Student strike for climate change protest at Red Square. Photo / George Novak
Business leaders have mixed feelings about whether New Zealand is doing enough to meet its international climate change obligations, which require big cuts to carbon emissions.
Almost a half of the Mood of the Boardroom respondents — 45 per cent — agreed the country wasn't doing enough; 42 per cent said it was; and 13 per cent were unsure.
The recent Intergovernmental Panel on Climate Change report says averting global warming rising by 1.5C will require worldwide emissions cuts of 45 per cent by 2030 and net zero by 2050.
In November, New Zealand will be represented by the Minister for Climate Change, James Shaw, at the 26th meeting of the Conference of Parties to the United Nationals Framework Convention on Climate Change (COP26).
New Zealand will be pushing for negotiations to be concluded on outstanding items of the Paris Agreement, including rules for carbon markets that ensure environmental integrity, and a transparency system that supports ambition and holds parties to account. The climate action includes finance, technology and capacity building.
New Zealand will be standing alongside its Pacific neighbours to make sure the region's voice and priorities are heard at COP26, to be held in Glasgow.
New Zealand committed to providing at least $300 million in climate-related support from 2019 to 2022, with at least two thirds of that funding going to Pacific Island countries.
Craig Stobo, chairman of NZ Local Government Funding Agency, Precinct Properties and AIG, asked where is the Government's accountability, from Paris 2016, for New Zealand committing to a 30 per cent reduction in emissions from 2005-year levels by 2030.
"Farming should transition faster to our world-class emissions trading regime.
"We also need to sort out a faster universal Corsia agreement on international aviation emissions."
The 2013 Corsia agreement, in which New Zealand is a participant, set a goal of making all growth in international flights after 2020 carbon neutral.
Rob Fyfe, Michael Hill International chairman, said the international obligations were both a massive opportunity and massive threat to the country's competitiveness.
"We need to up our game, it requires bold leadership from both business and government, and it's mostly still just talk," he said.
David Mair, chief executive of Skellerup Holdings, said aspirational comments do not solve the problem. "We are in an energy crisis caused by this government. We are 0.17 per cent of global emissions, but China is now funding 25 per cent of the coal-fired power stations in Asia and now European banks have pulled out. China and the United States are about 68 per cent of emissions. It's not that we should do nothing, but we can't save the planet."
Susan Peterson, chairperson of Vista Group and director of four further listed companies including Xero, said the big northern hemisphere investor houses were demanding clear action around carbon reductions as part of their investment mandates.
This has resulted in the price of debt and capital being influenced by the approach the borrower and issuer is taking to reduce carbon. The reality is that the price of debt or capital tends to be one of the top three costs to all businesses.
"In that context, all forward thinking businesses which are focused on keeping those costs down will be speeding up their efforts to reduce their direct and indirect carbon footprint," Peterson said.
Greg Lowe, group chief executive of Beca, said the government has done a good job of setting the target. "Taking action is the next step and that is harder. Energy transition, emissions reduction, and lower carbon choices all take careful planning, and will come with increased cost.
"It is the pathway that will be important, and that is the immediate challenge."
Vanessa Stoddart, Refining NZ director, agreed. "The problem is we can hit our targets by de-industrialising New Zealand but the cost and social ramifications and risks of this are large and haven't been factored in sufficiently. We need to change behaviour and culture first."
A banking executive said: "85 per cent renewable (energy), take a bow." Gavin Lennox, chief executive of The Icehouse, said "There are two major issues — transport and agriculture."
An oil and gas exploration leader said: "We are doing more than our fair share and it will lead to very poor outcomes for an export/import exposed country. But it will be a nice cheap place for billionaires who have made their money elsewhere."
The business leaders were also asked if the Climate Change Commission was on the right track by setting tradeoffs for New Zealand to meet its international obligations.
Nearly 50 per cent of the respondents favoured the commission's approach; 28 per cent believed it was not on the right track and 23 per cent were unsure.
The commission has called for progressively deeper emissions reductions — 15 per cent by 2025 and up to 63 per cent by 2035 for long-lived greenhouse gases; and 8 per cent by 2025, 12 per cent by 2030 and 17 per cent for biogenic (plants and animals) methane. By 2050 the target range for biogenic methane is 24-47 per cent reduction.
The commission has also recommended that nearly all cars imported by 2025 must be electric; road transport be almost completely decarbonised by 2050; phase out coal as soon as possible; and immediately start expanding the electricity system.
To reach 47 per cent reduction in biogenic methane for agriculture, the sector would need to cut production from livestock unless new technology came online, the commission suggested.
Also, the sector needed a farm emission carbon price scheme.
An airport executive said the commission had mixed its drinks. It should narrow its focus to actions that actually manage carbon risks and leave carbon emitters to figure out the best method/technology to manage their own risk.
Peterson said "While the speed of change might be challenging and confronting for some, we don't have any choice.
"At the end of the day, New Zealand is a price taker in international wholesale markets."
Lowe said there were many complex systems that needed to change to create the emissions reduction.
"Some big debates need to happen — for example, where will our future energy come from, how and when will it be created, and what will it cost?"
A banking leader said the commission greatly underestimated the difficulty of replacing fossil fuels in several areas, in particular industrial heat, and scaling up electricity generating capacity sufficiently to replace fossil fuels.
A television executive, however, said "we are not going far enough. We are too focused on spreading the burden equally versus prioritising the biggest potential drivers of change."
Stoddart said the quick win of de-industrialising New Zealand was not in the country's interest long-term. "We have assumed too much. New Zealand's wealth disparity means many will be unable to afford some of the assumptions being made, for example, the timeframe for switching to electric vehicles."
Stobo chimed in: "I was surprised that our world class 2008 Emissions Trading Scheme, our primary tool to reduce greenhouse gas emissions, did not get more support. Providing subsidies to electric cars does not reduce total allowable emissions under the scheme at all."
Energy solutions for heavy industry will be different from energy solutions for heavy and light transport, for example. We are likely to see many different technology solutions and we need to get on with trialling them now so we understand which ones suit which application. — Greg Lowe, Beca
Industry (esp Agriculture) feels the Government doesn't understand its challenges to make the necessary progress. At the same time, concessions have been in place for years. I think it is somewhere from the middle a roadmap will emerge. — Erica Crawford, Loveblock Wines
Need to embrace a collaborative and bi-partisan approach to addressing the problem. This cannot be the sole domain of politicians and academics. — Cos Bruyn, Fulton Hogan
Building infrastructure to support business and society to embrace new technologies would be a good start. — Don Braid, Mainfreight
The Climate Change Commission quite rightly focused on existing technologies in its first set of advice to Government. But we believe there is an opportunity to explore the potential of new and emerging technologies in future advice. We are early on in the development of our Internet of Things (IoT) business. Already close to half of our IoT revenues are linked to sustainability-related applications, like asset tracking that improves the utilisation of vehicles on the road, smart cities, and water quality monitoring. — Jolie Hodson, Spark
By creating local and international working groups eg. The Aotearoa Circle/Centre for Sustainable Finance and Central Banks working on a common reporting framework. — Vittoria Shortt, ASB
It needs to have a serious discussion around science and innovation including genetic modification — surely that is a lesser evil if it reduces NZ's carbon footprint. — Terry Copeland, Federated Farmers
Government and business jointly need to look to the opportunities from a positive response to climate change. Behaviour change will require incentives. The discussion needs to avoid rural/urban and generational distinctions. — Hayden Wilson, Dentons Kensington Swan
The pricing mechanism in the ETS will achieve this. — Roger Partridge, NZ Initiative
The great imponderable. We have to build cross party consensus. We floundered with superannuation for decades because of a lack of cross party consensus and were very late to KiwiSaver. We can't afford for the same outcome on climate. — Rob Fyfe, Michael Hill International
Understanding the implications of not doing this. Not just the "world as we know it is actually ending already" scenarios — but also in terms of likely reactions from trading partners in the form of climate sanctions if we do not. Lay out the change we need, and the tools we need to make that happen. De-politicise it, if that's even possible. Recognise and talk about what the rural sector has been and is doing, as well as what still needs to be done and by when. Establish a fund on an aggressive VC basis (i.e. 97 fail, 2 do OK, 1 unicorn) to specifically fund blue sky research into tools that reduce cow methane, capture wave power, and dozens of things I'm not smart enough to think of but somebody is. — Helen O'Sullivan, Crockers Property Group
Dairy export revenue has lifted 16% to a record $27 billion.