Climate trade-offs

If there seems a new gravitas about Climate Change Minister Nick Smith, it is because he, and the rest of the Government, must set their position on a most pressing issue: climate change.

On August 10, in Bonn, Germany, New Zealand is scheduled to table its policy on a targeted reduction of greenhouse gas emissions for 2020 - building towards the Copenhagen conference at the end of the year when there will be an attempt to hammer out a global climate-change mitigation agreement to succeed the Kyoto Protocol.

To this end, Dr Smith and his partner in such matters, Trade Minister and Associate Climate Change Minister Tim Groser, have been on the road consulting the public.

Their task was given impetus, and a confusing twist, by a recent report to the Ministry for the Environment prepared by the New Zealand Institute of Economic Research (NZIER) and Infometrics - "Macroeconomic impacts of climate change policy".

This has been touted as providing an indication as to the relative costs of various domestic emissions reduction levels.

But as the document itself says: "To be clear, this report investigates the impact of changes in New Zealand's AAUs [carbon credits] under the framework of an international agreement whereby New Zealand takes responsibility for any emissions above a given amount.

This is not the same as investigating different domestic emissions targets and should not be interpreted as such."

Greenpeace has called for cuts to 40% of 1990 levels by 2020.

Dr Smith has said that is neither achievable nor affordable, and that it was better to err on the side of realistic goals.

In offering the material for general consumption, his office appeared to suggest the NZIER report indicated achieving a position of minus 40% relative to 1990 levels would cost $3000 per capita per year.

This is, at best, a simplification of an extremely complex issue: the figures, and assumptions, have been challenged by Greenpeace, the Labour Party, and independent commentators.

Regardless, it is notable in all this how the terms of the debate have evolved.

It is only a short few years since Prime Minister John Key intimated to the House that he was a climate-change sceptic.

Earlier this year, Rodney Hide, leader of National's coalition partner Act New Zealand, called for - and got - a select committee investigation into the science of climate change.

He has been silent on the subject of late.

And in the discussion document prepared to accompany the ministers' roadshow, Mr Groser says: "We are working hard in international negotiations to achieve a post-2012 pact where New Zealand does its fair share as a developed country in addressing this global problem."

Predictions suggest the Government is likely to settle on somewhere between 15%-20% domestic reductions.

This will be too little for some and too much for others: moral and environmental imperative versus economic cost.

Proponents of the former say bold reduction targets carry built-in benefits.

Leading on the issue - so the argument goes - will enhance the country's "clean, green" image and bolster our international trade and tourism sectors.

Commitment now will hasten the development of renewable energy technologies, while urgent research and development on the science of agriculture-based emissions will similarly help propel New Zealand to the head of a burgeoning knowledge-driven economy.

But, according to Dr Smith, the NZIER report also highlights the additional cost to New Zealand of getting too far ahead of other countries - and, as some will ask, for what? New Zealand is simply too small a player to have any significant influence on the global environment when compared with, for example, the United States, India and China.

Nonetheless, even diehard climate sceptics have been quietened by a growing international consensus on the urgency of man-made global warming - one boosted by the change of adminstration in the White House; and the fact that climate change and international trade are becoming inextricably linked.

Carbon-footprinting - and its sometimes faulty science - has had a generous airing, but there are even bigger potential threats looming.

At the end of June, the United States House of Representatives passed a Clean Energy Bill.

Should the Senate make it law, it could have significant trade implications.

One provision of it would enable the US to impose tariffs on imports from countries which do not make the same level of climate change emissions reduction as itself.

New Zealand has to be seen to be at least in touch with its major trading partners.

As Mr Groser put it in a May speech on trade and climate change, on the one hand, "We will need to achieve the best possible global production patterns for agriculture that will meet both food and climate needs"; and, on the other: "New Zealand asks itself, how can an efficient agriculture-producing country that prices carbon into that sector remain competitive against a less efficient producer that doesn't?"

The trade-off has become a hot issue - in more ways than one.

 

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