Rod Carr advises successor to keep spelling out consequences of climate policies

Thursday, 5 December 2024

Rod Carr has some advice for his yet-to-be-announced successor after he steps down as climate change commissioner on Sunday.

“Stay the course. This is a marathon.

“There will be different choices made by governments — that is their right.

“There will be different consequences for those choices, and it is for the commission to help all New Zealanders understand the consequences of the choices that are being made.”

The former Reserve Bank acting governor, who is legally blind, has been a formidable part of the climate change policy apparatus for five years, with a talent for delivering the steeliest of messages neatly packaged in the politest of eloquent monologues.

It may seem hard to keep track of the patchwork of legal and institutional arrangements such as ‘zero carbon’ budgets and UN agreements that have been cobbled together to attempt to rein back rampant global warming.

But Carr insists New Zealanders who want to be informed can easily be informed and, in any case, the task ahead is pretty clear.

“We have to reduce our greenhouse gas emissions from all sources as soon as possible by as much as possible.

“If you need to burn stuff. Don't burn it in the open air. Burn it where there's carbon capture and permanent storage.”

Despite the ‘prisoner’s dilemma’ that has been assumed to haunt climate action — that it’s only worth one individual or country reducing emissions if they can rely on others also doing so — Carr sees plain self-interest playing a growing role.

“We frame this as burdensome obligations that would be expensive for New Zealand to meet.”

But the energy transition gives the country the chance to become energy independent and have lower-cost, cleaner energy with less vulnerability to long supply chains “from countries and cultures we may not have anything in common with at prices we have no ability to control”, Carr says.

“Why we wouldn't accelerate the transition to renewables and go as fast as we can to get off fossil fuels as soon as we can, defies logic.”

New Zealand also risks paying a heavy price if it doesn’t keep up its end of the global climate bargain, in particular in potentially losing access to European markets for its exports, he suggests.

“We have signed various trade and investment agreements, as well as our commitments under the Paris treaty.

“As a small trading nation, we rely on the rule of law and the multilateral order to enforce on others commitments they have made to us.

“It seems to me to be quite risky to then be selective in the obligations we have to others that we choose to honour.”

One of the least welcome messages that Carr may have for the Government may be that the time is arriving for the Treasury to start budgeting for the overseas carbon credits the country will need to meet its 2030 Paris commitment.

New Zealand has promised to reduce its net greenhouse gas emissions to 50% below its 2005 gross emissions by 2030, and Carr says time has run out to do that without spending billions buying-in help.

Up until now, the Treasury has resisted factoring the likely cost of buying overseas carbon credits into its already-deteriorating fiscal forecasts.

Finance Minister Nicola Willis justified that to Parliament’s Finance and Expenditure select committee as recently as on Tuesday by suggesting the Government still had choices about how to meet the Paris commitment.

But Carr makes clear he sees a big bill as now unavoidable.

“There was a time when the Treasury was able to argue ‘we don't know the quantity of this shortfall and we don't know the price per unit that we would need to pay, so there is sufficient uncertainty we can't and don't need to raise a liability in the Crown accounts’.”

But it is now clear the country will miss its 2030 emissions reduction pledge by about 100 million tonnes and that offsets sourced from overseas will cost at least US15 (NZ$25 each), he says.

“There's not a tree you can plant in the next five years that's going to close that gap.”

So if there was an excuse for Treasury not accounting for at least a $2.5b bill in the Crown accounts “it is getting pretty thin”, he says.

Another parting message is a reminder of the commission’s view that the Emissions Trading Scheme (ETS), which the coalition government has been promoting as its central tool for reducing emissions, is “no longer fit for purpose”.

Carr has grown increasingly concerned that by relying on tree-planting rather than emissions reductions to meet its carbon targets, the country has lumbered future generations with an obligation to keep increasing tracts of the country permanently under forest.

“The Climate Change Commission has been very clear that, in its current form, the ETS is not fit for purpose,” he says.

The number of carbon credits already on issue means the ETS can’t be used as a tool to help ensure carbon budgets for any particular period can be met, he says.

“In addition, the current settings would draw nearly 2 million hectares of New Zealand pastoral land into carbon sequestration.

“By the middle of the next decade, there will be so many forestry units available relative to emissions obligations … that you'll get a price collapse, which will further undermine the incentives and rewards for decarbonisation.

“The system is broken. It is not a tool that can be relied on, and it needs to be fixed.”

Forestry Minister Todd McClay on Wednesday announced new rules that would prevent credits being earned from exotic plantations on highly productive farmland and a 15,000 hectare annual cap on land typically suitable for sheep farming that could be converted to carbon farming.

One reality that hasn’t changed during his tenure, or the preceding 30 years, is the science of climate change, Carr says.

“We know how greenhouse gasses are formed through human activity. We can measure that impact. The way things are changing is largely the way the scientists said they would.

“The melting of the glaciers is causing sea level rise that was predicted. The dissolving of carbon dioxide in the ocean is causing acidification that was predicted, and the increasing vibrancy of the atmosphere is causing more storms, more frequently, causing more damage.

“We need to use what nature gave us. We don't have to keep fighting a war on nature.”