New Zealand’s Net Emissions.
The Zero Carbon Bill is currently undergoing consultation, with plans to pass the Bill in mid-2019. With Climate Change dominating headlines here’s our summary of what the Act is proposing.
What is the Zero Carbon Act?
The proposed Zero Carbon Act would set New Zealand’s greenhouse gas emissions targets into law. Greenhouse gases are the primary cause of human-influenced climate change. Long-lived gases like carbon dioxide are the ones most talked about globally and within New Zealand, we have become very aware of methane production, particularly that generated from cows.
By setting targets into actual law it has been suggested businesses will have certainty for long term planning without having to worry about the election of a new government changing the rules. In addition to setting the target, it is also proposed the Act would set up a framework on how targets will be reached through an independent Climate Change Commission providing multi-year “carbon budgets”.
The rationale for the system has been the success of this model in the United Kingdom for being perceived as de-politicizing climate change and where per-person emissions are falling.
What are the targets going to be?
The Government is consulting on 3 suggested options with an end date of 2050 to align with Paris Agreement targets:
- Net Zero Carbon Dioxide – achieve a target of net zero CO2 only. This option mostly excludes agriculture and infers that there would likely still be some carbon emissions, but they would be offset by tree-planting and possibly the purchase of overseas carbon credits.
- Net zero long-lived gases – this would see a net zero on gases that have a long life in the atmosphere like carbon dioxide and nitrous oxide as well as “stabilised” short-term gases, like methane.
- Net Zero – the most ambitious option, this would require net zero for all greenhouse gas emissions by 2050.
How would we get to those targets?
All 3 options will require some kind of Government action.
The proposal asks whether the target should be legislated, or set in a two-stage process based on advice from the proposed Climate Change Commission and whether the target should be able to be revised based on changing circumstances. The Government envisages the Climate Change Commission having an independent advisory role, similar to the UK model, including in relation to the New Zealand Emissions Trading Scheme.
But the proposal also features an option in which the Climate Change Commission is set up as an independent body at arm’s length from the Government and with statutory powers similar to the Commerce Commission.
The Government is also looking to set shorter term emissions budgets but is seeking views on how they should be designed. Key elements to be decided include the duration, revision, planning and monitoring obligations, and the consequences if there is a failure to meet the budget.
The proposal also suggests introducing an obligation on Government to publish national climate change risk assessment plans, and national adaptation plans, recognising some climate change is already going to happen, and that we need to improve and coordinate risk analysis and our ability to adapt. This includes whether organisations (including, potentially, private companies that provide public services like energy and transport) are required to report information on climate change risks and opportunities.
What does that mean for the economy?
There is an acknowledgment that the economic impacts could be significant:
- Carbon pricing will play an even larger role through to 2050. With carbon trades at around $21 per tonne, some of the more moderate scenarios suggested put carbon prices at approximately $100 – $275, depending on the ambition of the particular target.
- GDP growth rate could be 0.2% lower per annum through to 2050 under the net-zero emissions target.
- Costs associated with climate change could have their own impact on top of higher carbon prices such as the costs of adapting to extreme weather events, the cost of relocating and protecting infrastructure and the cost of stranded assets.