Can New Zealand become a green economy?

By Luke Harrington

On 21 March 2014, the Royal Society of New Zealand (RSNZ) released a panel report, ‘Facing the future: towards a green economy for NewZealand’, discussing the potential opportunities, as well as difficulties, involved with New Zealand moving towards a green economy. The United Nations Environment Program defines a green economy as ‘low carbon, resource efficient and socially inclusive’. Those all sound like attributes that we as a nation should want to embody, so how do we get there? And what are the hurdles that might make the path a bit tough?

The cross-disciplinary expert panel put together by RSNZ first notes the global context, and particularly highlights the need to lower greenhouse gas emissions in order to prevent the consequences of ‘dangerous’ climate change (loosely framed as impacts associated with a global temperature rise exceeding 2-degrees Celsius above pre-industrial levels). The panel also presents data showing that reducing per-capita emissions need not also reduce national wellbeing, contrary to some beliefs. While New Zealand has one of the highest per-capita emission rates in the OECD, we in fact have ample opportunity to make a variety of cuts to our emissions profile through numerous measures. The panel notes the wide range of sustainable energy resources at our disposal, as well as a range of potential benefits for New Zealand as a green economy, including improved resilience and energy security, reduced environmental deterioration, health benefits, more efficient production, and new economic opportunities from innovation.

There remain issues concerning the disproportionately high CO₂ emissions attributed to personal vehicle transport in New Zealand. Although promising research into electric vehicles and biofuels is ongoing, I believe this is going to be a very difficult challenge to overcome in terms of transitioning to a low-carbon pathway. The report notes that consideration of consumption-based accounting (which allocates emissions to consumers rather than producers) could influence how we think about and manage New Zealand’s emissions impact.

Among other key points, the report emphasises the need for a bottom-up approach to decision making. However, while businesses will have a central role in the transition to a green economy, they will need supporting drivers and regulations from government in ways that provide policy stability and business certainty. In this regard, the report somewhat surprisingly does not address the role of an emissions trading framework, something which must be discussed as part of a national mitigation strategy. Options for improving the effectiveness of the New Zealand Emissions Trading Scheme (NZ ETS) and emissions trading more broadly are an important focus for ongoing economic and policy research by Motu.  

While this report usefully summarises the key issues for New Zealand in terms of climate change mitigation and developing a green economy, I would still like to see a more quantitative comparison of potential reduction measures. Which possibilities show the most promise, where could companies focus their efforts to be successful in a New Zealand context, and how could effective actions be best supported by government policy? There remains work to be done, and a strong need for collaboration between academics, innovators, business leaders and the government. Motu’s new project on ‘Shaping New Zealand’s Low-Emission Future’ will help to facilitate such collaboration through research and dialogue.  Ultimately, this work will help to identify New Zealand’s possible pathways toward a green economy that supports both our interests locally and mitigation efforts globally.