Friday, September 09, 2016



Climate change: No path to lower emissions under National

In 2011 the National government set a long-term climate change target of a 50% reduction on 1990 emissions by 2050. So how will they achieve it? In 2014, as part of the planning for seting our (patheticly weak) 2030 target, the Ministry for the Environment prepared a report on Potential long-term pathways to a low carbon economy for New Zealand. A copy of that report has just become available through FYI, the public OIA request site, and its interesting reading.

The first thing to note is that there are some comments on how our goal stacks up globally, against a contraction and convergence scenario (which Treasury thinks is "unfair" - kiwis apparently being somehow special and entitled to pollute more than everyone else or something). According to MfE, the 50% by 2050 goal is only consistent with the 90th percentile contraction and convergence target - that is, if permitted per capita global emissions were at the absolute upper limit of risking dangerous levels of global climate change. The target is not consistent with the median scenario, which would require something like a 90% cut. The clear implication: we will not be "pulling our weight" in reducing emissions.

Secondly, MfE looks at how we might actually achieve even this minimal cut. There's some good news here: it requires emissions reduction rates of 3-4% a year (compared with 7% for the median scenario), which is a good match for asset turnover rates in the New Zealand economy. In English, that means that the goal is achievable without paying too much just through the normal asset replacement cycle. Coal plants get replaced with windfarms and cars with electric vehicles as they wear out, and the cost is pretty much zero.

But - and there's a big but - this critically depends on the government having strong incentives in place to ensure that the appropriate replacements happen:

If it were desired to increase the certainty of achieving such an emissions pathway to 2050 then it would be urgent to put in place now policies which incentivise relevant investments by asset owners. The relevant sectors whose assets turn over at less than the critical 7% per annum rate (implied by the media budget) are boilers, power plants, forests (some crops), transport infrastructure and buildings. If action were delayed, then accelerated asset turn-over rates, and higher costs, would be required to stay within a given emissions budget for CO2.

And pretty obviously, that's not happening. In fact, the opposite has happened: National has repealed the ban on new thermal electricity generation, cancelled the biofuels obligation (which would have reduced our transport emissions by 5% by now), and gutted the ETS to prevent the plantation of new forests, while doing SFA to ensure the uptake of electric vehicles. Confronted with a pressing global challenge, they've done the exact opposite of what we need to do.

Finally, MfE presents two pathways to achieving the required level of emissions reduction. In both, electric vehicles and new forest plantings play a crucial role. And to be blunt, that is simply not going to happen under current policy settings. If we want to solve this problem, we need a government which will actually engage with it, rather than retreating into denial while trying to leave it all to the market. And we're not going to get that under National.