NZ needs better friends

15 December, 2020

New Zealand needs better friends, if comments by other countries about our efforts to reduce emissions are to be believed.

Last week, Newsroom reported “players like the United Kingdom and the European Union have promised much more ambitious cuts [in greenhouse gas emissions] and pledged not to use international offsets. This [the use of international offsets] is seen by our allies as another example of New Zealand failing to live up to the challenge climate change poses.”

Who do these so-called allies think they are? They should hold the sermon and read the text of the Paris Agreement on climate. Specifically Article 6, which recognises co-operation between countries as an accepted way to reduce emissions.

Presumably these unnamed allies are sending similarly thoughtful comments to Switzerland and Peru. In October, these two countries announced a bilateral arrangement to reduce emissions under Article 6. Under the deal, Switzerland will fund sustainable development projects in Peru and receive credit for the resulting emissions reduction. The winners from the agreement in no particular order are Switzerland, Peru and the environment.

Perhaps it is time for our Government to bring our allies up to speed on what it means to be a small country. New Zealand gains from international co-operation more than most. Indeed, we depend on it.

There are only 5 million of us and we cannot specialise in everything. Our prosperity depends on access to large overseas markets where the division of labour is broad and deep. Isolation carries huge penalties for a small country. We are a trading nation for a reason.

It is the same for emissions. We are responsible for 0.2 percent of global emissions. That does not mean we should not play our part – we should. But closing the door to international offsets to go it alone has consequences. It would mean paying more, probably far more, to meet our commitments to lower emissions. That will not help the environment, to say nothing of the effects on our prosperity.

So it is a bit rich to be taking lectures from far larger, wealthier, and more interconnected countries about whether we are living up to our obligations by using international offsets. We are not Europe. We don’t have 450 million people. We don’t have 31 countries in our Emissions Trading Scheme and our electricity system does not connect 24 countries. It is just us. We earn more of our export income from primary production than most countries in Europe. Agriculture makes up half of our exports but only 6 percent of Germany’s, for example. Net zero is a more challenging target for us than it is for our larger allies.

Of course, if we are to use international offsets, they must be genuine and additional. That is, offsets must cut emissions over and above what would have occurred anyway.

Our Government ought to be leading the charge on cross-country collaboration. If we don’t say it, nobody else will. As a country, we must reject entirely the idea that there is something wrong with international co-operation on emissions. There is no upside for the environment – none – from forgoing the gains from specialisation and trade on emissions to insist on local solutions whatever the cost.

Sometimes obvious things need to be said. Climate change is a global problem. It does not matter whether our policies cut emissions on this side of our international border or the other. It does not matter whether emissions are reduced or offset. What matters is that the accounting is right (for both reductions and offsets – remind me why the Government does not check whether its emissions policies work?)

But is the Government about to fall for this “failing to live up to our obligations” line? We will find out on 1 February 2021 when the Climate Change Commission delivers its draft emissions budgets. The budgets will set a path for New Zealand’s emissions through to 2035.

James Shaw, the Minister for Climate Change and the statutory owner of the emissions budgets, has already said he will accept whatever the Commission gives him.

Whether international offsets will receive sensible treatment from the Commission is not yet clear, but the signs are not encouraging. Recently, the Chair of the Commission Dr Rod Carr said “the Commission wouldn't accept a world in which New Zealand's gross emissions continued to grow but it offset these by planting trees or purchasing overseas carbon credits.”

The Commission will use its emissions budgets to do as much as possible domestically. Only after domestic options have been exhausted will international offsets like the Switzerland-Peru deal be used to put the country on track to meet its 2030 obligations under Paris.

The Commission’s "domestic first" approach to reducing emissions is the product of last year’s Zero Carbon Bill, which included the nonsensical requirement that “as far as possible” emissions be reduced domestically.

This domestic rule will deliver exactly zero emissions benefits for the planet, but could cost New Zealand tens or even hundreds of billions of dollars over the coming decades.

Sadly, the Commission is unlikely to provide any analysis of the additional costs of its preferred approach over and above a least-cost (and Paris-compliant) alternative strategy. The Commission’s role is advisory, which apparently means things like cost-benefit analysis are unnecessary.

The case for action on this side of our international border will remain untested against its possibly ruinous and certainly unnecessary consequences. That is unacceptable.

At some point, the Government is going to have to explain how New Zealand can possibly benefit from a strategy that insists emissions are cut domestically and at vastly higher cost for no discernible legal, environmental, diplomatic or economic benefit in return. If New Zealand can genuinely and fully meet its commitments under Paris, and achieve net zero emissions by 2050, without going to all the trouble of transforming its economy, then it should.

In any case, 1 February threatens to be the day that New Zealand announces our leaders’ meek willingness to throw away billions of dollars for no environmental or any other benefit. We just want to be liked. How quaint, the leaders in Europe will think.

Let us hope we are not in that world. And let us hope that our allies will spare us from any more of their lectures.



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