Getting to Zero: Challenging but Achievable: Productivity Commission

The Productivity Commission today released its draft report on how New Zealand can transition to a low-emissions economy.

New Zealand has had climate change policies in place for some time but these have not been effective in reducing domestic emissions. For businesses, households, investors and consumers to manage the risks and seize the opportunities of moving to a low-emissions future, change is needed.

“Our report shows that major changes will be needed”, says Chair of the Productivity Commission, Murray Sherwin, “Emerging technologies are likely to play a large role in facilitating those changes and creating new opportunities for New Zealand.  Our inquiry shows that, if credible and stable climate policy can be established now, businesses, households and consumers will be better able to plan for change and manage the risks of moving to a low-emissions economy.”

The recommendations in the draft report are designed to promote these changes. They include:

  • a strong signal from the Government, and preferably from across the Parliament, about its long-term commitment to transitioning to a low-emissions economy;
  • establishing an institutional framework that supports policies for transition
  • a broad-based and effective emissions pricing scheme that includes phasing in agriculture;
  • supporting regulation and policies, such as a “feebate” scheme for imported vehicles;
  • more resources focused on low-emissions research and development, especially for agriculture; and
  • mandatory financial disclosures about climate risk.  

In essence, the strategy for New Zealand involves replacing fossil-fuels, where feasible, with clean electricity (eg, electric vehicles and lower grade process heat) together with substantial land use change, in favour of large scale new forestry plantation and significant growth in horticulture. This is the efficient strategy for New Zealand with currently available technology. Longer term, as new technologies emerge in response to higher emissions costs, there will be more options available to ease the path to a net-zero emissions future. These new options will be particularly important since, while increased forestry buys us time, it is not a permanent solution for New Zealand.

Murray Sherwin also notes that “While the challenges of achieving a low-emissions economy are large, the scale of change involved in the transition is comparable to transitions that have occurred before in New Zealand, and within the scale of transitions faced in other developed countries. New Zealand can reach its low emissions targets if it has the right institutions and policy settings in place, and the journey is embarked upon without delay.”

The Productivity Commission’s draft report makes 140 findings, 50 recommendations and asks 11 questions. It is being issued for public and stakeholder review with the Commission now calling for submissions.

A final report will be presented to the Government in the second half of 2018.

Notes

  1. The Low-emissions economy draft report is available at www.productivity.govt.nz/low-emissions/draftreport.
  2. Submissions are invited on the Low-emissions economy draft report by stakeholders and the public by 8 June 2018.
  3. For this inquiry, the Government asked the Productivity Commission to identify how New Zealand can maximise the opportunities and minimise the costs and risks of transitioning to a low-emissions economy. The inquiry is examining options for how New Zealand could reduce its domestic greenhouse gas emissions and transition towards a low-emissions future, while continuing to grow incomes and wellbeing. See inquiry terms of reference here.
  4. Key dates include:
  • 8 June 2018      Due date for submissions on the draft report
  • August 2018   Final report due to Government

The New Zealand Productivity Commission – an independent Crown entity – was established in April 2011 and completes in-depth inquiry reports on topics selected by the Government, carries out productivity-related research, and promotes understanding of productivity issues.