Bold legislation to drive emissions down to zero would come with massive implications - ranging from slower-growing household incomes to major impacts on industry.

The most ambitious of three options tabled this afternoon - achieving a net-zero 2050 across all emissions, not just carbon dioxide - would mean a 10th of New Zealand would need to be planted as new forestry.

But Climate Change Minister James Shaw said making plans and "taking common sense action now" would help avoid sudden changes down the track.

Shaw today released a discussion document to kickstart a six-week consultation process on the Government's proposed Zero Carbon Bill.


"The impacts of climate change are already real, with more damage caused by storms, droughts, coastal and river floods, which don't just affect property but also have impacts on where and how New Zealanders live and work," he said.

"The economic analysis we've done shows that our economy can continue to grow as we reduce emissions and underlines the importance of innovation and planting trees," Shaw said.

"We can develop new jobs in areas like forestry, alternative energy, electric vehicles, agricultural research and more so we can take advantage of the change.

The Government had looked at what had worked in countries like the UK, which established a Climate Change Act in 2008, and taken on expert advice from groups including the Parliamentary Commissioner for the Environment and the Productivity Commission.

"A strong 2050 emissions reduction target will show the world we mean what we say and give us a moral mandate to encourage other bigger countries to do their bit too."

Here we look at four big ways the bill will matter:

Hard targets, hard challenges

Over and above New Zealand's pledges already locked in under the Paris Agreement, the new bill is aiming for a 2050 target, as many countries already have.

The UK aims to reduce emissions by 80 per cent of 1990 levels by 2050, while Canada is also aiming to reduce its emissions by 80 per cent in 2050, relative to 2005 levels.


The European Union's target is 80 to 95 per cent by 2050, and Norway, Portugal and Sweden, particularly, are seeking to achieve neutrality, or near-neutrality, by 2050 or earlier.

Precisely what kind of emissions New Zealand would be pushing down to net zero, and how, is still up for discussion.

The term "net" emissions is normally used to describe gross emissions minus the emissions removed from the atmosphere through the impact of land use and forestry.

Big-emitting industries like sheep and beef farming and dairying will have the biggest challenges. Photo / DairyNZ
Big-emitting industries like sheep and beef farming and dairying will have the biggest challenges. Photo / DairyNZ

Gross emissions cover greenhouse gases from the parts of the economy that we traditionally think about as emitters, such as cars, factories and livestock.

One option was achieving net zero carbon dioxide by 2050 - focusing on CO2 but not other gases like methane or nitrous oxide, which predominantly come from agriculture.

Another was slashing CO2 to net zero by 2050, but "stabilising" emissions of short-lived gases, including methane, which decayed relatively rapidly in the atmosphere and lasted for decades rather than centuries.


This meant global temperatures can be stabilised without necessarily reducing emissions of these gases to zero.

Long-lived gases like carbon dioxide, meanwhile, either needed to reduced entirely to zero - or at least to the point where emissions can be balanced out by an equal amount of removals, for example, by planting new forests.

A third option was reducing all of New Zealand's greenhouse gases to zero by 2050.

Each of those options came with huge implications for the economy, which along with household incomes, would continue to grow but possibly not as quickly.

By 2050, per household national income would still have increased by 40 per cent, instead of 55 per cent, meaning support for lower-income households would be needed so the impacts weren't disproportionate.

Achieving a net zero emissions target by 2050 could also cause average GDP to grow less quickly, with the rate of growth depending on the target.


The annual growth rate could slow by about 0.2 per cent.

In the land sector, the first two options would require much more forestry to offset nitrous oxide and CO2 emissions, but what land use change ultimately happened would be determined by the level of ambition around methane reductions.

But net zero emissions across all greenhouse gases would require major land use change - and even 10 per cent of New Zealand given over to new forest planting.

Across all three options, big shifts would also be required for the energy and transport sector: electric vehicles would need to make up 95 per cent of the light fleet by 2050, industrial heating would need to shift from fossil fuel to electricity and biomass, and any remaining CO2 emissions would have to be off-set by forestry.

READ MORE: Shift to greener economy could see petrol car import cost rise

And forestry and innovation mattered greatly: emissions prices could be higher and growth rates lower if New Zealand did not plant enough trees or continue to make technical breakthroughs.


That was especially the case in globally competitive, big-emitting sectors like sheep and beef farming, dairy processing and petrochemical processing, as well as those with little opportunity to cut their emissions.

Under the Paris Agreement, New Zealand has committed to reducing greenhouse gas emissions from 1990 levels by five per cent by 2020, 11 per cent by 2030 and 50 per cent by 2050.

Budgeting better

To give more predictability, emissions "budgets" were a necessary part of the bill because they set out how much greenhouse gas New Zealand could emit over a period of time.

They could be set 10 to 15 years in advance, with each budget specifying emissions for a five-year period, and future ones could be revised to allow for changes in the economy and technology.

The Government proposed that the length of each budget should be five years as it provided greater predictability for businesses and communities, while remaining flexible for the future.

That would essentially mean New Zealand had a minimum "look-ahead" timeframe of between 10 and 15 years, posed lower administrative costs and matched up with New Zealand's Paris pledge.


But while too short a period meant less predictability for businesses and communities, too long a period requires decisions to be made today on very uncertain information.

"A strong 2050 emissions reduction target will show the world we mean what we say and give us a moral mandate to encourage other bigger countries to do their bit too," says James Shaw. Photo / File

Parliamentary Commissioner for the Environment Simon Upton recently recommended New Zealand set a six-yearly budget with a three-year review of the policies implemented by the Government, designed to line up with the electoral cycle.

The Government also proposed budget monitoring that would include annual reports, and banking or borrowing from one emissions budget to the next, which allowed a small amount of flexibility into each emissions budget.

It would also align the budgets to our main existing climate tool - the New Zealand Emissions Trading Scheme (ETS).

The ETS worked by putting a price on emissions by issuing a restricted volume of permits to emit into the market, requiring all sectors except for agriculture to report on their emissions, and buy and surrender emissions units to the Government.

The scheme was designed to create a financial incentive for businesses to invest in technologies and practices that reduce emissions, while encouraging forest planting by allowing eligible foresters to earn units as their trees grow and absorb carbon dioxide.


But over recent years, the ETS has been criticised for a lack of effectiveness, and the Government is looking at a range of new changes to it.

A climate commission

The bill would launch a new Climate Change Commission, tasked with providing independent, expert advice - and more importantly, holding successive governments to account for progress.

READ MORE: 'Urgent action' needed after NZ's emissions rise 20%

The commission would advise the Government on emissions budgets, areas of the economy to focus on, and any wider issues related to climate change.

But the Government proposed the commission wouldn't be making any decisons itself.

Achieving a net-zero emissions 2050 would require the planting of millions more trees. Photo / File
Achieving a net-zero emissions 2050 would require the planting of millions more trees. Photo / File

Currently, decisions on climate change policy are made by the Government with the support of advice from officials, with new laws and reforms subject to the parliamentary process.


Too much power could make a commission more at risk of being removed by future governments, although if it was too weak, it could be rendered ineffective.

How the commission might work in with the ETS was a much less clear.

It could have an advisory role with the ETS - a position that's supported both by the Productivity Commission and the Parliamentary Commissioner for the Environment.

But if it was able to make decisions around the ETS, like setting as the overall level of units supplied into the scheme, that could make it more independent, and with a clear mandate to slash emissions.

There have been calls for agriculture to join the ETS, and an interim
Climate Change Committee has already been set up to work on how to manage agricultural emissions, along with transitioning to 100 per cent renewable electricity.

A warmer, wilder future

The headline finding of a major Government-commissioned report in December was that New Zealand didn't have a clear and co-ordinated plan to deal with future climate change.

Even if the world could reduce its greenhouse gases, some climate change is already locked in and New Zealand would need to adapt. Photo / File
Even if the world could reduce its greenhouse gases, some climate change is already locked in and New Zealand would need to adapt. Photo / File

That was despite its threats to hundreds of billions of dollars of property and infrastructure - and to our primary industries with increased storms and droughts from a climate that could be several degrees warmer by 2100.

Most of New Zealand's major urban centres and most of our population were located on the coast or floodplains of major rivers.

READ MORE: New watchdog backs bolder action on climate

Communities, homes, commercial assets and infrastructure were exposed to flooding, sea-level rise, storm surge and inundation from rising ground water levels.

The mid-range projected sea-level rise over the next 50 years was 30cm - enough to effect all coastal areas to varying extents.

Under this scenario, in Wellington a one in 100-year flood would become an annual event, in Dunedin this would become a one in two-year event, and in Auckland a one in four-year event.


That meant the once-in-a-century January 2011 storm that put much of the Northwestern Motorway underwater would happen once every four years, and 40cm would make it a two-year occurrence.

A 70cm rise would make it a monthly event.

Damage and disruption to assets and critical infrastructure - including more than $200 billion in government and council-owned infrastructure assets - was expected.

The most recent national assessment found nearly 170,000 buildings sat within 3m of the mean high-water spring, exposing them not just to sea-level rise, but also storm-tide and wave flooding that could reach 1-2m in exposed places.

Even if the world could reduce its greenhouse gases, some climate change is already locked in and New Zealand would need to adapt.

The bill could help decision-makers systematically manage climate change risks, requiring the Government to develop national adaptation plans that prioritised actions based on regular risk assessments.


The Government was also looking at whether companies and organisations should be made to report on how they were adapting to risks themselves.

"There's no doubt that the change we need to make is significant but planning ahead gives us the best chance of maximising the opportunities and minimising the impacts of change so our transition is just and fair for people," Shaw said.

People can make submissions on the Zero Carbon Bill and find out more about the consultation process here.