Donald Trump's withdrawal of the United States from the Paris Agreement will have little tangible effect on New Zealand, at least in the short term.

It will not prompt the Government to reconsider its role in the accord. Climate Change Minister Paula Bennett has rightly and swiftly said New Zealand remains committed to its Paris target.

The 195-nation agreement aims to avoid atmospheric warming of more than 2C by the end of the century by getting each country to pledge to reduce emissions.

The pledges made by countries so far fall short of that goal. The US withdrawal makes it more distant still. But the Paris Agreement has huge momentum, and Trump's decision will not be its death knell.

Advertisement

It has been successful in getting buy-in from every country in the world except two (three including the US). There are two main reasons why it has succeeded whether past agreements have failed.

The US and China have provided unprecedented leadership on the issue. The joint agreement by the world's two biggest polluters to make deep cuts to their emissions in 2015 made the agreement meaningful and gave certainty to other countries.

While the US half of that leadership team is now diminished, others are taking up the torch and individual US states like California and Oregon say they will continue their emissions reduction measures.

The Paris Agreement also has momentum because the economic argument for reducing fossil fuel use is getting stronger every day. Coal is a sunset industry, and the cost of renewable energy and clean technology is plummeting. Trump does not have the political will to combat climate change, but the economics will eventually force the US' hand.

Over the longer term, a weakened Paris Agreement and these economic forces could put pressure on New Zealand to be more ambitious about its climate goals and the way it reaches them. The EU and China are already talking about deeper emissions cuts.

Paris targets can be raised but not lowered. The National-led Government has committed to cutting emissions by 11 per cent of 1990 levels by 2030. Labour and the Greens want the target to be lifted to 40 per cent.

Just 20 per cent of New Zealand's climate change target will met by reducing domestic emissions. The other 80 per cent will be met by buying carbon credits from overseas.

It means New Zealand will be paying around $1.4 billion a year - three times the environment budget - for little tangible gain within New Zealand.

While other countries are increasing their clean energy and getting more electric cars on their roads, New Zealand is effectively paying other countries to reduce its own pollution.

In pulling out of the Paris Agreement, Trump has also reneged on billions in funding for small countries to pay for climate change initiatives like moving to clean energy.

This could require New Zealand to take on a greater leadership role in the Pacific, where its vulnerable island neighbours will hurt the most from a decision made thousands of miles away in Washington.


What is the Paris Agreement?
An agreement signed between 195 countries in 2015 which aims to stop the planet warming by more than 2C this century. It requires all countries to set a target to reduce greenhouse gases between 2020 and 2030, but it is not legally binding. All countries except Syria and Nicaragua signed up to the agreement. The US has now joined them.
What has NZ committed to?
It has set a goal of reducing emissions by 11 per cent below 1990 levels by 2030 (or 30 per cent below 2005 levels). The US target (before it withdrew) was 26 to 28 per cent below 2005 levels. Labour and Greens wants NZ's target to be lifted to 40 per cent below 1990 levels.
How will it meet its target?
NZ is in the unique position of having nearly half of its emissions come from agriculture, which are difficult to reduce without cutting stock numbers. Therefore it is reaching most of its target by buying carbon credits from overseas - conservatively estimated at $14 billion over 10 years. It is also funding research to find out a way to reduce emissions from cows, and trying to reduce technology emissions by encouraging uptake of electric cars.
What does the Emissions Trading Scheme do?
The scheme is NZ's main policy for addressing climate change. It requires industry to pay for the costs of its pollution by buying carbon credits. It also allows companies to make money by growing forests, which capture emissions. Farmers are exempt from the scheme, but Labour and the Greens want them to be brought in gradually.