Dr Rod Carr

Slowly but inexorably, the country is getting to the point where it is going to have to make some tough choices about actually lowering greenhouse gas emissions rather than planting or buying its way out of them.

Prime Minister Christopher Luxon, at the weekend, removed any last hope that climate change deniers might have had that a National-led government would back off the 2030 emissions reduction target of a 50 per cent reduction on our 2005 emissions and then net zero by 2050.

“I want to be really clear that how we achieve our goal is a matter for debate, but committing to it is not,” he said, speaking to National’s Blue Greens Forum.

“I want to reassure you all that our government takes those very seriously, and our responsibility is to put New Zealand on track to achieving the goals and commitments that we have collectively made over a number of years.”

Last December, the Climate Change Commission briefed the new Government on what might be required to reach the 2030 target.

Some of that advice, like strengthening the EV charging network or amending the Emissions Trading Scheme to provide less of an incentive for pine trees, would have been welcome.

Other proposals, like preventing new fossil gas installations or advancing agricultural emissions pricing, might not have received such a warm reception from National.

However, the new Government is conscious that the country is behind in trying to meet the 2030 target.

“We haven’t inherited the reductions in emissions that we need to meet our Paris targets,” Climate Change Minister Simon Watts told the Blue Greens.

Climate Change Commission chair, Dr Rodd Carr, told the Environment Select Committee on Monday that there were only three ways we could meet the Paris targets.

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He said we could reduce gross emissions by a number of policy effects, or we could offset domestic emissions through the planting of forests, or we could seek to acquire offshore mitigation.

“Time has passed,” he said.

“So there is no way a tree planted today will make any material contribution to meeting our 2030 Nationally Determined Contribution.

“And rapidly, the window for domestic action is closing as well.”

The question about using foreign offsets is complex. Discussions on how an international market for carbon credits might work continue, but no agreement is anticipated before the next climate summit in Baku in November.

“The reality is, today, New Zealand has not executed any bilateral agreement that would have put a price on international offsets or mitigation in lieu of domestic action,” said Carr.

Thus, New Zealand will be forced to try to get actual emissions reductions from industry and the transport sector if we are to meet the 2030 target.

That will mean changes to the Emissions Trading Scheme (ETS) unit prices, and the Commission is due to deliver its recommendations on that to the Minister today.

The Government can influence the price by setting a floor price below which it offers no new ETS units and an upper limit or trigger price, at which point it will release new units into the market.

Because it will be wanting to try and put pressure on emitters, including motorists, to reduce their emissions, it can be expected that it will want those limits set higher.

The problem is that the higher the ETS price, the greater the incentive to plant pine forests for carbon farming, where the owners can claim ETS credits annually for the forest.

“It has been estimated that up to two million hectares of New Zealand pasture land could be converted to Pinus radiata plantations at a cost of between $25 and $50 a tonne (an ETS unit),” said Carr.

Carr said the Government needed to decide what an acceptable level of pine forest planting was and then, from that, determine the level of gross emissions reduction.

“The government has choices here,” he said.

“But it does need to make those choices in order to ensure that the emissions trading scheme is robust and is able to deliver the rewards for low emissions investments.”

Carr said the way trees were treated in the ETS was unlikely to provide the economic rewards to those who are taking up new technologies, changing business practices or responding to a changing relative price about what they buy as consumers and, as a consequence, would leave New Zealand with abatable emissions higher for longer than they should or would have been otherwise.

The Ministry for the Environment is currently reviewing the ETS with a view to encouraging more real emissions reductions and limiting the future planting of pine forests.

One proposal is to have the Government effectively set the price for forest ETS units while allowing the units that emitters would require to allow their emissions to float on the market.

Reducing gross emissions throws the spotlight onto the fossil energy market.

One of its most controversial recommendations is that it opposes new gas connections.

“The reality today is every time we connect a new residence to fossil gas, we’re locking in $6,000 worth of appliances to a home with our unknown available and in many cases, more affordable sources of energy than new fossil gas,” he said.

“So that’s why the Commission, over its various periods of advice, has targeted its recommendation.

“The Commission is not anti-gas.

“Even in our demonstration pathways, we are still using fossil gas in New Zealand in 2050.

“But we need to understand that we need to reduce the number of points of combustion of fossil fuel in the open air.

“Points of combustion are motor vehicle tailpipes and appliances, where there are  alternatives that deliver the same and often more affordable heat.”

Reducing motor vehicle tailpipes means reducing internal combustion engine vehicles and replacing them with electric vehicles.

But Carr suggested there would not be a silver bullet to deliver the desired reductions.

“The light vehicle fleet, which is under three and a half tonnes, contributes 70 per cent of ground transport emissions,” he said.

“If you look into that fleet, 20 per cent of the vehicles contribute 50 per cent of the emissions and they are often the internal combustion engine vehicles (ICEVs) driven for profit or for business purposes, courier vans and taxis and stuff like that.

“So we do need to recognize that by targeting, through depreciation rates or other interventions.”

And there is a heavy concentration of emissions from a relatively small number of heavy trucks.

“I understand about 800 heavy freight trucks contribute 80 per cent of heavy freight ground transport emissions in New Zealand,” he said.

“You can put them in a spreadsheet with their license plates.

“So from that point of view, you know, understanding the source of emissions so that we can target policies to get those emissions out of our economy is important,”

That is the immediate future. Pushing and persuading the biggest transport emitters to reduce their emissions and limiting farm-forest conversions.

It will be a test of the resolve of both Simon Watts and the Prime Minister.