First step an important one for sustainable development

By STEVE BONNICI*

Climate change, caused by the release of greenhouse gases, is an increasingly important issue for businesses all over the world.

The New Zealand Business Council for Sustainable Development, a coalition of over 40 leading businesses, supports the Government's recognition of this important issue. We see this as an important step forward on the sustainable development journey.

At the United Nations World Summit on Sustainable Development our partner organisation the World Business Council for Sustainable Development held a press conference with Greenpeace to signal that business and the environmental community are united in demanding Governments come together around one global framework to deal with the risks of climate change.

The New Zealand Business Council broadly supports the Government's policy package for the lead-up to the first Kyoto commitment period and for the commitment period itself.

The principles behind the policy provide for sound transitional measures; the liabilities for most emitters are capped; and competitiveness-at-risk industries appear to have been provided for.

We encourage the Government to move towards more transparent and market-based mechanisms once international trading in emissions and credits is well established with reasonably stable prices and businesses have had time to adjust.

The devil is likely to be in the detail, and it is important that proposed initiatives such as support for emissions reduction projects be implemented in a workable and cost-efficient manner. This will require the Government to "walk the talk" and make proper budget provision for emissions projects.

About 60 per cent of New Zealand's emissions come from methane and nitrous oxide. In some respects the New Zealand economy is a large farm and we cannot afford to damage the agricultural sector.

The Government's proposed package will help to shield agricultural methane and nitrous oxide emitters in the first Kyoto commitment period (2008-2012).

The agricultural sector will, however, be expected to invest around $15 million a year in emissions reduction research to avoid a levy that would raise the same annual amount.

We believe that New Zealand should retain the ability to withdraw from the Kyoto Protocol before the second commitment period (2013-2017) if necessary.

By that time we will be in a better position to assess the impacts of the second commitment period targets on business.

By then, research should have established whether New Zealand is able to cost-effectively reduce its agricultural emissions, and the emissions reduction requirements for developing countries will be known.

Many of these countries are New Zealand's trade competitors and it is important that we are all on a level playing field as early as possible.

I represented the New Zealand Business Council on last month's Government and Industry Climate Change Study Tour of the United States and Europe. Recommendations from this tour included the following.

First, the present policy structure gives little incentive to small to medium-size enterprises to engage in energy efficiency and emission reduction before the introduction of the carbon tax in 2007.

If a company or sector group has an energy plan that meets minimum criteria, that entity should be able to enter an agreement with the Government or have access to some other policy mechanism and avoid the carbon tax.

Secondly, a trading mechanism provides flexibility and lower cost for business. Early trading, even if of limited scope within New Zealand, will significantly enhance the future transition to an international trading scheme.

Thirdly, a dedicated resource to provide technical input to support businesses' action on climate change, including an understanding of their energy/emissions footprint, and a set of initiatives to manage that footprint would be a wise investment.

Our reports demonstrating why and how member businesses are addressing the challenge of climate change are available from the New Zealand Business Council
for Sustainable Development website.

* Steve Bonnici is managing director of Urgent Couriers, a New Zealand Business Council for Sustainable Development member.

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