"Free" units that benefit big business are not the issue

By Suzi Kerr, Senior Fellow, Motu Economic and Public Policy Research.

Radio NZ is reporting that various big kiwi businesses received millions of dollars worth of emissions credits from the Government. In our opinion, this is not the biggest issue for the NZ ETS going forward, though there are compelling reasons why this free allocation should phase out faster.

Two issues that are key for New Zealand are the overall ambition of our ETS, which drives price, and controls on the quality of units surrendered in our system when we re-connect to international markets. This is clear in recent reports from the Environmental Protection Agency.

During the 1 July 2014 – 30 June 2015 year, New Zealand firms surrendered 32 million emissions units, the vast majority of which they had purchased. If they had paid current NZ prices for those units, emissions would have cost them (and their consumers) around $189 million.  If prices were at the 'social cost of carbon' those units would have been worth more than $1.5 billion.  That would send a real economic signal.  The problem is not the system but the level of the price.

From Sea to Shining Sea: US Cap-and-trade Programs Showing Success on Both Coasts

By Katie Hsia-Kiung, High Meadows Research Fellow, US Climate and Energy Program, Environmental Defense Fund

When the preliminary plans for California’s cap-and-trade program were first introduced in 2010, it was quickly regarded as a groundbreaking policy due to its stringency, size, and scope. California was the ninth largest economy in the world – it has now jumped to eighth – and the Golden State’s program would soon implement the first economy-wide cap on greenhouse gas pollution in the country. But, it was not the first cap-and-trade program in the United States. In fact, ten states in the northeast had implemented the Regional Greenhouse Gas Initiative (RGGI) in 2008. Like California’s program, the RGGI system places a mandatory cap on greenhouse gas emissions and sets a corresponding price on carbon, but covering only the electricity sector. Despite the difference in scope and location of these two programs, they are both demonstrating that carbon pricing through cap-and-trade is an effective way to decrease harmful greenhouse gas pollution while allowing the economy to grow.

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.

Beyond Flying: Rethinking air travel in a globally connected world (a review)

What might a low-emission future mean for how we travel by air?  

This post presents a review of the book Beyond Flying: Rethinking air travel in a globally connected world, which was edited by New Zealander Chris Watson and published by Green Books in 2014.  The review, written by Rose Bridger, was first published in The Ecologist and is reprinted here with permission.

Beyond Flying brings together contributions from 14 people who drastically cut flying, or stopped altogether.

They made this commitment because flying is one of the fastest growing sources of climate disrupting greenhouse gas emissions. A single flight cancels out lifestyle efforts such as plant based diets, energy efficient homes and recycling.

In recounting experiences of undertaking long intercontinental journeys, and running businesses which require international communication, the book is an antidote to travel journalism which has no regard to the impacts of flying.

New Zealand’s 2030 climate change target: We can do better

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

On 7 July 2015, the New Zealand government tabled its Intended Nationally Determined Contribution (INDC) to global mitigation effort for the period post-2020.  It has pledged an emission reduction target of 30% below 2005 levels by 2030 (equivalent to 11% below 1990 levels by 2030), contingent on the rules for land-sector accounting and access to carbon markets. 

The government has not yet specified an emission budget for the period from 2021 through 2030. 

New Zealand’s proposal falls short of the global ambition needed to deliver the agreed two-degree temperature goal at least cost: countries should reduce their emissions by 40-70% below 2010 levels by 2050 on the way to a zero-net-emission global economy by the end of the century.  It also falls short of the targets recommended by a strong majority of submitters during the government’s recent consultation process (as shown in the summary of submissions). 

The proposal falls within the target range which the government had pledged conditionally in Copenhagen in 2009 – a reduction of 10-20% below 1990 levels by 2020 – but a decade appears to have slipped through the cracks.  The government’s rationale is that because we already have a high level of renewable electricity generation and biological emissions from agriculture contribute to almost half of our emission profile, we lack cost-effective domestic mitigation opportunities.

Ironically, the government’s announcement occurred on the same day when the Global Commission on the Economy and Climate released its latest report identifying ten key opportunities for climate action that would generate economic benefits and deliver up to 96% of the global emission reductions needed by 2030 to keep the world on a two-degree pathway.  The list is practical, energising and relevant to New Zealand:

1. Accelerate low-carbon development in the world’s cities
2. Restore and protect agricultural and forest landscapes, and increase agricultural productivity
3. Invest at least US$1 trillion a year in clean energy
4. Raise energy efficiency standards to the global best
5. Implement effective carbon pricing
6. Ensure new infrastructure is climate-smart
7. Galvanise low-carbon innovation
8. Drive low-carbon growth through business and investor action
9. Raise ambition to reduce international aviation and maritime emissions
10. Phase down the use of hydrofluorocarbons (HFCs).

These recommendations highlight the shortcomings of the government’s announcement. 

What’s missing from the government’s INDC is a firm commitment backed by policy to decarbonise the New Zealand economy in line with global effort to limit temperature rises below two degrees. 

What’s missing is a bold call for collaboration across government, business and civil society to deliver transformational low-carbon innovation with broader benefits for our economy, and to help other countries to do the same. 

Instead, the announcement suggests heavy reliance on overseas carbon markets until technology improvements in agriculture and transport become more widely available sometime after 2030.  It provides no policy direction to inspire and guide business investment.  It also fails to address the significant increase in net forestry emissions projected during the target period. 

According to the Ministry for the Environment, compliance with New Zealand’s 2020 target will be achieved with “no change to existing policy settings” and “at no additional costs on households, businesses or government” primarily through forestry activities and surplus units acquired through the carbon market.  However, this continuation of business as usual domestically through and beyond 2030 will not prepare the New Zealand economy to thrive competitively under increasingly stringent global carbon constraints.

While the INDC defines the lowest level of commitment the government is prepared to make, it fortunately does not limit what we can actually do as a country.  The government has pledged further consultation on its longer-term mitigation policies.  Hopefully, this INDC can be used as the launching point for more in-depth, cross-stakeholder discussions on why and how New Zealand should shift strategically toward a low-emission economy. 

A call for ideas on the kind of a low-emission future we want, and actions we can take to make it happen

This is an open letter by nine authors participating in Motu's Low-Emission Future Dialogue. It originally appeared on interest.co.nz, here, and has been cross-posted with permission.

Dealing with climate change is difficult, there is no denying that.

Thankfully as a nation we have moved past denying climate change itself. Now we are debating the best way to deal with it. That much is progress.

The contributors to this article are part of a group of people that meets regularly to discuss climate change and how we might deal with it as businesses, academics, non-government organisations and individuals.

We don’t always agree on what needs to be done, but we do agree that climate change is a huge issue that will shape the future of our nation.

Reframing the costs of smart climate action



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

According to a recent survey, 87% of New Zealanders have at least some level of concern about the impacts of climate change on society.  The government is currently consulting on how we want to translate climate concern into a target for reducing New Zealand’s emissions after 2020.

Rather than offering mitigation proposals, the government’s discussion document addresses the national context for setting a target and has a strong focus on the costs that accompany ambition.  But looking at the underlying modelling by Infometrics  and Landcare Research reveals more about the cost story in the discussion document than first meets the eye.  It also highlights the importance of discussing pathways alongside targets.

First, the modelling excludes important mitigation opportunities and benefits for New Zealand.  The authors of both studies are transparent about the limitations of their methodology (although these are not explicit in the discussion document).  For example, they exclude mitigation from the forestry sector, the potential for transformational technology changes (e.g. electric vehicles and improved batteries), and the value to society of co-benefits to human health, the environment and New Zealand’s international standing (e.g. clean-green branding) as well as avoided climate change impacts.