Productivity Commission prescribes more trees, fewer cows to meeting carbon emissions targets

Thursday, 26 April 2018

Households are being warned to expect big jumps in petrol and electricity prices to persuade them to shift to low carbon options.

More trees and electric transport and fewer sheep and cows are two key ingredients in achieving emissions targets, the Productivity Commission says.

The Productivity Commission's latest draft report on transitioning to a low-emissions economy includes 50 recommendations on how best to address New Zealand's slow progress.

While most developed countries have lowered their emissions, New Zealand has been increasing its output since the mid-2000s and is on track to increase into the next decade. New Zealand is still on track to meet its 2020 commitment under the Paris Agreement, to reduce emissions to 5 per cent below 1990 levels, but only because of the country's surplus credits from the Kyoto Protocol.

New Zealand's commitment to reducing its greenhouse gas emissions to 50 per cent of 1990 levels by 2050, and 30 per cent below 2005 emission levels by 2030, will prove far more challenging, the report says.

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The largest driver of net emissions reductions to 2050 are the agriculture and forestry sectors.

Even more ambitious, is the Government's proposed Zero-Carbon Act that would set the target of net-zero emissions by 2050.

Though New Zealand's absolute contributions to global emissions is small (0.2 per cent), on an individual basis we have room to improve. Our per-person emissions are the fifth-highest in the OECD.

The pathways to meeting these targets all involve changing the way we use land, the report said.

Agriculture accounts for nearly half of New Zealand's emissions – more than any other developed country.

Modelling undertaken by the commission indicated forest land would need to increase by between 1.3 million and 2.8 million hectares, and the majority of forest replanting needed to occur on 'marginally profitable beef and sheep farms'.

Productivity Commission chairman Murray Sherwin says major changes are needed if New Zealand wants to take its greenhouse gas emission targets seriously.

Lincoln University professor Anita Wreford said: 'While trees certainly have an essential role to play, it is important that we consider carefully which types of trees are planted and that [plantings] will remain suitable under a changing climate in order to maximise all the benefits that trees provide in addition to carbon sequestration and timber production.'

Wreford said it would be important to ensure that there were appropriate incentives for forests beyond monoculture systems, and the Paris Agreement's emphasis on decarbonisation should not take the spotlight from water and soil quality and biodiversity.

The report found transport was 'by far New Zealand's fastest-growing emitting source, followed by nitrous oxide emitted from soils'.

It called clean technologies are the 'closest thing to a 'silver bullet''.

Evidence indicated policies that incentivise the uptake and development of clean technology may be highly effective, and any delay in supporting it could drag out the economic transition and slow growth.

Productivity Commission chairman Murray Sherwin said the report shows 'major changes' were needed, and emerging technologies would be a key ingredient for those changes.

'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 report cites estimates that yearly subsidies supporting the production and use of fossil fuels were between $78 million and $88m.

It recommended these subsides be phased out.

The commission also made a case for withdrawing the free allocation of units to emissions-intensive, trade-exposed firms under ETS, and recommended the Government reform the NZ Emissions Trading Scheme rather than replace it with a carbon tax.

Dr Nigel Isaacs, a co-author of the Royal Society's report on transitioning to a low-carbon economy and Victoria University architecture professor, said increasing prices through an Emissions Trading Scheme might have an immediate effect on industries, yet it would take many years to change the types of cars Kiwis drive.

Submissions on the draft report are open until June 8 and a final report will be submitted to the Government in August.