What’s driving business to understand and act on climate change issues now, and what will going forward?

by Catherine Leining, Public Policy Fellow Motu Research
This has been adapted from a keynote address for the 2019 Climate Change & Business Conference

Motu is an independent non-profit research organization. The businesses I work with are the early movers, and they are very well informed and engaged. My impression is that the early movers see climate change as a significant opportunity, a significant threat, or a corporate social responsibility obligation.  I suspect that for many businesses in the middle, decarbonisation is a future problem or someone else’s problem.     

I see three key drivers that will change how businesses will respond to climate change in the future.

The first driver is emission pricing. The current prices in the NZ ETS have to rise significantly to support New Zealand’s Paris target and long-term decarbonisation. Modelling for the Productivity Commission suggested prices ranging from $30-80 by 2030 and $75-250 by 2050. We are still in a policy vacuum about what the emission price pathway will look like and what additional regulations will apply. In the meantime, businesses need to future-proof their investments by factoring in a high and rising shadow emission price or risk stranding their assets. Frankly, that applies to central and local government too.

The second driver is that the social license to emit is rapidly expiring. We are seeing unprecedented demonstrations now; fast forward a decade when we have hit 1.5oC and are competing for entitlements to an exhausted global carbon budget. Pressure from investors and consumers may be more influential in the near term than government targets. To maintain their social license, businesses are going to need to show genuine commitment, transparency and accountability for action to reduce emissions.

The third driver is that climate change creates enormous business opportunities. In our beautiful welcome, we heard about the winds of change. We can harness those winds – or be blown away by them. We need to create the kind of business targets that will unlock innovation and harness the winds. Right now, a lot of business targets involve drawing a boundary, reducing internal emissions by a percentage, and planting trees. We need a mindset shift for targets from constraint to transformer, cost to investment, and self to system. We need targets for collectively changing whole supply chains and financing models, building new partnerships, educating consumers, creating new markets, and replacing technology and infrastructure with unprecedented speed. The biggest business opportunities lie in being not just carbon neutral, but carbon transformational.

My final comment is that policy uncertainty is lethal to long-term low-emission investment.  Reaching strong political consensus on the way ahead would empower the producers, investors, and consumers who will make change happen.

E-Mission Possible roundtable summaries

by Catherine Leining and Ceridwyn Roberts, Motu Economic and Public Policy Research

The road to a net-zero future is paved with challenging questions for which there are no definitive answers – just choices to be made under uncertainty and consequences to be faced under risk. In order to shed new light on particularly thorny questions for NZ's low-emission transition Motu, Productivity Commission, the Institute for Governance and Policy Studies at Victoria University of Wellington, and the Environmental Defence Society convened a series of roundtables.

We have now completed the summaries from all four E-Mission Possible Roundtables.  We received very positive feedback on all of the roundtables in the series, and want to thank everyone who contributed to their design, funding and implementation.

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.

"Climate Cheats II": The Return of New Zealand’s ERU Controversy

by Catherine Leining, Motu Economic and Public Policy Research

In the tradition of dramatic sequels, the Morgan Foundation has just released "Climate Cheats II," this time with a focus on the 'dirty dozen' NZ ETS participants who used the most 'hot air' Emission Reduction Units (ERUs).[1]

The issue at the heart of both “Climate Cheats” reports is vitally important: New Zealand must safeguard the integrity of its contribution to climate change mitigation and the operation of the NZ ETS. The environmental, economic and reputational consequences of doing otherwise would be severe. The past choices made by the New Zealand government and NZ ETS participants followed the letter of the law internationally and domestically but not the spirit of the quest for a stable climate system. Importantly, those choices have a troubling legacy in the form of surplus Kyoto units of questionable integrity and international status, and a large participant-held bank of NZUs.

I have three key points in response to "Climate Cheats II." 

1. New Zealand didn’t cheat, but the climate got cheated by a global agreement with weak targets.

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?

Farm's nutrient run-off management leads to national award

John and Catherine Ford from Rotorua are the proud winners of the National Ballance Farm Environment Award this year, the first North Island and first sheep and cattle property to achieve that honour.

The Fords own the 1240ha Highlands Station, a hill-country farm sitting within the Lake Tarawera and Rotokakahi catchments and covered in phosphate-rich mud. The Fords say the careful and responsible management of nutrient runoff is one of the most critical farm issues to get right. They have a network of almost 200 retention dams that reduce runoff and scouring during heavy rainfall.

Last year the farm's scheme was tested by the biggest rainfall in 10 years. The dams held the water in the upper catchments and were effective in retaining water and reducing sediment loss.

John was a very active participant in Motu’s AgDialogue group and prior to that in the Lake Rotorua Dialogue group. He stars in the water quality films made in 2012 about the complexities of the Lake Rotorua catchment.

Part of the prize is a study trip overseas. The Fords are considering looking at some sensitive catchments in North America such as Wisconsin and the Chesapeake Bay or Great Lakes catchments.

Sustainable KiwiSaver fund: Have your say on where your savings are being invested

By Fiona Stephenson, National Communications Manager, Sustainable Business Network

Do you know where your savings in KiwiSaver are being invested? If you care about which companies your savings are supporting, your input can help drive demand for a sustainable KiwiSaver fund. At the Sustainable Business Network (SBN), we would love to hear your views, so take this quick survey (less than five minutes) and be part of a collective voice.

Z Energy Biodiesel Press Release

By Luke Harrington

A press release by Z Energy on 3^rd April 2014 marks the next step in alternative fuel developments in New Zealand. CEO Mike Bennetts announced a plan to invest $21 million toward a biodiesel manufacturing plant in Auckland, with a particular focus on tallow as the organic derivative of choice. Previous large-scale biofuel generation schemes have been met with varying levels of success in New Zealand (particularly the foray by Solid Energy in 2007) - this is actually acknowledged by Bennetts in the statement. Though this latest proposed operation will only make a small dent in the goliath that is fossil fuel demands for domestic transport, it is a promising step in the right direction – Z should be applauded for taking a leadership role in such an area.