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Responding to climate change

Hon Pete Hodgson
Friday, 5 October 2001 Speech Notes

Responding to climate change

[Address to Ninth Annual Resource Management Law Assoc Conference, Michael Fowler Centre, Wellington.]

On Tuesday the latest report from the Intergovernmental Panel on Climate Change was released internationally.

The Climate Change 2001: Synthesis Report completes the panel¡¦s five-yearly assessment of climate change science, the impacts of global warming and the adaptation and mitigation options.

An enormous amount of research, analysis and knowledge is crammed into this report, but the upshot of all this work can be summarised reasonably simply.

First, the world's climate is changing, and will change further and further, because of greenhouse gas emissions caused by human activity. This finding is robust, despite existing uncertainties around the degree and pace of change.

Second, the impacts of climate change will become steadily worse if we do nothing to reduce emissions.

But third ¡X and this is the good news ¡X there are many ways to reduce emissions that can bring other benefits to society and minimise costs.

The IPCC work is compelling.

That's why the international community reached agreement on the United Nations Framework Convention on Climate Change. That's why, with the exception of the United States, it reached agreement over the Kyoto Protocol a couple of months ago in Bonn.

We now have a protocol that is ratifiable. Early next year the government will take a formal decision on whether to ratify it.

In Bonn the international community made it clear that it was not prepared to wait indefinitely for a new United States position and for specific proposals from the US. It wanted to move ahead. So without the United States we finished work on the Protocol¡¦s rules. We nailed the rules on its flexibility mechanisms ¡V those involving emissions trading, joint implementation and the clean development mechanism. New Zealand wanted unfettered trading rules and that was what was achieved.

Importantly for New Zealand, we also secured rules on the forest sinks that will give us valuable credits for our post-1990 forest plantings. In fact I don't know of any other country's plantation forestry industry that has more to gain from the Protocol than New Zealand's.

We also agreed in Bonn on extra support for those few developed countries that were clearly going to have the most trouble meeting their obligations. Japan and Canada were the main benefactors, though both still have tighter targets than New Zealand and Japan in particular has a challenge in meeting them.

A vital issue for us was compliance ¡V how to ensure that big countries do what small countries like ours will do. We found a way forward that should ensure that compliance is legally binding with credible consequences for non-compliance. I¡¦m sure the need for this will be clear to a room full of environmental law practitioners.

While the legal texts remain to be agreed at the next conference of parties ¡X COP 7 in Marrakech, starting later this month ¡X I do not expect that the political deal that we put together in Bonn will unravel.

So now we have to move forward with this extraordinary creation. The Protocol is happening and a new world of lower emissions and better energy use will become a reality.

This Government has consistently said it intends to ratify the protocol. With the decisions taken in Bonn, the case for moving ahead with ratification is all the more compelling.

New Zealand is too small to make the Protocol come into force, or to stop it. In all likelihood the trigger nation will be Japan. Our job is to state our preparedness to ratify and then to be well prepared for when it comes into force.

While the US may wish to remain outside for the present, the agreement at Bonn showed clearly that other developed nations believe it is the best mechanism on offer. It will gather momentum and I believe the US will rethink its position before we reach the beginning of the Protocol's first commitment period in 2008.

My view is that the so-called new economy in the US will assert the need for the US Government to reconsider. Technology will be the driver of the global response to Kyoto. If the US stays aloof it may find itself at the edge of future technology shifts, rather than at the centre, where it ordinarily expects to be.

I can¡¦t emphasise this message enough. The Kyoto Protocol is now happening - and New Zealanders should be thinking and doing things about making our response to it a successful one.

The answer to the question that many people put to me ¡V ¡§why move so soon?¡¨ ¡V is that in fact we have wasted far too much time already.

New Zealand is as dependent on energy as every other advanced economy but, sadly, less efficient with it than many of our competitors. We will only get further behind if they respond to climate change by improving the efficiency of their energy use still further, while we do not.

We have to take a broader view of the benefits and costs of New Zealand¡¦s climate change response than many commentators are inclined to do.

The global response to climate change will affect nearly every aspect of human activity by challenging the ways we use energy. And the changes that this will bring about are likely to be quite profound.

How we deal with climate change will be emblematic of how we improve our position and role in the world economy. It will be an important part of the way New Zealand integrates the concept of sustainable development into our economy and society.

There is a lot to be done. I would have liked New Zealand to be heading down the path of reduced emissions and a far more energy-efficient economy much sooner.

Last week I released New Zealand's first ever National Energy Efficiency and Conservation Strategy . If we meet the targets it sets we will cut by thirty to forty percent our current expected excess carbon dioxide emissions over our Protocol target.

Think about that for a moment. We could deal to thirty to forty percent of our carbon dioxide emissions reduction challenge just by improving the efficiency of our energy use.

Those who insist on portraying the Protocol as a hair shirt must take note.

Improving energy efficiency is a benefit, not a cost. Even if it requires some investment it is a matter of spending money to save money. We can make significant progress towards our Protocol target by doing something that improves our international competitiveness rather than detracting from it.

The next major point ¡X and I¡¦ve said it before ¡X is that the commercial opportunities that will arise from addressing climate change will be a significant new part of the New Zealand business scene.

Officials have begun a process of working with business to identify these opportunities, to find where this country¡¦s best prospects lie and identify areas where Government can work with business to make the most of them.

There will be two main sources of business opportunities.

There will be increased domestic and international demand for climate-friendly, higher-technology products and services. And there will be demand for products and services to prepare for or mitigate the impacts of climate change.

I¡¦m proposing that business and economic opportunities be a central part of our upcoming consultation on ratification of the Kyoto Protocol and future policy options. It needs to be. We are looking for a policy environment for Kyoto that works for New Zealand businesses, not against them.

On one side of the ledger is a list of opportunities, some of which are crying out for a bit of private sector focus, on the other side there are the threats posed by putting a price on carbon, and the uncertainty around that price. Kyoto presents many uncertainties and some of them will be persistent and considerable. Other countries, businesses and individuals are getting used to this fact when it comes to climate change. The situation for New Zealand is no different.

The question is: What mechanisms best help us to deal with uncertainty? Clearly research and development will be crucial. So will contingency planning. So will an inclusive and transparent policy development process.

What won't help is doing nothing. "Wait and see" is not a strategy.

One area where uncertainty is reducing steadily is the science. You wouldn't know it from the news media, which seems to think that balance means giving climate sceptics equal space to those scientists who are attempting to explain climate change.

But the evidence that humans are causing global warming by digging up fossil fuels and setting fire to them has piled up steadily and overwhelmingly, and continues to build.

Doing nothing would mean sleepwalking into the climate change hazards that are already being identified. For a country as dependent on primary production as this one, that would be nothing short of negligence.

The expected impacts of climate change on New Zealand include:
„h drier conditions in the eastern part of the country, as we have now;
„h a risk of more frequent extreme events such as floods and droughts;
„h rising sea levels, with increased risk of erosion and saltwater intrusion; and
„h biosecurity threats from the spread of warmer climate pests and diseases.

We'll be starting a wide-ranging consultation process soon on what the national response to climate change should be. The policy programme maximises opportunities for consultation in the time available.

The legislation required for ratification will be done in two stages.

The first Bill will cover the minimum requirements for ratification by September 2002. These will include enabling the Government to buy greenhouse gas emission units on the international market and setting up a national system to monitor and report on emissions.

The second Bill will set out domestic policy to help New Zealand meet its obligations. In terms of policy, the first Bill can be thought of as how New Zealand can meet its Kyoto commitments, while the second is how New Zealand intends to meet its commitments.

Consultation on ratification and domestic policy options is scheduled from mid-October to mid-December this year. This will inform the development of a National Interest Analysis that will present the effects of ratification to Parliament and will be up for review by a parliamentary select committee.

Feedback from this initial round of consultation on policy will be used to undertake a second round on the Government's preferred domestic policy package next year. The second climate change bill would be introduced when practicable following that, with the expectation that it will be passed in 2003.

Consultation information will be disseminated widely, backed up by meetings with the general public, Maori, sector and industry groups, local government and community groups. Ministers will be actively involved so that the public and sector groups can get into a productive dialogue with us.

We are not going to be prescriptive in the first round of policy consultations. You¡¦ll have all heard already about the market-based options that we will be asking you about ¡X carbon charges, emissions trading, levy-based mechanisms, projects and hybrids of these. We also need detailed feedback on the framework we should put in pace to deal with carbon sinks.

I expect you are particularly interested in what role we see for the RMA to address greenhouse gas emissions for climate change reasons. This has been an area of uncertainty for quite a few years now and it¡¦s one that needs to be cleared up.

To date we haven't seen a precedent-setting decision from the Environment Court imposing conditions on a resource consent in relation to greenhouse gas emissions. That could yet happen.

In the meantime the Government does wish to signal clearly that it does not see the use of RMA controls and mechanisms as being cost-effective for managing greenhouse gas emissions. We have yet to take final decisions on this, but let me give you three reasons for signalling that view.

First, climate change is an international issue, so it should be dealt with consistently on a national level. The RMA consenting and planning process means that there will always be a risk of inconsistent treatment between regions. It also means the costs of implementing and managing climate change measures would be likely to vary for different regions.

Second, just as New Zealand has flexibility in the way it can meet its Kyoto commitments, so should emitters within New Zealand. These flexibilities are national and international by their nature and this does not fit well with regional or local decision-making.

Third, the national instruments available under the RMA, including National Policy Statements and National Environmental Standards, are unlikely to be cost effective for controlling greenhouse gases because of the time involved in implementing them.

That said, we will still be examining with local government the options for providing guidance on the appropriate use of the RMA.

The National Energy Efficiency and Conservation Strategy, for example, contains measures to improve implementation of the RMA with respect to energy efficiency ¡X especially in new buildings and urban infrastructure ¡X and development of renewable sources of energy. These are expected to contribute to reducing carbon dioxide emissions. Councils will also continue to use the RMA for infrastructure planning to manage the effects of climate change itself.

On this issue, and all aspects of policy, we will be actively pushing for submissions. We want to hear the views of groups like yours on the policy options, then analyse these views and ideas closely before we try to finalise a preferred policy framework.

My final message, therefore, to business, to other stakeholder groups and to the public is one of encouragement. You need to get involved in the consultation process that¡¦s about to begin.

We will be starting to reduce this policy uncertainty that I hear about so often. But we will not be eliminating uncertainty altogether.

Big questions about climate change risks and policy consequences will stay with us for a long time. The price of carbon, for example, will not be discovered until an international carbon market is well established. That price will have a fundamental impact on the economics of responding to climate change, and will itself change as the years turn into decades.

But we can start out with practical policy solutions ¡X ones that address growth in emissions, use wisely the benefits of our Kyoto forests, recognise and deal with the impacts of the principal measures we put in place, and create or enhance opportunities for New Zealand business.

That is where this government intends to go. We are taking a broad and long view of New Zealand's interests in responding to climate change and Kyoto. I urge others to do the same.


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