Rod Oram: Kiwis losing the carbon race

New Zealand has pledged a 30 per cent reduction in greenhouse gas emissions from 2005 levels by 2030.
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New Zealand has pledged a 30 per cent reduction in greenhouse gas emissions from 2005 levels by 2030.

Our government and businesses are talking more about New Zealand's journey to a low carbon economy, and doing a bit to help us towards this profound and beneficial global shift.

However, our competitors – companies and countries – are racing far ahead of us.

This was the stark message from this week's Australia-New Zealand Climate Change and Business conference, the ninth run by the Environmental Defence Society since 2004.

Rod Oram says modest emissions will mean New Zealand being left with ageing technology.
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Rod Oram says modest emissions will mean New Zealand being left with ageing technology.

New Zealand ratified the Paris climate agreement last week, pledging a 30 per cent reduction in greenhouse gas emissions from 2005 levels by 2030.

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But on current policies, we're heading for a serous overshoot. Our emissions will have gown by 100 per cent between 1990 and 2030, whereas our Paris pledge equates to an 11 per cent reduction.

This forecast was in a government document Carbon News, obtained recently under the Official Information Act. The story is at nz2050.com/NZovershoot

The government is working on new policies, with a leisurely deadline of mid-2017. Any changes to the Emissions Trading Scheme, its key instrument for carbon cuts, won't be made until mid-2018.

The government is likely to meet as little as 20 per cent of NZ's Paris pledge by actual emissions reductions. The rest will come from increasing forest plantings to capture carbon, and from buying international carbon credits.

But three huge problems arise:

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  • Modest emission cuts mean the NZ economy will be lumbered with old, polluting technology, while our competitors will be investing far more heavily in more efficient, clean technology.
  • Foresters need relatively stable carbon prices to be confident enough to plant. But our deep exposure to highly volatile international carbon prices will be destabilising. The government could insert a floor and ceiling to the actual carbon price experienced here, but they would be very costly for taxpayers.
  • Only two of the 20 largest emitters, Korea and Turkey, have said they will use international carbon markets to help them meet their Paris pledges. Anyway, credits are only meant to be a last resort not a major tool, says the United Nations, which oversees the Paris treaty.

Our government's overwhelming reliance on forestry and international credits is making our businesses too complacent about reducing emissions, and too lazy about new technologies and the great economic opportunities they bring.

Air New Zealand is the only company at the forefront of its global sector on these issues. Meanwhile, the conference heard from some businesses such as Countdown and Fonterra on the energy efficiencies they are achieving.

But these were narrow, meagre approaches compared with the deep sustainability strategy described by a representative of IKEA, the global furniture company. This involves energy, wood, cotton and water as its four core resources, details here nz2050.com/climateIKEA.

IKEA is a member of the We Mean Business collation of 467 major companies, with combined global sales of US$8.1 trillion, plus 183 investors with US$20 tr of assets. So far they have made 1,065 commitments to big changes, details at www.wemeanbusinesscoalition.org/

Likewise, the Institutional Investors Group on Climate Change is pushing global industries hard to reinvent themselves. Its latest report is on carmakers, available at nz2050.com/CarsInvestors.

This fundamental remaking of the global economy to purge carbon is creating enormous business opportunities. Conversely, grave risks and losses are starting to arise for companies and industries that don't.

The gloomiest view on NZ's response comes from Business New Zealand's energy council. Its report last year offered two scenarios, both of which comprehensively failed to meet our Paris pledge, even on energy emissions alone.

One scenario even had us burning more coal than now because, apparently, we will run out of renewable energy opportunities, details at nz2050.com/NZenergy.

We should be leaders. After all, global agricultural emissions are greater than vehicle emissions, so farmers have to be as radical as carmakers.

But the government keeps agriculture, which accounts for almost half our emissions, out of the ETS; and it heaps free carbon credits on other exporters.

This guarantees two perverse outcomes: the burden and cost of change will fall on the rest of businesses, and households; and New Zealand will miss out on many of the opportunities of the new global economy.



 - Sunday Star Times

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