What a small country’s successes and mistakes can teach us about emission pricing

By Suzi Kerr, Chief Economist at Environmental Defense Fund. First published at EDF's blog.

I’m from Aotearoa, New Zealand, and I really love its land and people, but I am fully aware that from a global perspective it appears pretty insignificant – that’s actually one of its charms.  But being small doesn’t mean you can’t make big contributions including toward stabilizing the climate. This recently published article highlights some lessons New Zealand’s experience with emissions trading can offer other Emissions Trading System (ETS) designers at a time when effective climate action is ever more urgent.

Talking intensively to ETS practitioners and experts around the globe about their diverse choices and the reasons why they made them has made me acutely aware of the need to tailor every ETS to local conditions.  In a complex, heterogeneous world facing an existential crisis, diversity in climate policy design makes us stronger and frankly, improves the odds that the young people we love will live in a world where they can thrive.

Commentary on Tranche Two Decisions on the New Zealand Emissions Trading Scheme

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

Reforming New Zealand’s climate change legislation is a complex tango. Where the Zero Carbon Amendment Bill leads, NZ ETS amendments must follow. The government’s latest NZ ETS policy decisions will help ensure future emission prices rise in step with our targets. Check out our “Top Ten” list of alterations to watch for as we outfit the NZ ETS for the important job ahead or read on for comments on yesterday's announcements.

Zero Carbon Bill Submission

by Catherine Leining and Suzi Kerr.
The New Zealand government has recently consulted on its proposal for a Zero Carbon Bill. This would:

• set a new and more ambitious 2050 greenhouse gas emission reduction target
• establish interim five-year “emissions budgets” consistent with meeting those targets
• require the government to issue plans for achieving its emissions budgets
• require preparation of a national climate change risk assessment and national adaptation plan
• set up a new independent Climate Change Commission to advise the government and monitor its progress.

Our full submission on the Zero Caron Bill is available here. In this blog we highlight five key opportunities to improve the government’s proposal.

A new approach to emissions trading in a post-Paris climate

This article was prepared by Suzi Kerr, Catherine Leining and Ceridwyn Roberts at Motu Economic and Public Policy Research. It was first published on The Conversation.

Despite the US withdrawal from the 2015 Paris Agreement on climate change, other countries, including New Zealand, remain committed to cutting their greenhouse gas emissions.

In our report, we explore how New Zealand, a trailblazer for emissions trading, might drive a low-emission transformation, both at home and overseas.

Turning off the tap

Emitting greenhouse gases is a lot like overflowing a bathtub. Even a slow trickle will eventually flood the room.

The Paris Agreement gives all countries a common destination: net zero emissions during the second half of the century. It is also an acknowledgement that the world has only a short time to turn the tide on emissions and limit global temperature rise to below two degrees. The sooner we turn down the tap, the more time we have for developing solutions.

Retooling the emissions trading scheme to ‘decarbonise’ NZ

There are practical ways to change the NZ ETS so it delivers clear and predictable emission price signals. This would ensure that New Zealand’s emitters reduce their greenhouse gases more quickly than is currently happening.  

A new paper released today by Motu Economic and Public Policy Research suggests a package of changes to improve the NZ ETS. The proposal emerged from discussions over the past year among diverse cross-sector experts involved in Motu’s ETS Dialogue. 

New report highlights need for coastal homeowners, government, and the insurance industry to plan for climate change

by Susan Livengood, Director of Partnerships for the Deep South National Science Challenge.

As New Zealand counts the cost of widespread flooding this month, a new report identifies key questions we need to answer to better prepare our coastal communities for climate change.

The Insurance, housing and climate adaptation report, commissioned by the Deep South National Science Challenge, highlights issues New Zealand may face as it grapples with “increasingly severe risks” for coastal housing – particularly sea level rise which is expected to exacerbate the frequency and impacts of flooding and storm surges.

It was hard not to think of this report as I drove along the Thames Coast Road in the wake of last week’s storms. Huge boulders lay on the road, pohutukawa trees ripped from the earth by landslides lay dying in the sea, and the splash of waves on the road reminded me just how susceptible to sea level rise this area is.

Assessing the impacts of Motu’s Low-Emission Future Programme

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

In November 2016, Motu surveyed 360 people interested in climate change policy and had 81 responses. The survey was designed to help assess the impacts of Motu’s programme ‘Shaping New Zealand’s Low-Emission Future’ and its cross-stakeholder Emissions Trading Scheme and Low-Emission Future Dialogues as well as inform future programme planning. As a ‘thank you’ to all those who took part Motu will purchase and plant six trees through the Wellington City Council’s ‘Two Million Trees’ initiative.

We feel encouraged that more than three quarters of respondents agree or strongly agree that Motu’s work has enhanced the quality of policy discussion on climate change mitigation and that more than four fifths of respondents regard Motu as a credible source of independent expert information on climate change mitigation.

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. 

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.  

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. 

Where can households make a difference to their emissions?

by Ceridwyn Roberts, Motu Economic and Public Policy Research

Motu has just released new research identifying where households can make a real difference to their greenhouse gas emissions – and cutting down on red meat and purchasing an electric vehicle are top of the list.

Corey Allan, Suzi Kerr and Campbell Will looked at information from the 2006/7 and 2012/13 Household Economic Surveys1 and found many opportunities for ordinary Kiwis to reduce their impact on climate change.

While most households are taking at least some actions that reduce emissions, the actions they are choosing are not necessarily the ones that will have the biggest emission benefits. To give the general public more information about what sources of emissions have the most impact, Suzi and Corey worked with ChewyData and the NZ Herald to compile The Household Climate Action Tool, hosted by NZ Herald Insights. This uses averages of annual spending and household purchases to help people figure out their household’s best choices to reduce emissions.

Majority of New Zealanders are concerned about climate change and taking actions that reduce emissions

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

The following media release was issued by Motu on 15 May 2015.

A strong majority of New Zealanders are concerned about climate change and taking actions that reduce household emissions, according to a recent survey.

Researchers at Motu Economic and Public Policy Research, an independent, not-for-profit research institute, and Victoria University of Wellington designed the survey of about 2200 New Zealanders aged 18+. The survey was conducted by Horizon Research Limited from 28 July to 1 September 2014 with support from the Sustainable Business Council.

The survey showed that about 87% of New Zealanders are at least somewhat concerned about the effects of climate change on society in general.

63% are concerned or very concerned about the societal effects of climate change and 58% are concerned or very concerned about the personal effects.

Figure from Horizon Research Ltd (2014)

New Zealand’s journey toward a low-emission future: Today’s climate change landscape

By Catherine Leining, Senior Policy Fellow, Motu

Note: Motu has just published three Motu Notes on climate change issues prepared as background papers for its Low-Emission Future Dialogue. The first in the series presents an overview of the climate change challenges facing New Zealand and the current policy context.  This information is highly relevant because in 2015 New Zealand will need to present its post-2020 emission reduction commitment - referred to as an Intended Nationally Determined Contribution - under a new international climate change agreement currently under negotiation. The paper's executive summary is provided below.  The full paper is available here. 

In the coming decades, New Zealand will face important choices shaped by both the risks and opportunities created by climate change. This paper provides an overview of the current climate change landscape from which New Zealand is starting the next stage of its journey toward a global low-emission future. The key findings are:

Climate change science, emission trends and mitigation scenarios The latest reports from the Intergovernmental Panel on Climate Change (IPCC) reinforce the case for significant reductions to global greenhouse gas (GHG) emissions. Under business-as-usual growth in emissions, the global mean surface temperature in 2100 could increase by 3.7^oC to 4.8^oC compared to pre-industrial levels. A least-cost pathway to limit temperature increases to not more than 2^oC above pre-industrial levels would involve reductions of 40–70 percent below 2010 levels by 2050 on the way toward a zero-net-emission global economy. A key objective should be limiting cumulative emissions, and delaying action significantly increases the costs of mitigation.

Betting the farm on it – how rural land use (may) change with recent commodity prices and land sales

By Zack Dorner

Farming is a risky business, as is forestry. You are at the whim of the weather and international commodity prices which, as we have been reminded by recent dairy prices, can drop rapidly without much warning. Meanwhile, farmers have to make long term decisions about capital investments, or decide whether to convert from one type of a farm to another. Foresters must plant trees which won’t pay off for several decades. Given the importance of rural land use for New Zealand’s economy and environment, it is important that we understand better how land use changes in response to economic drivers.

For my honours thesis last year I decided to look into recent rural land use changes in New Zealand and whether changes may be associated with recent commodity prices and land sales. I’m very happy that my thesis has now taken the form of a Motu Working paper, which has just been released. In lieu of you having to read the full paper (though of course I encourage you to do so!), here is a quick summary of some things I learnt along the way.

Land use models do work (at least sort of)

By Corey Allan and Suzi Kerr

This post first appeared on Agricultural Emissions Dialogue.

Land-use models are used to explore possible futures, anticipate and diagnose problems, and simulate the effects of different policies. ‘All models are wrong but some are useful’ and more carefully developed and rigorously tested models are more useful. If you are interested in how land-use models are and should be used, our recent paper on land-use modelling provides a non-technical overview of the land-use models currently used in New Zealand. 

Who is taking smaller bites out of climate stability?

By Corey Allan, Research Analyst, Motu Economic and Public Policy Research

How should we compare efforts to reduce greenhouse gas emissions across countries? The Kyoto Protocol focuses on production emissions, which are the emissions resulting from the production of goods and services. But what is the point of production? Would we produce goods if there was no one to consume them? In a globalised world, production will move from one country to another if there is still sufficient demand for the output. So is a country really contributing to the reduction of greenhouse gas emissions as much as it appears if their production emissions are falling, but their consumption of emissions-intensive goods remains unchanged?

Researchers at Motu, and a student intern from Stanford, have just released a preliminary analysis of the emissions associated with household consumption in New Zealand.  The analysis shows that the composition of consumption emissions can differ significantly from the composition of production emissions.  The difference is particularly salient for food emissions, as you can see from the two charts below: