While attention is focused on economists finding a $500 million-a-year hole in National’s tax plans, a similar-sized hole in climate costings is hiding in plain sight — and it applies to Labour, too.

National appears to have the bigger gap, however.

The gulf was highlighted in the Pre-election Economic and Fiscal Update (PREFU) — Treasury’s official word on the state of the government’s books — which explicitly excluded the cost of meeting New Zealand’s international climate target under the Paris Agreement.

Asked how they would pay this week, politicians gave unclear answers. But the obligation was still very real.

Both Labour and National have said they are committed to meeting the country’s international climate target, known as an NDC (Nationally Determined Contributions).

Under the Paris Agreement, which covers almost every nation on the planet, New Zealand has promised to cut emissions by 41 percent off 2005 levels by 2030. Exporters and carbon market experts say failing to meet that pledge could jeopardise international trade — nevermind the fact that following the Paris Agreement is humanity’s best hope for avoiding more expensive and deadly heating.

New Zealand plans to meet its target in two ways. First, it will do as much as it can inside the country by meeting a set of “emissions budgets”.

No way to meet target
But when the Climate Change Commission ran the numbers, it concluded there was no way to meet the whole target with action at home. Because New Zealand started slow at tackling emissions, cutting transport, industry, farming and electricity emissions that quickly would cause too much economic pain, it concluded.

So there is also a second part to the target: buying carbon credits from overseas. Typically, economists assume this is cheaper than making cuts in emissions at home, though it depends on the project.

While no purchases will be made until after the election, the kinds of things that could qualify include retiring coal boilers in developing countries, or planting forests.

This is where the gap in the books comes in. Treasury had previously put the cost of buying these credits from overseas — and an estimated 100 million tonnes of them will be needed, at last count — at between $3.3 billion and more than $23 billion between now and 2030.

Even at the lower end of projections, it could work out at around $500 million a year.

Whichever way the government decides to do it, PREFU said the costs would be “significant” and will start biting “within the current fiscal forecast period”.

As things stand, according to Climate Change Minister James Shaw, one or possibly two rounds of purchases could be made in the next four years, with a third and final “washup” at the end of the decade.

Election may change timing
The election could change the timing, but whoever is in government will be expected to start showing progress towards meeting their Paris target well before the end of the decade, said carbon market expert Christina Hood from Compass Climate.

“There’s this common misconception that whoever the finance minister is in 2032 is going to have to get their chequebook out and square up by however much we missed by. It doesn’t work that way at all.

“Every emission (saving) we count has to actually occur during those years (before 2030), so we need to get on with funding that.”

Yet despite starting to fall due within the next four years, the costs did not appear as a liability on the government’s books. Nor do the major parties seem to be clear on how much to budget for them.

Bold claims, few details
This week, neither National nor Labour answered clearly how much they had planned to set aside for these costs nor how they intended to pay them. They instead focused their answers on wanting to cut planet-heating emissions more deeply inside New Zealand’s borders.

At times, politicians seemed to confuse domestic emissions budgets with the $3 billion-plus added cost of buying offsets to meet the Paris target, or they made heroic statements about how much they could do onshore, without supplying the figures behind them.

A quick reminder: the 100-odd million tonnes in overseas offsets that it was estimated we would need were on top of meeting New Zealand’s domestic emissions budgets, not instead of it. Only a truly incredible effort could meet the entire amount inside the country, requiring deep and fast climate action on a scale neither party has hinted at.

Currently, New Zealand is not even on track to meet its domestic emissions budgets, as Climate Change Commission chief executive Jo Hendy told a business and climate conference in Auckland this week.

“Latest projections show we are not on track in every single sector, so we are going to have to do more,” she said. “We are particularly reliant on pushing the dial in transport and in process heat.”

Yet when RNZ asked about the $3 billion-plus cost on the campaign trail, politicians appeared to be planning to overperform on those budgets, sometimes by impressive amounts. Their answers suggested they may not need to worry too much about that $3 billion-plus.

Here’s what Labour leader Chris Hipkins said, when asked if he had costed for meeting Paris: “We still have a way to go before we have to make a final decision on how best to meet our commitments there. We’re on track to meet our first emissions budget.

Working harder
“We’ve still got the second and third emissions reduction budgets to go. If we don’t meet our targets there is a period of time when we can figure out how best to remedy that, and that includes working harder in the second period to compensate for that.

“But we’re confident that with the stuff we’ve got in place at the moment, we’re on track to meet our first target.”

Hipkins did not address paying for offshore credits, which were required even if the country met all three domestic budgets. As prime minister, he rolled back a biofuel policy and, like National, has focused his transport promises mainly on building new roads rather than a strong shift to lower-emissions modes.

He has also promised help for home insulation and solar, but it was not clear if his new promises compensated for the cuts.

Asked the same question, National leader Christopher Luxon took aim at the government for undermining the Emission Trading Scheme (ETS), saying the scheme should do more of the “heavy lifting”.

He, too, skirted the question of paying for offsets.

For context, the ETS made polluters pay for around half the country’s domestic climate pollution (the other half was from agriculture) and was already factored into projections of needing 100 million-odd tonnes of extra ‘top up’ help from overseas.

The scheme could do more, particularly if carbon prices went higher (taking petrol prices with them), or if farming was included, or if there were no limits on planting land in cheap pine trees, but Luxon did not detail how National would navigate these kinds of changes.

Cutting domestic emissions
Meanwhile, other party spokespeople talked-up cutting domestic emissions.

Labour environment spokesperson David Parker told the conference in Auckland he wanted to look at claims that native afforestation could meet the entire Paris target (without overseas help).

National’s climate spokesperson Simon Watts told the same gathering — the annual Climate Change and Business Conference — that National believed it could meet 70-75 percent of the 2030 target inside these shores, a figure considerably higher than previous estimates by the Climate Change Commission.

Watts did not supply details on how that would be achieved, though he discussed lightening regulation on wind and solar energy.

His party has said it would scrap Labour’s Clean Car Discount and major grants to companies to switch off coal boilers, and it would also delay pricing farming emissions a further five years, until 2030. There were questions about how it would meet even the current domestic emissions budgets.

The cost of waiting
Hood had a spot of good news on the cost front. She told RNZ that based on recent purchases by Switzerland, the cost of overseas carbon offsets was likely to be towards the lower end of Treasury’s range.

Even if the government winded up buying 100 million tonnes of savings offshore, that was still only around half the quantity the John Key-led government expected it might have to stump up for when it made its first Paris Agreement pledge, despite the first pledge being weaker on climate than the current one, she noted.

But getting offsets at the lower end of the cost range relies on the government getting moving on lining them up and buying them, she says.

Shaw told RNZ that environmental integrity would be a bottom line after New Zealand was burned for buying valueless “hot air” credits from Russia and Ukraine in the early years of carbon trading.

As well as Switzerland, Singapore and others had already started striking deals to buy the offsets they needed.

While the New Zealand Government has been scoping out prospective sellers overseas, it has refused to reveal who it is talking to, citing commercial sensitivity.

The ministries for Foreign Affairs and the Environment were working on advice to Cabinet on how to make these purchases and ensure the carbon saved was real. But that advice will not land until after the election.

Most expensive time to buy
One thing is clear. 2030 will be the most expensive time to buy, Hood said, because many countries will be panic-buying from overseas projects to meet their missed domestic commitments. Shaw agreed.

“A whole bunch of countries will be going, ‘Oh crap, I’ve missed my target,’ and scrambling around trying to find ways to fill the gap.”

Shaw wanted Paris costs to go into PREFU, making it clear to the government that any money spent on domestic action on climate change was also a cost saving in terms of buying fewer offshore credits.

“This is one of the things that worries me about what some of the other parties are saying, is that they aren’t really accounting for [Paris] in their fiscal plans.”

Shaw called the huge variance in Treasury ‘s $3 billion-23 billion estimate “unhelpful”.

“It’s such a wide variance it’s hard to trust it. At the moment… people are putting their fingers in their ears and saying ‘lalalala”.”

But asked how much the Green Party had costed for meeting New Zealand’s offshore climate commitments, Shaw would not be drawn on naming a more accurate number.

Treasury estimate best
“The best estimate I’ve got is the Treasury estimate. The Ministry for the Environment and MFAT (Ministry for Foreign Affairs and Trade) are doing a lot of work on this at the moment, but they’re not going to have a report back until just before Christmas. If I was to give you a number I would be pulling it out of thin air.”

As for how to pay for it, Shaw said ETS proceeds from polluters could do a lot of it.

“In a good year that’s a billion dollars, so if there’s seven years for us to do that it’s $7 billion.”

But Shaw also acknowledged there were a lot of other calls on that money — including for adapting to climate change, paying for domestic carbon savings, and helping low-income families weather the costs of higher emissions prices, which boost fuel and electricity costs.

National has said it would use ETS proceeds to help fund its tax cuts, meaning it will need to pay for the Paris target (both the offshore and onshore parts) some other way.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

As the Glasgow climate summits gets underway, New Zealand’s government has announced a revised pledge, with a headline figure of a 50 percent reduction on gross 2005 emissions by the end of this decade.

This looks good on the surface, but the substance of this new commitment, known as a Nationally Determined Contribution (NDC), is best assessed in emissions across decades.

New Zealand’s actual emissions in the 2010s were 701 million tonnes (Mt) of carbon dioxide equivalent. The carbon budget for the 2020s is 675Mt. The old pledge for the 2020s was 623Mt.

The Climate Change Commission’s advice was for “much less than” 593Mt, and the new NDC is 571Mt. So yes, the new pledge meets the commission’s advice and is a step up on the old, but it does not meet our fair share under the Paris Agreement.

It is also a stretch to call the new NDC consistent with the goal of keeping global temperature rise under 1.5℃.

True 1.5℃ compliance would require halving fossil fuel burning over the next decade, while the current plan is for cuts of a quarter.

Emissions need to halve this decade
Countries’ climate pledges are at the heart of the Paris Agreement. The initial round of pledges in 2016 added up to global warming of 3.5℃, but it was always intended they would be ratcheted up over time.

In the run-up to COP26, a flurry of new announcements brought that figure down to 2.7℃ — better, but still a significant miss on 1.5℃.

As this graph from the UN’s Emissions Gap Report 2021 shows, the world will need to halve emissions this decade to keep on track for 1.5℃.

New Zealand’s first NDC, for net 2030 emissions to be 30 percent below gross 2005 emissions, was widely seen as inadequate. An update, reflecting the ambition of the 2019 Zero Carbon Act to keep warming below 1.5℃, has been awaited eagerly.

But several factors have combined to make a truly ambitious NDC particularly difficult.

First, New Zealand’s old climate strategy was based on tree planting and the purchase of offshore carbon credits. The tree planting came to and end in the early 2010s and is only now resuming, while the Emissions Trading Scheme was closed to international markets in 2015. The Paris Agreement was intended to allow a restart of international carbon trading, but this has not yet been possible.

Second, New Zealand has a terrible record in cutting emissions so far. Burning of fossil fuels actually increased by 9 percent from 2016 to 2019. It’s a challenge to turn around our high-emissions economy.

Third, our new climate strategy, involving carbon budgets and pathways under advice from the Climate Change Commission, is only just kicking in. The government has made an in-principle agreement on carbon budgets out to 2030, and has begun consultation on how to meet them. The full emissions-reduction plan will not be ready until May 2022.

Regarding a revised NDC, the government passed the buck and asked the commission for advice. The commission declined to give specific recommendations, but advised:

We recommend that to make the NDC more likely to be compatible with contributing to global efforts under the Paris Agreement to limit warming to 1.5℃ above pre-industrial levels, the contribution Aotearoa makes over the NDC period should reflect a reduction to net emissions of much more than 36 percent below 2005 gross levels by 2030, with the likelihood of compatibility increasing as the NDC is strengthened further.

The government then received advice on what would be a fair target for New Zealand. However, any consideration of historic or economic responsibility points to vastly increased cuts, essentially leading to net-zero emissions by 2030.

Announcing the new NDC, Climate Change Minister James Shaw admitted it wasn’t enough, saying:

I think we should be doing a whole lot more. But, the alternative is committing to something that we can’t deliver on.

What proper climate action could look like
Only about a third of New Zealand’s pledged emissions cuts will come from within the country. The rest will have to be purchased as carbon credits from offshore mitigation.

That’s the same amount (100Mt) that Japan, with an economy 25 times larger than New Zealand’s, is planning to include in its NDC. There is no system for doing this yet, or for ensuring these cuts are genuine. And there’s a price tag, possibly running into many billions of dollars.

New Zealand has an impressive climate framework in place. Unfortunately, just as its institutions are beginning to bite, they are starting to falter against the scale of the challenge.

The commission’s advice to the minister was disappointing. It’s being challenged in court by Lawyers For Climate Action New Zealand, whose judicial review in relation to both the NDC and the domestic emissions budgets will be heard in February 2022.

With only two months to go until 2022 and the official start of the carbon budgets, there is no plan how to meet them. The suggestions in the consultation document add up to only half the cuts needed for the first budget period.

Thinking in the transport area is the furthest advanced, with a solid approach to fuel efficiency already approved, and an acknowledgement total driving must decrease, active and public transport must increase, and new roads may not be compatible with climate targets.

But industry needs to step up massively. The proposed 2037 end date for coal burning is far too late, while the milk cooperative Fonterra — poised to announce a record payout to farmers — intends to begin phasing out natural gas for milk drying only after that date.

The potentially most far-reaching suggestion is to set a renewable energy target. A clear path to 100 percent renewable energy would provide a significant counterweight to the endless debates about trees and agricultural emissions, but it is still barely on the radar.

Perhaps one outcome of the new NDC will be that, faced with the prospect of a NZ$5 billion bill for offshore mitigation, we might decide to spend the money on emissions cuts in Aotearoa instead.

Dr Robert McLachlan is professor in applied mathematics at Massey University. This article is republished from The Conversation under a Creative Commons licence. Read the original article.

Article by AsiaPacificReport.nz

New Zealand’s Climate Change Commission this week released its long-anticipated advice to the government on how to reshape the economy to meet the country’s domestic and international climate change obligations.

The document sets out three emissions budgets, covering 15 years to 2035 in five-yearly plans. It also provides advice on the direction policy should take to achieve the country’s 2050 net-zero goal.

New Zealand’s net emissions rose by 57 percent between 1990 and 2018, placing it among the poorest performers in the OECD.

As one of New Zealand’s six climate change commissioners I have been part of the process of making a clear case to government that we must take “immediate and decisive action on climate change” across all sectors.

The commission’s priorities include a rapid shift to electric transport, accelerated renewable energy generation, climate-friendly farming practices and more permanent forests, predominantly in native trees.

It also says New Zealand must raise its pledge under the Paris Agreement, known as the Nationally Determined Contribution (NDC), because its current commitment is not compatible with the goal of limiting warming to 1.5℃ above pre-industrial levels.

Ambitious but realistic carbon budgets
The good news is the draft carbon budgets are achievable, with technologies that already exist.

The commission’s advice is built around 17 recommendations that cover many sectors of the economy. One of the key messages is that Aotearoa New Zealand cannot plant its way out of trouble but needs to make real cuts in emissions and eliminate the use of fossil fuels.

Most of the solutions are well known. We need to reduce emissions from transport, from energy and industry, from agriculture and from waste.

Breaking: New Zealand roadmap to net zero unveiled. Here’s what it means for you.https://t.co/5oLgapQdDC

— The Spinoff (@TheSpinoffTV) January 31, 2021

Reducing transport emissions is crucial as the sector was responsible for 36.3 percent of New Zealand’s emissions of long-lived greenhouse gases in 2018 and accounts for most of the growth in emissions over the past 30 years.

Recommendations for the transport sector include electrification of the vehicle fleet, improved public transport networks and better integration of active transport (walking and cycling).

A rapid increase in electric cars would reduce emissions from private and commercial transport, while supporting low-carbon fuels like “green” hydrogen and biofuels would help the freight sector (including heavy trucks, shipping and aircraft).

Part of the transport story is urban planning — changing how people and goods move around. The commission recommends limiting urban sprawl, making walking and cycling safer and easier and shifting more freight from road to rail or shipping.

The commission also calls for rapid decarbonisation of electricity generation, and energy generally, to phase out the use of coal. Between now and 2035, it estimates New Zealand could cut transport emissions by 47 percent and those coming from heat and electricity generation by 45 percent.

I can’t stress this enough. We’re heading for economic change, to decarbonise the country. There’ll be winners and losers. Who they are depends on decisions by govts, informed by advice out a week from today by the Climate Change Commission. Have your say! https://t.co/pAs5PLeaKo

— Eloise Gibson (@eloise_gibson) January 24, 2021

Emissions from agriculture
Methane accounts for 43.5 percent of New Zealand’s greenhouse gas emissions, and more than 80 percent of total methane comes from cud-chewing farm animals. But the short-lived nature of methane in the atmosphere means we do not need to reduce methane emissions so fast.

The Zero Carbon Act calls for a 24-47 percent reduction in methane emissions by 2050, compared to net-zero for carbon dioxide.

The commission’s advice is that biogenic methane emissions can be reduced by 19 percent by 2035 while further improving productivity in the sector through better feed, fewer but more productive animals and continued research into emission-reducing technologies.

The commission calls for real cuts in emissions rather than offsets through tree planting, but argues forestry should continue to play an important role in the long-term storage of carbon, for example if timber is used in buildings or furniture and to provide bioenergy.

It recommends a shift towards more permanent native forests to improve long-term carbon storage, biodiversity and soil retention.

Waste is another sector with significant potential to cut emissions. Per head of population, New Zealanders throw away roughly twice what an average OECD citizen does. The commission recommends moving towards a circular economy, where resources are valued and reused.

In terms of greenhouse gas emissions, the main issue in the waste sector is methane release from decomposing solid waste. Capturing that gas at source could reduce methane emissions by 14 percent by 2035.

Cost of a fair transition
The commission’s draft budgets recommend an overall reduction in total greenhouse gas emissions of 36 percent by 2035, starting with 2 percent by 2025 and 17 percent by 2030. It estimates the cost of achieving this is less than 1 percent of projected GDP, much lower than was initially thought.

The payoffs for public health, for our environment and biodiversity make this a good investment, let alone the huge avoided costs from unchecked climate change.

The commission’s recommendations will go through a public consultation process until March 14, and the government has until the end of the year to decide which parts of the advice it takes on board.

An important aspect of the advice is inclusiveness and support for all sectors of society as we move to a low-emissions future. The commission takes a te ao Māori (Māori world view) approach, making it clear that Aotearoa must have an equitable and fair transition.

By Dr James Renwick, professor, Physical Geography (climate science), Te Herenga Waka — Victoria University of Wellington. This article is republished from The Conversation under a Creative Commons licence. Read the original article.

Article by AsiaPacificReport.nz