NZ government to restore a full unit obligation in the NZ ETS

By Suzi Kerr and Catherine Leining, Motu Economic and Public Policy Research

Under its Budget 2016 package, the New Zealand government announced today that it will progressively phase in a full unit obligation for non-forestry sectors in the New Zealand Emissions Trading Scheme (NZ ETS) over a three-year period. 

According to the media release from Hon Paula Bennett, Minister for Climate Change Issues, “The current 50 per cent unit cost will increase to 67 per cent from 1 January, then 83 per cent from 1 January 2018, with all sectors in the ETS paying the full market price from 1 January 2019. The current price ceiling which caps units at $25 will remain.”

Restoring a full unit obligation in the NZ ETS represents an important step forward for incentivising domestic mitigation but future emission prices remain uncertain in the absence of broader decisions on future unit supply.

Banking ideas for climate solutions

by Catherine Leining, Ceridwyn Roberts, and Suzi Kerr of Motu Economic and Public Policy

"How might New Zealanders help to reduce climate change?"

People who are increasingly concerned about climate change want to know what practical steps they could take to be part of the solution. Motu has released a new information resource which could help: an Idea Bank of Pathway Milestones for New Zealand’s Low-Emission Future.

During the past two years, participants in Motu's Low-Emission Future Dialogue have explored possible pathways toward a successful low-emission economy for New Zealand.  Participants engaged in their personal capacity, not as organisational or sector representatives. Detailed ideas that emerged from the process are captured in this “idea bank” document, which is offered in the spirit of sparking discussion, not as recommendations. While acknowledging the vital role that forestry will play, the participants focused on the stationary energy, land transport and agriculture sectors. Additional outcomes from the process are presented in the synthesis report New Zealand’s Low-Emission Future: Transformational Pathways. 

Can Engineers Change the World? Energy Transition Engineering

Dr Susan P Krumdieck is Professor in Mechanical Engineering and Director of the Advanced Energy and Material Systems Lab, University of Canterbury, New Zealand.

Can technology solve the climate problem? Dr Krumdieck outlines her work on a new interdisciplinary practice called transition engineering: changing course one innovative project at a time.

Business leaders recognise that the biggest risk to their business is energy transition. The most popular concept of this transition involves a substitution of renewables for fossil fuels and development of elusive tail-pipe technologies like carbon-capture and storage. This concept is comforting and simple. But it is also profoundly wrong. There is no way to achieve an energy transition without completely reworking every aspect of our infrastructure, industry and economy to vastly reduce energy demand. Changing the global economy to nearly eliminate the use of fossil fuels is a “wicked problem” – a problem with no known solution. This is why the new field of energy transition engineering is emerging. 

Can engineers change the world?

Charting a course toward New Zealand’s low-emission future

by Catherine Leining, Policy Fellow, Suzi Kerr, Senior Fellow, and Ceridwyn Roberts, Communications Director, Motu Economic and Public Policy Research.

When Captain Cook set out to observe the Transit of Venus in the South Pacific, it was a part of Earth so poorly explored by westerners that European mapmakers couldn’t agree if he would find a giant continent there or not. Cook steered across miles of open ocean, fighting storms and scurvy to reach Tahiti.

These days there’s similar trepidation awaiting those who try to map the future landscape of climate change solutions.

Over the last two years, Motu Economic and Public Policy Research has convened the Low-Emission Future Dialogue, engaging a group of cross-sector stakeholders in their personal capacities to explore options for a successful zero-net-emission economy in New Zealand.  The goal was creative problem solving, not consensus on recommendations.  The outcomes are a collection of ideas not necessarily endorsed by individual participants, their affiliated organisations, or programme funders.  

Finding the best cure for a "hot air" hangover

By Catherine Leining, Policy Fellow at Motu Economic and Public Policy Research

When it was introduced in 2008, the New Zealand Emissions Trading Scheme (NZ ETS) pioneered many design features. Among these was replacing the conventional ETS cap on emission units and constraint on offset credits with an unconstrained buy-and-sell linkage to the global cap set by the Kyoto Protocol. This gave participants the option to increase their own emissions while contributing to global mitigation by buying overseas Kyoto units if that was the most efficient outcome.  The history of why this policy choice was made and how it has impacted on the system’s outcomes alongside other design features and historical events is detailed in Motu’s new working paper entitled Lessons Learned from the New Zealand Emissions Trading Scheme.

Emissions Trading in Practice : A Handbook on Design and Implementation

As the world moves on from the climate agreement negotiated in Paris, attention is turning from the identification of emissions reduction trajectories—in the form of Nationally Determined Contributions — to crucial questions about how these emissions reductions are to be delivered and reported within the future international accounting framework. 

The experience to date shows that, if well designed, emissions trading systems (ETS) can be an effective, credible, and transparent tool for helping to achieve low-cost emissions reductions in ways that mobilize private sector actors, attract investment, and encourage international cooperation. However, to maximize effectiveness, any ETS needs to be designed in a way that is appropriate to its context. 

Time Travelling on the NZ ETS

by Catherine Leining, Policy Fellow, Motu Economic and Public Policy Research Trust

Both the New Zealand Emissions Trading Scheme (NZ ETS) in operation today and the world in which it is operating are markedly different from those anticipated by policy makers when designing the system back in 2007-2008. As the New Zealand government reviews the NZ ETS, history can be a powerful teacher. What might we learn by looking back in time at how and why we arrived at today’s NZ ETS?

Motu Economic and Public Policy Research has compiled an interactive timeline for the development and implementation of the NZ ETS from 2005 to 2015. It is intended as an information resource for:

• policy makers, 
• NZ ETS participants, 
• researchers, and 
• ETS practitioners from other countries who wish to learn from New Zealand’s experience.