The devil will be in the detail of the Climate Change Commission’s proposed carbon budgets released yesterday.
And that detail will now be the subject of first a two month consultation period the Commission will lead. Then the final decisions will be up to the Government who will issue a new Nationally Determined Contribution (NDC) or set of specific reduction targets in time for the United Nations Climate Change Conference in Glasgow in November.
But anybody looking for definitive answers from yesterday’s launch of the budgets would be disappointed.
In many ways, the 600-page document raised even more questions about our lower-carbon future.
Their key recommendations were:
• C02 gases from transport — predominantly from fossil fuels — be nearly halved, by reducing by 47% by 2035.
• Agricultural methane be reduced by 20 per cent by 2035.
• Industry, heating and power emissions reduce by 45 per cent by 2035.
The report says the current Emissions Trading Scheme will not be enough to meet these targets.
“The Emissions Trading Scheme (NZ ETS) alone won’t get us to where we need to be,” it says.
“Action is needed across all sectors of the economy.
“Priority areas for action include increasing the number of electric vehicles on our roads, increasing our total renewable energy, improving farm practices and planting more native trees to provide a long- term carbon sink.”
It also says there needs to be an acknowledgement of iwi/Māori rights to exercise rangatiratanga and kaitiakitanga in a joint plan to reduce emissions.
“The speed of this transition needs to be steady – fast enough to make a difference and build momentum but considered, with room to support people through the change.
“An equitable transition means making sure the benefits of climate action are shared across society, and that the costs of the climate transition do not fall unfairly on certain groups of people.”
The report itself is 600 pages long, and the Commission bungled its release sending to some “selected” people but not others. Non-Government Organisations were briefed but not given copies of the report. Some journalists (not POLITIK) were given advance copies, but in some cases, these were heavily redacted.
The consequence was that last night stakeholders were still scrambling to try and understand it.
However, there were some points that immediately stood out.
The report places a big emphasis on Treaty of Waitangi obligations.
It consistently refers to New Zealand only as “Aotearoa”; the first major Government report to do so.
And at one point, discussing the difficulty some people might have affording electric vehicles, argues that access to transport is a particular issue for some Māori.
“Transport is hugely important for Māori to connect to their whānau, haukāinga, and tūrangawaewae,” it says.
“ About a quarter of Māori in Aotearoa live in Auckland. However, many have whakapapa connections outside of Auckland and may need to travel long distances to participate in iwi, hapū, and whānau activities and events.
“Some Māori households are large or intergenerational and require larger vehicles.
“Transport, particularly utes, is also a key enabler for the haukāinga to collect resources and provide services to the marae.”
So, it says, targeted assistance will be needed to ensure an equitable transition, not just for Maori, but also lower-income people more generally and people with disabilities.
Transitioning to electric vehicles will be crucial.
The report says we need to phase out imports of light internal combustion engine vehicles sometime between 2030-2035.
“While electric vehicle supply grows, there would also need to be a focus on importing more efficient internal combustion engine vehicles, including increasing the share of conventional hybrids.”
And the Commission suggests we may need to change our travel habits.
“We assume the average household travel distance per person can be reduced by around 7% by 2030, for example through more compact urban form and encouraging remote working,” it says.
“ We also assume that the share of this distance travelled by walking, cycling and public transport can be increased by 25%, 95% and 120% respectively by 2030.
“Overall, this would see total household vehicle travel staying relatively flat despite a growing population.”
The other big fossil fuel emitter is industry, heating and power production.
The report suggests there is uncertainty on how to go forward on power generation; whether it should all be renewable or whether the cost of that would be counter-productive.
“The challenge is delivering a timely, reliable and affordable build-out of the electricity system while managing the opposing risks of under or over-investing in the system,” it says.
The report does not directly address some of the big industrial questions such as the future of the steel mill or Fonterra’s coal-fired milk drying plants.
But importantly, there will be real questions about some of its analysis.
It forecasts a fall in wholesale electricity prices of 30 per cent by 2026 because “we assume that the Tiwai Point Aluminium Smelter closes.”
This is the payoff which would enable the economic impact of increased electrification of transport and industry possible.
Climate Change Minister James Shaw said yesterday that the Commission was assuming that Tiwai would close in 2024, that the electricity that is currently consumed will become available to the rest of the country.
“That would lead to a significant drop in household electricity prices of about 30 per cent, and those prices wouldn’t get back to today’s levels until about 2035,” he said.
“And what that would do is encourage rapid decarbonisation because electricity would become cheaper than a lot of other fuel sources.”
And he indicated just how important the closure of Tiwai would become.
“If the electricity that is currently consumed by Tiwai is used by, say, a single other project, electricity prices will remain high, and we would need to significantly increase additional generation in the next few years,” he said.”
The report pushes back against current policy to reduce net emissions by 2050 through the planting of forests.
It models what would happen if the ETS price went to $50 a unit.
New forest planting would increase to around 1.3 million hectares by 2050, allowing net zero emissions to be reached with minimal further reductions in gross emissions.
“The results suggest that Aotearoa could meet the net-zero target for long-lived gases with relatively little additional change,” the report says.
But 1.3 million hectares would represent 17 per cent of all New Zealand grassland; the social impact would be immense.
In what amounts to a rejection of the “one billion trees policy” the Commission is arguing against a massive tree-planting programme.
“This approach would fail to drive meaningful decarbonisation and instead use up land resources for the purpose of offsetting avoidable emissions.”
Shaw said that the Commission was proposing that forestry be capped at ‘”something just over 700,000 hectares” and that there should be a mix of both indigenous and exotic forests planted.
Forestry represents a major exercise in land-use change, particularly for sheep farmers on marginal hill country land.
But the report also suggests that around 2000 hectares of dairyland could convert to horticulture each year and this would be a way of reducing stock numbers to help meet dairy’s targets.
At first glance, dairy would seem to have escaped relatively lightly with a total reduction of 20 per cent by 2035, and that was what Greenpeace claimed.
“The fact is we know that reduction in stocking rates and phasing out synthetic nitrogen will cut agricultural emissions while improving water quality, animal welfare and farm-gate profits in the bargain,” said Greenpeace senior campaigner Steve Abel.
But what worries the industry is that it will be required to double its emissions reduction to 20 per cent between 2030 and 2035.
And what is equally worrying the industry is that the 2050 figure, which was the subject of so much controversy during the passage of the Zero Carbon Bill, is still unresolved.
“Our analysis indicates that it is possible to reduce total biogenic methane emissions by between 12-26% below 2017 levels by 2030 and 25-59% below 2017 levels by 2050 through reducing biogenic methane emissions from both agricultural and waste,” the report says.
The lower ends of these reductions (12% by 2030 and 25% by 2050) can be achieved using currently available practices and technologies.
“The development of new technologies such as a methane inhibitor would provide greater flexibility and unlock the upper range of reductions.
“Reaching the higher range of biogenic methane reductions (26% by 2030 and 59% by 2050) without new technology would likely require reduced agricultural production from livestock and land-use change.”
And that raises the economic question.
The Commission’s report is more optimistic about the economic cost of decarbonising the economy than previous reports such as that of the New Zealand Institute of Economic Research which in 2018 forecast that meeting climate change targets could take 0.6 per cent off GDP each year.
That would work out at about $3 billion a year; but the Commission argues that the cost could be lower, at least to begin with.
It says it could cost $190 million each year from 2022- 2025; $2.3 billion each year from 2026 – 2030 and $4.3 billion each year from 2031 – 2035.
There is much more in the Commission’s report, which unfortunately because of the way it was released, it has been impossible to analyse.
But sector groups and NGOs will start to do that today, on the basis of what is likely to be the year’s most consuming political debate.