Prime Minister Jacinda Ardern made waves in the lead up to the 2017 election when she labelled climate change her generation's "nuclear free moment". She's right, of course. There's never been a stronger moral imperative to tackle one of the greatest challenges humanity has ever faced. However, taking action on climate change also presents enormous opportunities to build a thriving green economy and stay ahead of the curve as the world transitions.
The Government's recent announcement to ban new offshore oil and gas exploration is just one step — but a bold one, and in the right direction. The emerging clean energy sector is estimated to be worth US$605 billion ($863b) to the private sector globally by 2030. New opportunities in forest ecosystems globally represent up to $365b per year, electric vehicles $320b, and energy efficiency in the building and construction sector up to $770b over the same period.
Some of our greatest economic opportunities lie in areas where we have core strengths and relative advantages, for instance in renewable energy, high value regenerative agriculture, biotechnology and forestry, biofuels and bio-products, in improvements in the built environment and infrastructure, transport, across-the-board efficiencies and electricity grid technology.
There are also risks in remaining reliant on a high-carbon infrastructure. Fossil fuels are increasingly being seen as a financial liability. Conservative models indicate US$2.5 trillion will be wiped from global financial assets, between stranded assets and climate impacts. Major investors are making moves to reduce their exposure to climate risk as well as reduce the overall impacts of climate change.
The Norwegian sovereign wealth fund, the world's largest, has already begun divesting from high-carbon projects and is making plans to remove all oil and gas projects from its portfolio. Last December, the World Bank announced that they'll be ending financial support for oil and gas exploration.
In the New Zealand context, Westpac bank recently released a study in partnership with Vivid Economics and EY (Ernst Young) demonstrating we will be $30b better off if we respond to climate change sooner rather than later.
Westpac itself is reducing exposure to fossil fuels and investing in renewables echoing a clear trend in the global finance sector.
By taking a strategic approach, New Zealand can lead in developing the industries that will contribute to the global economy of the future as well as drive our own prosperity, and at the same time show kaitiakitanga (guardianship) for our environment and encourage innovation and resilience in our people.
Ensuring that this transition is socially just and leaves no one behind will require careful planning, long-term thinking, and sufficient runways for communities and sectors to transform.
The New Zealand Council of Trade Unions supports this position. Executive Sam Huggard said, "The science is clear that there is no long-term future for oil and gas, that's inescapable, and the quicker we can have a plan in place for transition, the outcome for the workers will be much, much better."
The low-carbon transition comes with significant opportunities for employment, including boosting regional jobs. Around the world, countries investing in renewable energies show that job growth in the sector far outstrips that of future oil, gas and mining sector opportunities.
Importantly, the benefits of the low-carbon transition go beyond employment and GDP. For instance, the Productivity Commission report identified the enormous opportunity that technological innovation holds in creating "dynamic and creative improvements in national wellbeing". These include cleaner air, reduced rates of respiratory illness, cleaner water, less harm to biodiversity and of course avoiding catastrophic climate change.
The shift to a clean-energy future will touch every aspect of our economy — every product and service must know its carbon footprint and find ways to achieve neutrality.
The Government's recent decision to end offshore oil and gas exploration has created a much-needed signal to investors and businesses alike that the future is going to be low-carbon.
Sir Stephen Tindall is a trustee of Pure Advantage, a trust promoting green growth. The trustees include Rob Morrison (chairman), Sir Mark Solomon, Katherine Corich and Phillip Mills.