Speech: Smith, NZ Climate Change Centre Conference
Hon Dr Nick Smith
Minister for Climate Change Issues
20 May 2009
Opening address to the New Zealand Climate Change Centre Conference in Wellington
Good morning and thank you for the introduction.
I would like to offer my thanks to the New Zealand Climate Change
Centre for organising this conference, for the leadership shown by all of New Zealand’s Crown Research Institutes and Canterbury and Victoria Universities in initiating the centre, and for inviting me here to talk to you this morning.
Today I want to give you an overview of Government thinking on climate change policy – including the complex issue of adaptation that is the focus of your conference this year.
It will come as no surprise to you that tackling climate change is the Government’s number one environmental priority.
The first point I wish to make is the scale of the political challenge posed by climate change.
I have been fortunate to have held many portfolios during my 20 year Parliamentary career including dreaded roles like Corrections, but none get close to the complexity and difficulty posed by anthropogenic climate change.
First, the science is mind blowingly complicated. You cannot explain it in a 30-second sound bite.
Full marks to Gareth Morgan and John McCrystal for their book ‘Poles Apart’ released last week which gives the public a digestible take on the science.
The second problem is that climate change is as much an economic issue as it is an environmental one. Our modern societies are so dependent on fossil fuels that every industry will need to radically change, and that change will come at a cost.
The third problem is that our atmosphere knows no national boundaries. It is the global commons. Unless countries act collectively to constrain emissions, all will be adversely affected. Determining what is a fair way to share the burden of reducing emissions requires the Wisdom of Solomon.
And the fourth problem is this is a long term issue. The recession is costing jobs today, but the direct impacts effects of climate change on people’s livelihoods are decades or more away. So too are the solutions. There are no quick fixes. The challenge of climate change is going to span over several governments and generations.
So my first point is that we need to be upfront about the size of this challenge.
It was the policy of the previous Government for New Zealand to lead the world on climate change and to become the first carbon neutral country.
The gap between this lofty goal and our actual track record did our international reputation more harm that good.
The truth is that our emissions have been growing at one of the fastest rates among developed countries.
Since 2000, the proportion of renewable energy has steadily declined and we have doubled coal generated power production.
The reversal from five decades of impressive aforestation to significant deforestation in recent years has added to our ugly numbers.
It is just unrealistic to continue to pretend we are, or can be, world leaders in reducing emissions.
Our unique emissions profile, with such a large proportion coming from agriculture, makes our job of reducing carbon pollution more difficult than most developed countries.
We also need to recognise that as a small open trading nation, accounting for 0.2% of global emissions, tough emission reduction policies would just export emission-intensive industries offshore.
For these reasons, the new Government’s policy goal is not about being first but ensuring New Zealand does its fair share as a developed country in constraining and reducing emissions.
We have set the achievable target of a 50% reduction in New Zealand’s carbon equivalent emissions as compared to 1990 levels by 2050. In other words – 50 by 50.
Setting the target is the easy bit. Putting in place practical policies to achieve it is what matters.
There is a strong consensus the most efficient way to constrain and reduce emissions is by an economic instrument – either a cap and trade type system or a carbon tax.
The debate between the two has raged for more than a decade. In 1995, the then National Government opted for a low level carbon tax but in 1999 made a decision in principle for a cap and trade system and set officials off to design it. The Labour administration changed tack in 2000, dropping carbon trading and advancing a carbon tax, and then reversing the decision in 2006 back to an Emissions Trading Scheme. This circular debate has become a little tiresome and needs to be drawn to a conclusion.
As I told the ETS Review Select Committee, National’s preference remains an ETS. It has the advantage of being able to easily recognise sinks like forestry that are so important in the New Zealand context. I also note that an ETS, in which the price of carbon varies as we have seen in Europe in response to the recession, has the advantage of automatically responding to the ebb and flow of the economic cycle.
It makes sense that we should take more pain with a higher carbon price in the good times and a lower price when the economy is struggling.
I would further add to this debate the international context. Even if we thought, at a theoretical level, that a carbon tax was the better tool, Europe has gone down the ETS route, Australia is going that way, and the United States and Japan are also heading that way. It would be out of sync for New Zealand with just 0.2% of global emissions to head off in a different direction.
But I want to stress that the Government has not made a decision and will not do so until the Select Committee review has concluded. Subject to gaining Parliamentary support, National’s preference as per our pre-election policy, is for a modified Emissions Trading Scheme.
An important area of work for the Government is in exploring how New Zealand’s Emissions Trading Scheme can be harmonised with Australia.
This work commenced following the March Summit between Prime Ministers Key and Rudd. Tomorrow I am having further discussions with my Australia counterpart Senator Penny Wong – albeit I want to stress the work is at an early stage.
The New Zealand Government sees four significant advantages in harmonisation.
First, we recognise that climate change is a global issue. Success is only possible by countries working together.
Australia is our nearest neighbour in which political, social and economic links run deep. If we two close cousins of the global community can’t show that we can work together on this, we really are in trouble.
Secondly, harmonisation of carbon trading schemes, just as with the advantages of trade, benefits both countries by ensuring the lowest cost possible mitigation measures.
Thirdly, harmonisation reduces the compliance costs. There will be considerable public and private expense in measuring, reporting and ensuring compliance with emissions trading regimes, and these can best be minimised by a common approach.
Finally, harmonisation reduces the Trans-Tasman competitiveness issues. We do not want investment decisions being made on either side of the Tasman on the basis of who has the softest climate change policies.
Recent decisions by the Australian Government to make changes to the timing and implementation of its Carbon Pollution Reduction Scheme has not changed the New Zealand view that there is potential for harmonisation.
The underlying goals of the Australian Government of a 60% reduction in emissions by 2050 is very similar to New Zealand’s 50 by 50 goal. Australia is using a base year of 2000 whereas our target is relative to 1990.
While an economic instrument is the primary policy tool to drive emissions reductions, this will be complemented by other important policies.
A significant barrier to building new renewable energy has been the Resource Management Act.
The irony over recent decision making under the Act is that it has been easier to get a consent for a new thermal power station than for a renewable, geothermal, wind or hydro-electric development.
Two significant changes are being made to change this. The first is the bill currently before Parliament to streamline and simplify the consenting process. We want an end to long drawn out consent procedures with a new crisp Board of Inquiry process that incorporates both local and national factors for nationally significant projects.
Secondly, we are also pursuing a National Policy Statement on renewable energy to give a clear signal to decision makers of the importance of expanding New Zealand’s renewable energy base.
Using energy more efficiently is also part of our programme. Initiatives to insulate state houses have already been announced and a new initiative is being developed to attend to the huge stock of privately owned, poorly insulated homes.
A very important initiative is the work being led by Agriculture Minister David Carter on National’s policy of an international centre for research on Agricultural Greenhouse Gas Emissions. I rate this as the most important contribution New Zealand can make internationally to the whole problem of climate change – particularly as the issue of developing country emissions come into focus.
A key component of a successful agreement in Copenhagen will be commitments by developed countries to assist developing countries in addressing their emissions, and this is where New Zealand can help build a solution.
There are other policies on solar heating, biofuels, electric cars, and forestry which the Government is also working on as part of the new Government’s climate change agenda.
I particularly note yesterday’s announcement by Energy and Resources Minister Gerry Brownlee on biofuels as it illustrates the different approach of the new Government to these issues.
Rather than the mandatory requirement to use a blend of biofuels, the grant scheme announced yesterday provides a financial incentive for sustainably produced fuels. It is a more equitable approach in that it puts ethanol and biodiesel on the same footing and it gives the right financial incentives to the biofuels industry.
You can expect more of this Bluegreen approach of favouring incentives over compulsion in our policies to tackle climate change.
I want to conclude this broader speech on climate change with the issue of adaptation.
No matter how successful efforts are in future to contain emissions, we already have significant change in the system.
For New Zealand temperature rises of about 1degree Celsius by 2040 and 2 degrees Celsius by 2090 are likely, matched by sea level rises of about 20cm mid-century and 50cm by the end of the century. Also projected are higher rainfall in the West, and more droughts in the East.
Many of the discussions programmed for today are focused on planning for these changes. This is an important part of managing the way forward.
Good long-term planning is vital for New Zealand to adapt to a changing climate. But the Government recognises it is not without its challenges, including:
• long-term planning horizons - making decisions based on future climate scenarios may cause difficulties for decision makers
• public perception – providing sufficient information for the public to understand the likely scenarios and associated risks for their communities
• that climate change may be just one of many priorities competing for attention and resources
• the current economic climate
Despite these challenges, dealing with climate change effects must be part of existing planning for Government, local government, businesses and communities. It is now business as usual.
Managing climate change effects does not necessarily require new and additional resources – we just need to be smarter and take into account the long term in our planning.
And those of you present today play a vital role in planning for the effects of climate change. This conference brings together a huge range of expertise from variety of sectors. We have the opportunity to share knowledge and form partnerships that will help prepare New Zealand for the effects of climate change. We must work together to plan for the future.
Climate Change Adaptation Work Programme
The Ministry for the Environment is leading cross-government work on climate change. The focus of the Ministry’s work programme is on helping New Zealanders prepare and adapt to the physical impacts of climate change.
This work programme focuses on building partnerships and this conference is an opportunity to strengthen the relationships between central government and planners, engineers, insurers, surveyors, lifeline utilities, and local government to build a greater understanding of the work the Government is doing.
Scoping for a proposed National Environmental Standard
One of the key pieces of work that the Government is doing is on the impact of the projected sea level rise. I am aware that decision-makers – especially regional, district and city councils – need more certainty to better plan for this. I understand that national direction on what to plan for would help.
For this reason, the Ministry for the Environment is preparing a discussion document scoping options for a proposed national environmental standard on sea level rise.
I expect to be in a position to make further announcements on this in July after the Coastal Policy Statement work has been completed.
National Policy Statement on Flood Risk Management
The other area of concern for local councils is that of direction on flood management. The Ministry is also working on a proposed national policy statement on flood risk management to give guidance to councils. This is still in a draft form and you will hear more about this as the work progresses.
The Government’s view is that good planning and preparation are the keys to adapting to future changes in our climate.
It is clear that we all need to work together to prepare for, and adapt to, climate change and improve the resilience of our communities in the face of uncertainty. Everyone has a role to play.
Our understanding of climate change and its effects will continue to evolve. We must act on the information we have available and make sure we are flexible enough to make changes in the future.
I look forward to working with you as we tackle this momentous issue.