The Climate Change Commission have delivered their landmark report for consultation. The report brings together New Zealand’s Nationally Determined Contributions (under the Paris Agreement), commitments under the Zero Carbon Act, current government policies, and recent progress with a potential budget to success.It is a significant piece of work and we thank the Commission for what is clearly a consultative and multi-faceted document, one we believe is achievable through urgency and action. The report is now available for public feedback.Jacinda Ardern described climate change as our nuclear-free moment. We prefer to liken it to the internet – a fundamental change in how we go about our lives and business. One that will transform how we operate, creating strategic advantage or significant challenge for each of us.The direction of climate change is going to impact every business and household in the country. To help navigate the Commissions thinking, and help you avoid the task of reading all 180 pages of the report, we have summarised some of the key points made in the document.The first point we want to highlight is the need to get started. If we are realistically going to achieve these goals any delay will quickly compound annual collective results. The Government has committed to reaching net zero emissions of long-lived gases by 2050, and to reducing biogenic methane emissions by between 24-47% by 2050. The budgeted reduction targets start’s out gently at an average of 5.6 per cent lower than 2018 over the next four years. From then on, the targets increase rapidly, ramping up to be almost 26 per cent lower in 2031-35.The Commissions analysis has found that the Government’s commitment to reduce net emissions by an average of 30% from 2005 emissions levels over the 2021-2030 period is not compatible with global efforts. In addition, New Zealand’s current policy settings do not put us on track to meet targets, to do so, New Zealand must accelerate action on climate change. We should expect significant direction in the policy updates scheduled for publication in December this year.We also attached the timeline produced by the Climate Change Commission for consultation here.
As a country we cannot plant our way out of climate change.
We must focus on decarbonising and reducing emissions at the source. Pine trees will play an important role in achieving short term targets and could support a future bioeconomy, however we should look to existing forests and increasing native forests to create long terms carbon sinks that will not be harvested. Overall, the report identifies using offsetting through planting trees is essentially a distracting loophole to making the changes required and not a feasible solution.
Jobs and investment – risk and opportunity
The transition to a low emissions society will bring opportunities, benefits, challenges, and costs. The report estimates overall costs of meeting the country’s targets and proposed emissions budgets are likely to be less than 1% of projected GDP, although this figure is already being challenged politically.There will inevitably be changes to businesses and employment as we move to low emissions. Some businesses will need to close; however, it is also clear a myriad of new technologies and businesses will be created. Coal mining and oil and gas sectors will be hard hit, with an estimated 600 – 1,100 fewer jobs across both sectors by 2035. As a country founded on innovation and entrepreneurship, New Zealand business is already responding by looking to productivity and technology to support the transformation. Much of this transformation will stand up on a global stage, creating new jobs and future export opportunities.
Heat, industry, and power
Electricity use will need to be maximised which will increase demand for additional low emissions renewable generation such as wind and solar. This aligns with goals to increase renewable generation.Reducing emissions from process heat is also key. The report acknowledges the difficulties associated with capital lifecycles and realistically accommodates financial barriers to change. There are proven options for decarbonising low and medium temperature process heat, including switching fuel use from coal and natural gas to biomass and electricity. There are also opportunities to improve energy efficiency. There are recommendations that we need to almost eliminate fossil fuels, including nearly ending the use of coal by 2035 and the use of natural gas and diesel by transitioning to biomass and electricity.
New Zealand needs to improve the energy efficiency of buildings, alongside decarbonising the energy used for heating, hot water, and cooking.Commercial and public buildings are seen to offer large opportunities to improve energy efficiency through improved insulation and greater control of energy use. New buildings can be built to higher standards, and existing buildings retrofitted to achieve these improvements. Our path assumes a 30% improvement in commercial and public buildings’ energy intensity by 2035 compared to today’s performance.Commercial and public buildings need to quickly transition away from coal to alternatives such as biomass which could use existing boilers, with a goal of eliminating coal use by 2030. The Government announcement in 2020 that all coal boilers in public sector buildings will be phased out is a step towards this. Due to the asset life of fossil fuel heating systems the budget is accommodating.The budget targets all new heating and hot water systems installed in new buildings after 2025 to be either electric or biomass. For existing buildings, no further natural gas connections to the grid, or bottled LPG connections occur after 2025 and the phase out begins in 2030. This would allow time for a steady transition, to be on track for a complete transition away from using natural gas in buildings by 2050.Homes similarly need to improve energy efficiency. Assumptions are that existing homes’ energy intensity improves by 6% by 2035 through policy settings. Newly built homes will be targeted at being 35% more energy efficient compared to today’s performance.
Waste is an important emissions source and will involve an equally large transformation to occur. The budget targets the total amount of organic waste going to landfills decrease by at least 23% from 2018 to 2030.We need to not only reduce emissions but move from a throw away culture to one that values our resources. A circular, self-sustaining economy will reduce our waste emissions and cut biogenic methane emissions. This will involve considerable focus on product lifecycles and packaging, including a commitment to resource recovery and reuse. New Zealand’s path includes a reduction in the amount of waste generated and a focus on reducing the amount of organic waste, such as food, wood and paper, that go into landfills.
New Zealand needs to almost decarbonise land transport completely. This means changing how most vehicles are powered, including heavy vehicles.To meet the proposed budgets imports of light internal combustion engine vehicles will be phased out between 2030-2035. More than half of all light vehicle travel should be electric by 2035 and 40% of the light vehicle fleet by 2035.Medium and heavy trucks will be slower to electrify, due to the greater daily distances of travel. In 2030, 15% of medium trucks and 8% of heavy trucks would be electric. By 2035, these would increase to 84% and 69% respectively.While electric vehicle supply grows, policy will likely demand more efficient internal combustion engine vehicles, including increasing conventional hybrids.It is acknowledged that electric vehicles are currently more expensive to purchase (although prices are expected to drop) but are cheaper to run with other benefits of improving local air quality and reducing noise pollution.Achieving this phase out is ambitious and will require strong supporting government action. This timeframe is consistent with the phase out dates being set by a growing number of countries.In addition to changing the vehicles we drive; we need to be changing how and how much we travel. We will need to travel less through manual modes and public transport.The Commission’s report also considers a range of perspectives and the impact on a variety of demographic groups, having solicited input from a wide range of sources in its analysis. From here, we all have the opportunity to provide input. For the full report you can access it here.ESP will be following up this update with a “how to guide” that will help your organisation begin contributing to reducing your emissions. If you would like to know more, or need help developing your plan, please get in contact on +64 9 309 9482.