Trees and transport electricification key to carbon neutral economy, says Productivity Commission
By Pattrick Smellie
April 27 (BusinessDesk) - New Zealand can achieve a carbon-neutral economy by 2050, but the price of carbon may need to be as high as $250 a tonne, mass uptake of electric vehicles would be required by 2030, and much of the country's marginal sheep and beef farming country would need to disappear under pine and eucalyptus forest plantings, says the Productivity Commission.
Written before the government's announcement that it was ending offshore oil and gas exploration, the 508-page draft report on achieving a low-emissions economy also makes clear that fossil fuels will need to remain a small but vital part of the electricity system for decades to come, especially if electricity is to largely replace fossil fuels for transport and industrial heat.
Initiated by the previous National Party-led government and eagerly awaited by the new administration, which has a more ambitious climate change action agenda, the report also makes numerous one-off recommendations that would slaughter some sacred cows.
Among them: that Fonterra stop being forced to process milk it doesn't want and that New Zealand must belatedly impose exhaust emissions standards on both new and used cars or risk becoming a "dumping ground" for used cars from most other developed countries, which higher emissions standards.
While greenhouse gases produced by agriculture must come into the emissions trading scheme, the commission recommends concentrating less on the short-lived, albeit powerful, methane gas produced in the digestive systems of cows and sheep, saying stabilising methane emissions is more important than reducing them because "eliminating CH4 (methane) is not needed to stabilise global temperatures" and technological solutions for its production by animals have yet to emerge.
"Long-lived gases need to get to net-zero and short-lived gases do not in order to limit peak warming," the commission says. "The case for putting greater relative priority on mitigating long-lived gases is strong. While this is well-understood within the scientific community, less policy attention has been paid to this issue globally."
To encourage the uptake of electric vehicles (EVs), the commission recommends the introduction of "freebates" that would reward drivers for buying low-emissions vehicles.
"Expanding forestry is central to achieving large reductions in emissions up to 2050," says the report, which expects marginal sheep and beef country to be best-suited to that transition and that some landowners will choose permanent forests rather than planting for harvest in areas where felling is too remote or steep to be commercially viable, but where owning locked-up carbon in the trees will still provide a return.
However, forestry will only work as an expanding carbon sink until perhaps the middle of this century, after which it's unlikely there will be new land on which to plant new permanent forests, and those already planted will be reaching maturity, making them unable to absorb more carbon.
"New Zealand would need to find other ways to reduce emissions. But it has time to consider options and seek technological developments with the potential for further cost-effective mitigation," the commission's report says.
If the country aimed for the previous government's target to halve emissions against 2005 levels by 2050, modelling for the commission suggested carbon prices of between $75 a tonne of carbon dioxide-equivalent and $152 a tonne would be required by 2050.
To become carbon-neutral by then, modelling suggested carbon at between $157 a tonne $250 a tonne would be required, with prices at that level helping to drive a fast switch away from the use of fossil fuels and encouraging science and innovation to make the change possible.