The world is getting hotter and it is increasingly certain that human activities are the major driver of this warming. Tackling this challenge requires a deep cultural shift toward “greener”, more innovative sources of growth and sustainable consumption patterns.
What Would Happen Without Action?
Global greenhouse gas emissions need to be 40-70% below 2010 levels, and near zero or negative, by 2100 to prevent global temperature rising above 2°C. If we continue our current trends there is a high probability of significantly greater temperature rises increasing the risk of irreversible damage to our ecosystems, agricultural systems, and health (OECD, 2015).
Current predictions estimate that unless the global energy mix changes, fossil fuels will supply about 85% of energy demand in 2050 causing a 50% increase in our greenhouse gas (GHG) emissions, primarily due to a 70% growth in energy related CO2 emissions. The impacts of this on the quality of life the world over would be disastrous (OECD, 2012).
- Global temperature is projected to be 3C to 6C above pre-industrial levels by the end of the century – bringing with it a raft of consequences.
- The number of premature deaths from exposure to particulate pollutants could double from current levels to 3.6 million every year
- Today, unsafe water kills more people than all forms of violence, but air pollution is set to become the world’s top environmental cause of premature mortality, overtaking dirty water and lack of sanitation.
- Global water demand is projected to increase by 55%, a massive increase on our already unsustainable level of extraction
While 3°C of warming may sound insignificant, or even pleasant, Earth is a bit like the human body and a small average temperature change can have dramatic effects. Evidence indicates that the Earth’s current climate is only around 5°C warmer than it was during the last Glacial Maximum (‘ice age’). During that time the Earth was a very different place, with large ice sheets covering Northern Europe and North America, and sea levels approximately 130m lower than today (genzero,2016). Comparatively a rise of around 5-8°C - which occurred around 50 million years ago - known as the Paleocene-Eocene Thermal Maximum period - saw the poles free of ice caps, with palm trees and crocodiles living above the Arctic Circle.
The impacts of climate change are already being felt here in New Zealand:
- The national average temperature has risen 0.9˚C over the past century
- Ice volume in the Southern Alps is down 11% over the past 30 years
- Average rise in sea level of 16cm over the four major ports in the past 100 years
Based on the latest climate projections for New Zealand by the end of this century we are likely to experience:
- Higher temperatures and more frequent extreme weather events
- Greater erosion – and possibly inundation– of coastal areas
- Introduction of new pests and disease, affecting both health and agriculture
- Increased warming and acidification of our ocean, with unknown impacts on the marine food web
It’s also likely that our lives and livelihoods will be significantly affected by global impacts such as immigration, food shortages, and political instability. Our response over the next decade will decide how good or bad these outcomes will be.
What is required is a massive reduction in the world’s total emissions, first, by weaning ourselves off fossil fuels by around mid-century, and by 2100 achieving zero net emissions. Obviously this will require a fair amount of heavy lifting, policy change, and international cooperation, all of which needs to begin right now. Many cities, regions, and countries have started this process.
The 2015 United Nations Climate Change Conference held in Paris negotiated an agreement setting an international goal of limiting global warming to less than 2 degrees – with an aspiration for 1.5 degrees - compared to pre-industrial levels, with an agreement to achieve zero net anthropogenic (human induced) greenhouse gas emissions during the second half of the 21st century. Thus far the pledges made in Paris amount to a likely warming of closer to 3 degrees; so while it was a promising start, more urgent action will be needed to achieve the target.
In April last year, six heads of state and government, two city and state leaders, the heads of the World Bank Group, the International Monetary Fund and the OECD agreed on an ambitious global target for putting a price on carbon pollution. This is a key tool in reducing emissions.
These leaders challenged the world to expand carbon pricing to cover 25 percent of global emissions by 2020 – double the current level – and to achieve 50 percent coverage within the next decade. At present around 40 countries and 23 cities, states and regions throughout the world are using carbon pollution pricing schemes, representing about 7 billion tons of carbon dioxide. The schemes, now worth about $50 billion, cover about 12 percent of global emissions, which is a threefold increase over the last decade.
New Zealand’s past contribution
In total, NZ’s per capita greenhouse gas emissions (in CO2e) are the 5th worst of industrialised nations at around 18 tonnes per year. If we focus purely on CO2, our annual emissions are around 7.9 tonnes per person. This is well above the global average (4.9 tonnes), although much lower than some of the highest emitters (Australia, US, Canada), but still higher than the EU as a whole (7.0 tonnes) and China (7.5 tonnes) (Futureearth,2016).
Climate Change Minister Paula Bennett asserts that New Zealand has met its greenhouse gas emissions reduction targets through:
“...[A] combination of emissions reductions, the capture of carbon through forestry, and international trading.”
While New Zealand has certainly upheld our international agreements, we have done this without taking action to reduce our emissions. In fact our emissions continue to rise, making the future job of reducing them more difficult and expensive.
 Carbon pricing shifts the social costs of climate change to the source of the pollution, encouraging polluters to reduce emissions and invest in clean energy and low-carbon growth. It is a crucial mechanism for redirecting investments and transforming markets to build low-carbon, climate-resilient economies driving improvements in the health and well-being of billions of people.
Source: OECD, 2014.
So how has New Zealand met our obligations up until now? The answer is through forestry (largely planted in the 1990s) and by purchasing fraudulent carbon units from the Ukraine and Russia.
On paper we have meet our targets, however in terms of actual climate mitigation, we have gone backwards. The huge swathe of pine plantations established in the 1990’s has allowed us to gain credits for the carbon they store, as is standard practise, and has covered most of the gap between our emissions and our targets. As these trees are harvested, under the current system, we must pay back many of these credits (as some of that carbon is released back into the atmosphere). This is due to happen from around 2020 and once this occurs will leave us with significant ‘carbon debt’. The existing rules bought New Zealand time to get our greenhouse gas emissions down, but Government inaction has squandered that time. Our emissions have continued to climb in excess of our targets, so now as a reactionary measure, we are trying to change the rules so we don’t have to pay any of these credits back, while still claiming all the benefit and paying none of the cost.
Our attempts to avoid paying for the carbon costs of our forests can be seen as a questionable accounting trick, however when it comes to our use of carbon credits, we haven’t just been avoiding our climate obligations but have been an accomplice in defrauding them. New Zealand was an active member of the international Kyoto Protocol commitment (an international convention on climate change) and we have put in place an Emissions Trading Scheme (ETS), however our participation goes only skin deep. We have cheated our way to our emissions targets through the purchase of fraudulent credits from Russia and the Ukraine.
- These countries manipulated the system by falsifying their emissions and flooding the market with cheap credits.
- The credits were effectively banned in the EU however the New Zealand Government turned a blind eye
- From 2011-15 New Zealand companies were allowed by the government to purchase around $200 million worth of these credits rather than investing in emissions reduction schemes in NZ
The Government continues to preach our environmental efforts all the while holding proportionally more than 4 times the level of fraudulent credits than the next highest country, Estonia. In absolute terms, the only countries holding more of these ‘fake credits’ are Germany (195 million, about double New Zealand, with emissions around 24 times as high as New Zealand) and the United Kingdom (107 million, slightly more than New Zealand, with emissions around 16 times as high).
By turning a blind eye to the purchase of these credits, the Government effectively removed any incentive to actually reduce emissions. New Zealand foresters who accrue real credits were left selling on a market worth almost nothing (due to the low cost of the fake credits), killing their incentives and meaning that it made more economic sense to cut down the trees and convert the land to dairy farming.
The New Zealand Government has been able to use their stockpile of fake credits to meet NZ’s Kyoto commitments all the way through to 2020 and beyond, knowing all the while they have no real environmental value and without needing to cut our actual emissions.
Source: OECD Stat, (2014).
New Zealand’s future contribution
New Zealand’s INCD targets to reduce greenhouse gas emissions in line with the Paris agreement are equally short-sighted and have been labelled as “inadequate” and “far from doing its fair share”. Our current target is to reduce emissions by 30% below 2005 levels by 2030, which is equivalent to an 11% reduction below 1990 levels. By using the accounting methods we spoke about previously, this target is actually likely to result in an increase of GHG emissions above 1990 levels; if other countries followed the New Zealand approach, global warming would exceed 3-–4°C. We are fortunate that this is not the case, and many countries have committed to meaningful targets.
What makes this more disturbing is that the government has done almost nothing to achieve even these inadequate targets and official projections show our carbon emissions will continue to grow. Perhaps the clearest indicator of failure is that the total effect of all planned government policies still results in an increase in emissions by 2030 (GenZero, 2014) , (MFE,2015).
 Intended Nationally Determined Contributions (INDCs) is a term used under the United Nations Framework Convention on Climate Change (UNFCCC) for reductions in greenhouse gas emissions that all countries that signed the UNFCCC were asked to publish in the lead up to the 2015 United Nations Climate Change Conference
The Government argues that it costs New Zealand more to move to a carbon neutral economy, but this claim is flawed. The reason taking action to reduce emissions will cost us more than other countries is because we have done nothing in the past decade.
International comparisons show how regressive our efforts have been. Many countries have now committed to targets that would see them reaching zero net CO2 emissions or very close to it by 2050. The Scandinavian countries in particular are leading the charge:
- Norway – climate neutrality by 2030 (through use of international offsets)
- Sweden – cut emissions at least 85% below 1990 levels by 2045 and offset the rest to be carbon neutral.
- Denmark – fossil fuel free energy system and 80-95% emissions reduction below 1990 by 2050.
Other large developed countries are similarly ambitious:
- UK – at least 80% reduction below 1990 levels by 2050, target enshrined in domestic law through Climate Change Act.
- US – 80% reduction below 2005 levels by 2050.
- Germany – 80-95% reduction below 1990 levels by 2050. Has set out 2030 target ranges for each sector in its Climate Action Plan.
These countries have all set interim targets (e.g. 2030) with policy and strategy consistent with a pathway to their long-term goals.
At the end of the day, targets are one thing, results are another and fortunately many of these countries above are walking the walk, all while still achieving GDP growth.
Source: (Worldreasourceinstitute, 2016)
Continuing to delay action will only cost us more, and the World Bank warns that the longer action is delayed, the more costs and severity will rise for the next generation.. For some perspective, the fossil-fueled power plants built in 2012 alone will emit some 19 billion tons of CO2 over their expected 40-year lifetime, more than the annual emissions of all operating fossil fueled power plants in 2012 ( WBG, 2015).
Models reviewed by the IPCC find that if mitigation is postponed until 2030, costs will rise an average 50 percent for the 2030–50 period, and 40 percent for the longer term (2050–2100) (WBG 2015). If emissions peak in 2015, the rate of annual emissions reduction needed to stay close to 2°C is around 3.5 to 4 percent — that rate would be at least 8 percent if we delay until 2030 making the job that much harder. The cost is not just a financial one. Taking action to cut carbon pollution in New Zealand now will give us benefits sooner, like cleaner air, less dependence on foreign oil, better human health and more liveable cities.
Making the Change
Carbon neutrality or decarbonization does not simply imply no emissions whatsoever. Positive emissions in some sectors and some countries can be offset, to an extent, through natural carbon sinks and negative emissions in other sectors and countries. Overall decarbonization means zero net emissions of CO2 —as well as the stabilization of emissions of short-lived greenhouse gases, such as methane, that dissipate in the atmosphere in decades.
Forget for a moment our current performance, and look at the opportunity we have to become carbon neutral - and in time a carbon negative country – and the benefits that this will bring.
As discussed, one of the cornerstones of a carbon neutral world is the ability to effectively price carbon. A robust carbon commodity market creates incentives for clean R & D with benefits that extend past the environmental, decreasing the impacts of health related issues brought about by human induced climate change while also being an efficient way to raise revenue.
The revenue potential is a benefit that is often missed. Demand for new clean developments is forever increasing as the world becomes more inclined toward climate protection. New Zealand currently exists as a predominantly agricultural commodity based economy; the opportunity here is that by investing in new clean energy developments we can become a world leader in a growing, potentially massive market, and shift our economy away from its agricultural roots. This view is shared by our recent Prime Minister:
“It’s estimated that demand for low-carbon products will be worth at least $500 billion per year by 2050. Countries and consumers will be crying out for climate-friendly products and innovations. New Zealanders must position our economy and businesses to take advantage of those opportunities.” — Prime Minister John Key, 2007.
According to New Zealand Trade and Enterprise there are approximately 250 companies and organisations already researching, developing and commercialising clean technologies in New Zealand.
The latest report of the Intergovernmental Panel on Climate Change (IPCC) which presents the consensus views of 830 scientists, engineers, and economists from more than 80 countries and was formally endorsed by the governments of 194 countries, identifies possible pathways to reach carbon neutrality by the end of the century. These have been broken down into four main sections:
(a) decarbonisation of electricity;
(b) massive electrification (using clean electricity) and, where that is not possible, decarbonising development [MM1] a switch to lower-carbon fuels;
(c) greater efficiency and less waste in all sectors;
(d) improved carbon sinks (such as forests, vegetation, and soil).
Looking at the break down of New Zealand’s emissions by sector gives us an indication of the areas where intervention of these pathways will have the greatest impact. In 1990, New Zealand’s gross emissions were 65.8 Mt CO2-e. Between 1990 and 2014, gross emissions increased 23.2 per cent to 81.1 Mt CO2-e. The largest contributors were carbon dioxide from road transport, manufacturing industries and construction, nitrous oxide from agricultural soils, and methane from livestock digestive systems.
While it is clear that agriculture has a massive impact on our emissions the types of greenhouse gases vary within each sector. The metric used in measuring this graph takes this into account in order to demonstrate a comparison (converting gases into CO2 equivalent emissions). While this is effective for these purposes there are questions about the appropriate methods for accounting the main gas generated from agriculture, methane, and research is still required to confirm the effects it has on our environment. So our climate policy largely excludes agriculture and will concentrate predominantly on C02 emissions.
 Carbon dioxide equivalent (CO2-e)is a measure for describing how much global warming a given type and amount of greenhouse gas may cause, using the equivalent amount of CO2 as the reference. CO2-e is used to account for the different global warming potency of the different greenhouse gases, and allows them to be reported consistently. Gases are converted to CO2-e using the amount of warming they would cause in the 100 years following emission, compared to the effect of CO2 itself.
 industrial processes and product use (IPPU) (eg, metals, minerals and chemicals)
This is not to understate the impact agriculture has on our environment, this has just been covered in our environment policy. Ultimately there is a need for joined up policy when it comes to land use.
TOP will be proactive in developing improvements where we can achieve the best marginal benefit for each dollar spent. We are also prepared to invest in our long term future, which while carrying large upfront costs, will have the greatest impact in reducing our emissions in the long run.
As we have mentioned the government has not done any sort of long-term analysis or planning towards even its 2020 target, which is why the critical first step is to set up a framework similar to what the UK has done with their Climate Change Act.
- The Climate Change Act established a legally binding target to reduce the UK’s greenhouse gas emissions by at least 80% below base year levels by 2050
- The Act introduced a system of carbon budgets which provide legally binding limits on the amount of emissions that may be produced in successive five-year periods, beginning in 2008.
- The first three carbon budgets were set in law in May 2009 and require emissions to be reduced by at least 34% below base year levels in 2020
- The fourth carbon budget, covering the period 2023–27, was set in law in June 2011 and requires emissions to be reduced by 50% below 1990 level (GOVTUK, 2013).
Using the pathways identified by the IPCC that we listed earlier we can begin to develop a plan forward for a carbon neutral New Zealand.
Pathway 1 : Decarbonisation of electricity
New Zealand is ahead of most countries concerning decarbonizing electricity (thanks mainly to the legacy of our hydroelectricity plants). It is still crucial we continue to develop these systems, and with our enviable renewable energy resources, powering our country on 100% clean energy appears possible through a combination of energy efficiency and renewable energy technologies that already exist today.
We would not be the first country to commit to such an ambitious target, with Denmark already striving to make this a reality. While comparisons across countries are difficult it is worth mentioning that Denmark is starting from behind New Zealand in its current share of total energy from renewables (roughly 22% versus 32%), and has lower per capita renewable energy resources (GenZero,2014).
We have the highest renewable energy potential per capita of any country in the world (Underhill, 2014). This is of course helped by our small population and abundance of space and resource. We should see this for the potential it holds, rather than an excuse for inactivity.
Our Government has maintained a goal of achieving 90% renewable electricity by 2025, introduced by the last Labour Government. However tracking reports and future projections from MBIE show that under business as usual we will fail to achieve this (GenZero, 2014). We must ensure we achieve these targets, while also looking at other ways to harness this sector. Geothermal energy for example is abundant in New Zealand, as is wind, hydro, and bioenergy. Continuing to develop technology that can harness these sources is a priority.
Moving to a 100% renewable system will also require new technology to manage electricity demand without thermal generation as a back-up.
Pathway 2: Massive electrification (using that clean electricity) and, where that is not possible, Decarbonising Development a switch to lower-carbon fuels.
The figure below shows a snapshot of how our energy is produced and consumed here in New Zealand.
Source: GenZero, 2014
While it is important to develop clean renewable resources it is clear we are still hugely reliant on fossil fuels, with approximately 60% of primary energy coming from petrol, coal, oil and gas. It is not possible right now to remove all these fossil fuels (e.g. coal is needed to make steel) however it is possible to substitute the use of coal elsewhere (e.g. Fonterra milk driers).
Fuel Shifting & Transport
The energy sector makes up 40% of our gross emissions, or 32.2 Mt CO2-e, an increase of 36% since 1990. We have been attempting to reduce our reliance on coal-fired and gas-fired generation as we progress toward more renewable sources that we have touched on, such a hydro, geothermal, and wind power, however as our economy is still geared towards oil and gas. Any upturn in production,
like we saw in 2014, offsets any current gains we have made in clean energy – our emissions rose 1.2% between 2013-2014 after decreasing during the economic downturn (MFE, 2016).
Our biggest reliance is on liquid fuel, specifically related to transport.
Source: MBIE (2014)
The transport sector produces 14 million tonnes of C02 with 90% of this being on road transport; 7% on domestic aviation and the remainder on trains and shipping (GenZero, 2014). This can almost exclusively be attributed to fossil fuels. All up around 10% of our total greenhouse emissions come from driving cars; internationally transportation accounts for around 18% of human GHG emissions.
Reducing transport emissions requires a comprehensive set of strategies; urban design, equipping cities with increased public transit, biking and walking options and more efficient cars, trucks, planes, and ships that use increasingly lower-carbon sources of energy.
Different models have been applied by other countries to address transport fossil emissions. Canada and the US have for example concentrated on decarbonisation development, putting in place stringent greenhouse gas standards for vehicles; in 2025 for example passenger vehicles and light trucks will emit about half as many greenhouse gases as 2008 models. New Zealand has no fuel emissions standards (since they were scrapped by the current government in 2009) (GenZero,2014).
Governments including California, China, India, the Netherlands and Norway are leading full-scale shifts to electric vehicles including plug-in hybrid, battery and fuel-cell vehicles. Consumer demand is on the rise, and manufacturers like GM, Nissan, Tesla and others are starting to bring affordable EVs to market.
According to the International Energy Agency, EVs should account for at least 75 percent of car sales by 2050.
Pathway 3: Greater efficiency and less waste in all sectors.
One of the most easily implementable ways to reduce emissions is through efficiency improvements, as they often bear a low relative cost making them an effective starting point for action. A climate report released by consultants McKinsey & Company developed a cost curve exploring potential interventions.
The following from the report all produced significant emissions savings at a relatively low cost.
- Fuel efficient commercial vehicles
- Lighting systems
- Water heating
Heat accounts for 28% of consumer end-use energy (Royal Society, 2016) , and is often ignored in energy policy. The graph below illustrates our reliance on non-renewable energy to produce this heat.
The buildings sector is the main user of this energy and is indirectly responsible for around 20% of New Zealand’s energy-related GHG emissions. These mostly arise from the consumption of fossil fuels to meet the demand for heating and cooking, as well as the thermal share of electricity generation when used for appliances, heating, ventilation and cooling (Royal Society, 2016).
Internationally, existing buildings require over 40% of the world’s total final energy consumption, and account for 36% of emissions in the EU.
As an example of progressive legislation the EU has developed two main laws to improve the energy efficiency of their housing, the 2010 Energy Performance of Buildings Directive and the 2012 Energy Efficiency Directive. One of the requirements is that all new buildings must be nearly zero energy buildings by 31 December 2020 (public buildings by 31 December 2018). The laws also regulate current building stock; about 35% of the EU's buildings are over 50 years old. By improving the energy efficiency of these buildings there is the potential to reduce total EU energy consumption by 5-6% and lower CO2 emissions by about 5%.
The majority of buildings that will be in existence in 2050 have already been built so we also need to concentrate on imp roving the performance of current building stock. Cost effective, easily implementable measures such as those listed above are an easy, efficient first step to reduce emissions by lowering demand for power.
Linked to this idea of investment cost is how benefits accrue over a lifetime. Achieving legitimate climate targets requires cohesive strategies involving all types of developments, however one of the major factors we look at when developing policy is the long term impact.
Typical lifetimes and opportunities for replacement
important energy supply and end-use equipment and infrastructure
The graph above shows that overall buildings have one of the longest replacement cycles, and coupling this with the fact that they contribute such a large percentage of our energy usage means that regulation is crucial. While retrofitting is, as mentioned earlier, an effective method at reducing emissions, ensuring that new buildings are up to an energy efficient standard ensures that we are not further committing to future emissions . While we value changes such as conversion to electric vehicles, we see investment in buildings as more of a priority due to the long term benefits.
Pathway 4: Improved carbon sinks (such as forests, vegetation, and soil).
Preserving and improving carbon sinks is a crucial component in reducing net emissions. We are lucky in New Zealand having such an abundance of land that gives us one of the more effective carbon sequestration systems in the OECD.
Source: OECD (2014)
Our Forests currently sink around 24.4 Mt of C02, however this number continues to decrease as we rip out more and more trees, predominantly to convert the land to dairy.
- According to Ministry for the Environment, our rate of forest removals since 2008 has been greater than our rate of forest planting, averaging around 8,500 hectares per year
- Global Forest Watch puts our net loss of tree cover between 2001–2014 at 139,793 hectares
- The 2015 Environment Aotearoa report, using land cover satellite imagery, found that between 1996 and 2014 we lost more than 10,000 hectares of native forest and regenerating forest.
If we continue at this rate our sequestration levels will more than half to around 11 .4 Mt by 2030.
Deforestation also heightens our vulnerability to various kinds of environmental damage and degradation, such as hillside erosion, flood incidence, soil deterioration, and poorer water quality.
The scale of erosion-prone land in pasture in New Zealand is vast. A 2007 Ministry for the Environment report put this at 1,140,367 hectares—that is, 4.25% of New Zealand’s total land area. Slips caused by erosion not only carry a large environmental cost, but also a fiscal one. For example the weather bomb experienced in the Central North Island in 2015 caused around $70 million worth of damage mostly as a result of erosion on sheep and beef farms. These costs include clean-up costs, degradation of assets, lost economic opportunities, reduced productivity, compensation costs etc (PureAdvantage, 2016).
A PCE report identifies 1.1 million hectares of erosion-prone marginal land as appropriate for planting. There are a number of projects that exist and are attempting to do this, however we need a concerted plan in order to make planting on such a large scale a possibility.
If this land was successfully planted in native trees they would sequester 318 million tonnes of C02 by 2050, an average of 9 million tonnes of CO2 every year. That would get us about two-thirds of the way back to 1990 levels if our gross emissions remain at their current level. Alternatively, if we planted those 1.1 million hectares in Pinus radiata, we could sequester carbon at over three times that rate, however the sequestration effect wouldn’t last as long (PureAdvantage,2016) .
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