In what has been described by the UN as a "make-or-break year" for a planet on red alert, New Zealand's future will be determined by what happens next. By Matthew McKinnon.
On January 31, the Climate Change Commission published the advice it is planning to give to the Government about how to cut New Zealand's climate pollution.
You could be forgiven for not having the time to read it, or for getting lost in the more than 800 pages of recommendations and supporting materials put out by the commission. But nothing is likely to affect the future of the country more than what happens next.
The big decisions could influence everything from where people live, how they get there, what food is on the table, what jobs put the food there, and much else, including, of course, the climate and the future of our planet.
The good news is that, thanks to this commission, a lot of very helpful information has been tabled, allowing Kiwis to get a grip on the climate fight and have a say during a consultation period, which closes on March 28.
The commission has supplied many of the ingredients necessary to tackle the climate problem. Prime Minister Jacinda Ardern has already welcomed the news that dealing with climate change is feasible and shouldn't cost what was previously thought.
The bad news is that, somewhere amid all those pages, the maths got lost on how much pollution actually needs to be cut. And although there's some talk of opportunities and incentives, for the most part the main emphasis is on centrally planned regulations that will sow terror in the hearts of those who fear New Zealand becoming a "nanny economy" for environmental reasons.
Flying into trouble
Let's start with the maths. The Paris Agreement called for limiting global warming to 1.5°C above pre-industrial levels. John Key's National-led government ratified the agreement in 2016 and, in 2019, the "Zero Carbon Act" set out a framework to achieve this goal.
That act also created the Climate Change Commission, which is supposed to tell the government how much emissions it should cut in order to be in line with the Paris Agreement goals, and how to adapt to the environmental challenges that have resulted from the world's failure to act sooner.
The commission says that by the end of the decade, we need 2030 emissions "much more" than 35 per cent lower than those in 2005, or 23.5 per cent lower than our emissions were in 2010. Our current Paris Agreement commitment, set by National six years ago, is a 30 per cent cut from 2005 levels by 2030.
On the other hand, climate scientists and the UN say overall global emissions need to be at least 45 per cent below 2010 levels come 2030.
In other words, if the commission's emissions advice was a navigational recommendation, it would be as useful as telling a pilot headed to Australia to stay in the air for "much more" than one and a half hours.
This is a problem on several levels. We are not a big emitter of overall climate pollution. But very few countries are. Only six countries plus the EU are individually responsible for more than 2 per cent of all climate pollution, and only 12 emit between 1 per cent and 2 per cent of all carbon dioxide (CO2). Of the other 140-plus countries, each has decimal-point-level responsibility for emissions.
Still, every single country needs to be paddling in the right direction, or the emissions cuts would have to be even deeper to overpower those running rogue.
Because the science is so clear, the UK's new climate target is to cut 2030 emissions by 59 per cent below their 2010 amounts. It took the recommendation of its independent climate policy body, the first such ever created – our Climate Change Commission is modelled on it.
The EU's new target, at just under a 50 per cent cut (by 2030 compared with 2010), is not considered strong enough, in particular because wealthy countries are expected, because of their affluence and historical responsibilities, to do more than the bare minimum.
As New Zealand is one of the top-30 wealthiest economies on a per capita basis, you might imagine how the other 160 or so countries that are less flush will react to this country coming up short. Poorer countries, after all, take a lot more of the rising heat and its problems on the nose, yet their responsibility for releasing emissions is often infinitesimal.
A great many countries are also well off track. Late last month, the UN Framework Convention on Climate Change (UNFCCC) released its interim report on the more than 70 countries that, unlike us, came up with new targets for the 2015 Paris Agreement's five-year deadline last year. Those countries, which represent 30 per cent of global climate pollution, will now collectively cut their 2030 emissions by a measly 0.5 per cet of their 2010 levels – and this after strengthening their targets.
The UNFCCC says that even with increased targets by some countries, the combined efforts fall far short of what is needed. UN Secretary-General António Guterres describes the report as a "red alert for our planet" and says that 2021 is a "make-or-break year".
"It shows governments are nowhere close to the level of ambition needed to limit climate change to 1.5°C and meet the goals of the Paris Agreement," he says, calling for immediate action to launch a decade of transformation.
Fortunately, new pledges last year from the very biggest polluters – China, India and the US – are so substantial that we might still be able to cap global warming at just above 2°C, assuming the pledges are implemented.
The price of failure
We need to worry a lot, though, about any further heating. The past decade has been the hottest on record for New Zealand. The planet has already warmed by 1°C in the time since industrialisation kicked off about 200 years ago. Another half a degree of extra warming might not sound like much, but that half a degree is roughly the entire amount of warming we have experienced since the early 1980s.
Because so little has been done to tackle the climate problem to date, in this decade and the next we will now further heat up at least as much as we did over the past four.
At double the speed of warming, we need to worry about many more bone-dry summers.
Record droughts and water shortages, such as that experienced by Auckland with just 65 per cent of its usual rainfall last year, will soon be outdone. We need to get used to the flooding that shut down hundreds of dairy farms in Southland in 2020; so little snow falling in August that ski fields will close; and more record high winds to fan fires in tinderbox regions, which put people, forests and livestock at ever-greater risk.
Unfortunately, the first half a degree of extra warming that brings us close to 1.5°C is something we can't control any more because the emissions already released carry inertia. Each kilogram of CO2, after all, keeps doing its heating job in the atmosphere for hundreds of years. What we can do is try to halt warming at 1.5°C to prevent things getting a lot worse – if we make big changes fast enough.
If heating went beyond 1.5°C, and up a notch to 2°C, things would really start to get dicey. Pretty much every bad outcome that could happen because of the climate would be two to three times worse than the already grim predicament we'd find ourselves in at 1.5°C. This means extreme heat spells, an increase in the rate of species and insect extinction as a result of overheating habitats, coastal erosion, crop failures and fisheries in decline. In fact, it's estimated 99 per cent of coral reefs, which sustain a quarter of all marine life, would perish at 2°C.
We shouldn't go there, and we don't have to. Fearing or assuming countries such as New Zealand won't do their bit, the new US administration and the EU are working towards "border adjustments", which are basically tariffs on climate-unfriendly imports.
This should worry us since we have a very high share of exports that are emissions-intensive right now. Even if some key exports such as dairy are more climate-friendly than those of other producers, our products will look less attractive to consumers on overseas shelves if big tariffs are slapped on them – competing producers in those consumers' home markets won't complain, however.
The current pandemic has taught us to be ready and prepared. Imagine if we knew that in "x" number of years, the next big coronavirus outbreak was certain to strike. Advance planning and preparation would make a slam-dunk response easy, compared with the chaos of Covid-19.
Climate change is exactly that next pandemic we already know about. What's more, there are huge economic opportunities on offer as we work to get a proper handle on it.
There's a reason Elon Musk is one of the world's richest people, with $180 billion of his fortune attributed to green wealth. Green tech and sustainable goods and services are big business. Look at the thriving trade of the likes of giant Chinese electric automaker BYD and lithium-ion battery producer CATL, German wind turbine maker Enercon, ride-sharing pioneers Uber and Lyft, or Australian billionaire Anthony Pratt's recycling empire.
They're all riding a green-business wave. The need for Aotearoa to be riding along with them, rather than being dashed on the rocks, is why we face a defining moment right now.
The New Zealand Emissions Trading Scheme (NZ ETS) should be the central driver of change. It will be more efficient than dictating policies and regulating every sector and business. The market will do a lot of the work, with businesses free to choose their own smart, climate-friendly strategies.
On the other hand, we should not kid ourselves that the NZ ETS has been working. If it had, our emissions would have fallen instead of being flat or rising since it started in 2008. We wouldn't have a million more polluting cars on the roads or have lost so much forest cover.
The Climate Change Commission actually recommends a number of the key measures needed to strengthen the NZ ETS, but does not go far enough. There are three key shortcomings. Firstly, the price of emitting a tonne of CO2 has been fixed at $25 (there is also an active spot-trading market in NZ ETS credits and that's currently trading at nearly $40), but this year an auctioning system will begin and the government will intervene to keep the price between $20 and a maximum of $50 a tonne. This compares with the current EU carbon spot price of $57, although it's understood that a price of at least US$100 is needed already to keep us on track to limit warming to 1.5°C. The commission has recommended the government move to a range of $30-$70 until 2026 and have a maximum price of $140 by 2030.
Secondly, the government hands out yearly free carbon credits equivalent to eight million tonnes of CO2 – about a fifth of the NZ ETS's overall volume. Some of our biggest polluters – New Zealand Steel, the Tiwai Point aluminium smelter and methanol producer Methanex – are given credits that forgive and forget between 60-90 per cent of their emissions. The commission has called for a review of these handouts, without passing judgment. However, they are expected to continue.
Thirdly, the most glaring shortcoming: about half of all our emissions, those from agriculture, are still outside the NZ ETS. The commission has recommended inclusion but that agriculture receives free allocations to soften the blow. This will probably be no more useful in cutting emissions than the current set of handouts.
Even if the NZ ETS' price, carbon-credit handouts and ag-sector shortcomings are rectified, a hands-off approach won't be strategic. Take the Tiwai Point aluminium smelter, where about 2500 direct and indirect Southland jobs continue to hang in the balance. Massively ramping up the carbon price or phasing out Tiwai's free carbon-credit allocation will probably not save a plant that soaks up 13% of our national electricity supply.
Yet Tiwai's owner, Rio Tinto, already has the technology to make aluminium while eliminating all direct greenhouse gases from production. This will be commercially available in 2024 – when the smelter is slated to close. The breakthrough technology, known as Elysis, is a joint venture of Alcoa Corp and Rio Tinto, the governments of Canada and Quebec, and US software giant Apple. It's probably not a bad venture for New Zealand to be a part of, rather than sending our production of this strategic metal offshore.
Then there is dairy farming, accounting for 23% of our overall emissions but just 2.3 per cent of GDP. Under any serious ETS system, it would be hard to see dairy thrive. Yet it makes no sense to bump our comparatively emissions-friendly dairy production offshore for higher-polluting producers to move in. The roll-out of home-grown solutions, such as methane-slashing seaweed feed supplements – already showing promising results in field tests – could be greatly accelerated with targeted support, easing incorporation into a solid ETS regime as well as the pressure to reduce livestock numbers as recommended by the commission.
Likewise, the commission sees very few ways to reduce the 5 per cent of our emissions that come from landfills, aside from reducing waste. As great as less waste would be, other solutions exist, but not without direct public engagement. Metro Vancouver, for instance, makes use of sewage wastewater combined with timber refuse to create a landfill topsoil called Nutrifor. When placed on landfills, it reduces methane emissions by 90 per cent.
It's noteworthy that the Climate Change Commission's draft advice excludes new innovations in its calculations, for the reason that not everything in the pipeline will pan out. It doesn't want to judge what will succeed and what won't.
Money well spent
The good news is that the government will have the means to fund these kinds of investments in green tech. The most recent Budget forecast a nearly one-third increase in public expenditure for 2020-21, the largest single increase in Crown spending since Treasury began publishing statistics 50 years ago. Indeed, more than $140 billion of new spending, over and above the 2018 Budget level, is planned through to 2024/25, including more than $60 billion of pandemic-related spending. New Zealand is lucky to have the balance sheet to support it; this debt- not tax-fuelled spending won't even raise an eyebrow in the OECD.
As the International Monetary Fund and UN chiefs have repeatedly stressed, though, pandemic stimulus packages are a major opportunity to build forward better and should accelerate the green transition. Minimum recommendations are to screen spending for green benefits and wherever possible prioritise these. There are also win-win public investments, such as digital infrastructure improving internet coverage and speed that helps people work from home while reducing vehicle trips and pollution.
Once initial pandemic-related needs have been met, any climate-friendly investment that raises aggregate demand and boosts employment will be a great use of these recovery billions. Whereas spending to slow or counteract efforts to deal with climate change would be a total waste of public funds and a travesty.
We can sit around and quibble about the commission's economic models on the costs of proposed policies, but keep in mind that the new public spending will be spent anyway, even if it's not being spent sustainably.In 2018, for instance, New Zealand budgeted $1.7 billion towards buying four Boeing Poseidon maritime patrol aircraft, which the military will get in 2023. That money would be more than enough to pay for a subsidy to fund the average $10,000 price difference between electric vehicles (EVs) and petrol/diesel vehicles for every new car sold in the country for two full years straight.
That's not as crazy as you'd think. The Netherlands offers a $6500 subsidy for EV buyers and Germany up to $15,000. In Luxembourg, you can knock more than $8000 off your tax return for purchasing one. Since EVs run as if you were paying 30 cents a litre for petrol or diesel vehicles, 160,000 Kiwi drivers would be making regular savings as a result, buying Kiwi-made green energy and supporting local jobs.
Not that everyone will need subsidising, and some costs can legitimately be picked up by the public. If you can afford a $290 return flight from Auckland to Wellington, you can probably afford the $2.90 of carbon offsetting in support of native bush if we required it. A recent report from the Parliamentary Commissioner for the Environment on tourism shows how certain sectors can and should take more responsibility for their footprint.
The questions we face are not whether to spend but what our spending priorities are; what will be best for the country, and what is most strategic?
Why let Tiwai close when we have abundant local renewable energy in the South Island, for instance? Why is there no focus on green hydrogen when we have a natural-gas network that could be used to plumb it to homes and businesses around the country. There, it can be blended up to 30 per cent with natural gas before appliance changes to household stoves or heaters are needed.
Why close the Huntly power station when it could be converted to a waste-to-energy and green-hydrogen plant and blending facility? Hydrogen needs only water and electricity to produce and burns into water vapor. Hydrogen can store power for later use such as from energy produced at night by wind and geothermal when less electricity is used. This opens up new energy development options and helps solve the "dry year" dilemma – those years when drought dries the hydro dams out.
In the north, too, way more green power can be generated in our most populous and energy-hungry regions, catering to the growing electricity needs of an economy weaning itself off billions of dollars in annual spends on foreign fossil fuels. Its households and businesses can accommodate lots of roof-top solar and the North Island's geothermal fields could produce at least treble the 17% of our electricity they already generate.
Thermal industries that should be retiring coal and fossil burners could likewise benefit from the heat byproducts of any new geothermal installations if relocated.
For the most part, we are not actually talking costs with these decisions, but rather investment choices. Yes, we need grid upgrades, charging stations galore and many other things besides, but these will support new markets and commercial activity. Every kid knows you can't make big bucks selling lemonade at the school fair if you don't first get a hold of – read: invest in – the citrus and the sugar.
Speaking of youth: it's their future most at stake and their views should have more weight in determining our direction. The appointment of one or more youth reps to the commission would be a start, but the Government should also convene a dedicated national youth consultation prior to the final policy decisions this year to be sure their views will be genuinely heard and, ideally, reflected.
The climate problem is the greatest market failure to ever occur, but a smart government response could have us travelling in a prosperous and sustainable direction in no time.
The questions are so huge that the Climate Change Commission cannot give us all the answers, so the current consultation is really a kick-start to a year-long, nation-wide conversation on the future of the country.
Make sure your own views are heard through your MP, political party or association, online or direct to the commission.
Matthew McKinnon leads Swiss-based NGO Aroha Geneva, which helps safeguard vulnerable communities and ecosystems. He has worked for the New Zealand Cabinet Office and the UN.