, and international co-operation.
Then a New Zealand delegation was summoned to Brussels to answer questions from 30 member countries before the report's 38 recommendations came out.
The review had some praise. It was given to: the removal of agricultural subsidies, for helping convert highland sheepfarms into conservation estates; the fisheries quota, for helping to avoid stock collapses; increases in protected native forest areas and marine reserves; wider access to safe drinking water; and our active approach to international environmental issues.
But behind our clean, green facade the OECD found festering sores. As we fret about the implications of rising sea levels, droughts, emission deficits and heat-related deaths, our environment is reeling from a decade-long economic boom.
We lack measures to sheet home the cost of the consequent pollution or financial incentives to lessen the damage. We don't even have reliable data on which to base policies.
The solutions include national standards and policy statements to give councils statutory clout, and information-gathering to give reliable benchmarks. They also involve financial punishments and incentives, including taxes.
All that might be merely theoretical if the OECD recipe wasn't strikingly similar to options touted by everyone from Greenpeace to the Government's political rivals for combating global warming.
Greenpeace: "A polluter pays price instrument forms the backbone of any suite of climate policies. This could be achieved either through a carbon charge or an emissions trading scheme. A price instrument must be implemented immediately." The National Party advocates a tradeable permit system that will cap and then reduce emissions. The Greens' newly released climate change policy acknowledges that our ability to reduce emissions varies from sector to sector "but all sectors will have to cover all or part of their emissions liability."
For motorists, that suggests higher fuel taxes - which the OECD says are relatively low. On dairy farms, Fonterra might become liable for excess emissions. A trading system could apply to fossil fuel generators. The review suggests similar use of "economic instruments" to reduce contamination of streams by farming, curb pressures from urbanisation, limit waste and encourage recycling. Energy should be taxed and priced to promote efficiency in transport and industry.
These costs would inevitably be passed on to consumers - although some argue that they could be made "fiscally neutral" through tax reductions elsewhere.
Climate change consultant Murray Ward says the OECD's message is not new but governments have been reluctant to raise energy prices fearing a voter backlash. The public awakening to climate change may change that.
"There are some smart ways to use economic instruments so there shouldn't be any real backlash from New Zealanders. Positive incentives, done smartly, can get sectors on board."
Those who accuse the Government of dragging the chain on environmental policies have found plenty of backing in the review. Greenpeace climate campaigner Vanessa Atkinson says the review is an embarrassment and demonstrates just how behind the game New Zealand is.
"The Government must put a price on greenhouse gas pollution across the economy by 2008, establish targets to reduce greenhouse pollution by 30 per cent by 2020, aim for 100 per cent renewable electricity by 2025, phase out existing coal stations like Huntly and put in place policies to encourage renewable energy such as a guaranteed pricing scheme, as well as energy efficiency and public transport."
Environmental Defence Society chairman Gary Taylor says a "step change" in environmental management is needed. "It's clear that New Zealand lags seriously behind in terms of providing national guidance and measures ...
"The OECD sees things have become so serious we need to get more regulatory in our approach.
"It's a damning indictment that we lost 170sq km of native forest habitat in eight years."
Policy statements are needed to safeguard biodiversity, particularly on private land and valued landscapes, says Taylor. Oceans policy development has proceeded at snail's pace. National standards are missing for water, wastewater, solid waste, agriculture and the marine environment.
"We need to reform the tax system to ensure that the polluter pays and that sustainable outcomes are incentivised."
Environmental taxes could be offset by reductions in other taxes such as income, company profits and GST. "The whole idea is to change behaviour so we make fossil fuels more expensive, then renewables become more viable at higher cost."
But this is where the roadblocks start - to some extent accounting for the Government's slow progress. Apart from the energy sector (where hydro-electricity is a renewable resource), others in the firing line - agriculture, forestry and motorists - fiercely resist the prospect of polluter (or user) pays.
Two years after campaigning vigorously against the "fart tax," Federated Farmers appears just as hostile to the alternatives (which may be fart taxes by another name). As the federation's climate change spokesman Frank Brenmuhl forcefully argues, it's a bit rich charging farmers for something they have no ability to control. There are few, if any, options currently available to help farmers reduce methane and nitrous oxide emissions.
"Price-based and regulatory measures to reduce emissions are pointless in the absence of worthwhile mitigation options. We do have a choice about whether we hop on a plane and fly to Europe for a holiday and a choice about the car we drive. So let's put controls on those things over which we have control."
Brenmuhl's unimpressed with the Greens' suggestion that environmental costs be borne at an industry level by the likes of Fonterra. "Prices are set by world markets, not by us; Fonterra doesn't have the ability to pass on prices."
Dairying's 15-year boom is held largely responsible in the latest review for a notable decline in water quality in rivers and lakes in (mostly lowland) pastoral farming areas. While the voluntary Dairying and Clean Streams Accord (which involves fencing off and bridging over streams) has helped, "regulatory approaches with more teeth are needed to ensure aquatic ecosystems are sufficiently protected".
"Economic incentives to limit the use of nitrogenous fertilisers and pesticides should also be given some thought."
The prescription is similar for dealing with landfill waste, where the absence of national standards has allowed variations in charges and encouraged the transport of waste to substandard landfills.
"As a result, incentives for waste minimisation are muted and the market for waste management services is distorted.
"The country-wide application of full cost recovery landfill charges ... should be accelerated."
Waste is one area where the Government can point to progress, with the Green-sponsored Waste Minimisation Bill - including a levy on waste and incentives making producers responsible for the life-cycle of goods - at select committee stage.
But as report after report on climate change has upped the ante, the Government has little more tangible to show than Prime Minister Helen Clark's parliamentary pledges in February on sustainability and carbon-neutrality.
The shelving in 2005 of the carbon tax and tax on animal gas emissions, the backdown on car emissions testing and the tortuous progress of policy development since, have left Labour an easy target for those seeking urgent action.
The OECD notes the decision not to proceed with a national policy statement on biodiversity while suspension of the climate change package "has created great uncertainty about how New Zealand will meet its Kyoto package."
It has also led to a perception that the Government, in dealing with climate change, is picking off sectors one by one - a perception exploited by the likes of Federated Farmers.
Frank Brenmuhl: "We're prepared to do the same as every other New Zealand taxpayer to meet the obligations the Government has signed up to. We don't believe farmers have any more obligation than any other persons in this regard."
Environment Minister David Benson-Pope says the Government is working towards an over-arching strategy. Consultation on five discussion documents dealing with climate change - covering agriculture and forestry, energy and transport, and greenhouse gas emissions - has concluded and "options are narrowing". Environmental taxes will be levied "across the whole community so everyone gets a fair share."
He agrees with the OECD's concerns about over-reliance on voluntary measures. "Voluntary-first is always the way we'd prefer to go but even people involved in voluntary accords are saying we do need some back-stop legislation. The mood has shifted."
Local government is also calling for more explicit guidelines and policy statements, and standards for water and transmission lines are in the pipeline.
"We've been keen for a long time to make progress in this area," Benson-Pope said. It wasn't our doing that we got scuppered by the so-called fart tax debate or that there wasn't [partner] support post-election for carbon charging. Our policy didn't change but it wasn't achievable because support parties got frightened."
He acknowledges that the result was a three-year gulf in policy formulation. "We have lost time but we're now in a position where we can move a lot faster even than I would have thought six months ago." Sooner or later, climate change or not, we'll have to accept there's a cost to saving our environment.
The price of being greener
* Emissions trading
A total quantity of "allowed emissions" is set for a defined period and emitters are required to hold tradeable units, or allowances to match their greenhouse gas emissions over that time. Each unit represents the right to emit the equivalent of one tonne of CO2. Units can be traded to minimise either individual or collective costs.
* Greenhouse gas charge
A greenhouse gas charge would raise the price of emitting activities to reflect their environmental cost, creating an incentive to reduce emissions.
* Cap and trade
A limit, or cap, is set on the amount of acceptable emissions. Those exceeding assigned units may buy additional units from those who will not use all theirs.
* Price-based measures
Also referred to as economic instruments, these seek to integrate environmental costs into economic activities. They can include pollution charges and financial incentives.
- Source: Ministry for the Environment
