A Robust, Independent, Assessment of Climate Change Policy Immediate Benefits Needed Urgently

A robust and independent assessment of the immediate benefits of our climate change policy is urgently needed to maintain public support for our climate change commitments.  This needs to be done before the real costs of our Paris (COP21) commitment start to bite.  The costs are material and could start to fall as early as 2019 for the commitment period 2021 – 2030.  Without a robust understanding of the immediate benefits the public support for the commitment will be difficult to maintain.

Politicians on all sides continue to rely on these costs not falling during their watch.  But simply putting off the awful hour (and hoping someone else is in power then) or hoping it will never happen (because the COP21 agreement will collapse) seems overly simplistic to me.

I suggest it is safer to assume we could be held to account for our COP21 commitments and get a robust independent assessment of the real tangible and immediate benefits of this policy done urgently.  Without a robust understanding of immediate, tangible and credible benefits public support of the policy is likely to collapse as soon as real, immediate, tangible costs start to bite.

 

Costs To Achieve Climate Change Commitment Immediate And Certain

The costs to achieve our climate change commitments are likely to be immediate and certain.  So similarly immediate and certain benefits need to be identified, understood and robustly debated, or we would be forced into difficult social policy trade-off decisions.

Our climate change commitment starts to bite in 2021.  Real costs will be incurred, possibly even before then, if we are to prepare for 2021.  These costs are significant and may start to involve some hard social policy choices for New Zealand.  For example do we prefer free education (with immediate and tangible benefits) or helping save the world from climate change (with longer term and less certain benefits).

At the Paris COP21 conference New Zealand committed to an ambitious climate change policy designed to show us as world leaders.  We committed to reducing our Green House Gas emissions by a net 30% below our 2005 levels over the period 2021 to 2030.  The Ministry for the Environment had studies done by Infometrics and Landcare to help us understand the likely cost of this policy.  They estimated the annual average costs over the period to be between $2.1B pa (Landcare) to $8.3B pa (Infometrics).

New Zealand’s cost are higher than most because we already have a largely green electricity supply system, so the options for quick easy decarbonisation gains, don’t exist for us.  The lowest cost option for us to meet our commitment, as identified by the Ministry for the Environment Studies, is for us to (mostly) buy carbon credits from overseas.  And there is quite some uncertainty here about both availability, credibility, and price, of such credits.  So actually implementing the policy commitment may prove even more expensive than first thought.

To put these cost in context it is useful to consider them against other social policies we take for granted.  For example the low end estimate of the cost ($2.1B pa) is about the cost of ‘free’ primary education.  And the high end estimate of the costs ($8.3B pa) is about the cost of our ‘free’ early childhood, primary, secondary and tertiary education (figures from Treasury 2013 infographic on where your tax dollar goes).  And remember that the commitment period starts in 2021, so these costs could start to bite within a relatively short time.

So unless there are some very real, tangible and immediate benefits to implementing our climate change policy there are going to be some very hard social policy tradeoffs to be made, starting fairly soon, if we are to be ready for 2021.  Hence the urgency for a robust independent study to identify these credible benefits.

 

Ratchet Clause and Diminishing Returns Means Cost Rise Rapidly With Time

The COP21 agreement includes a ratchet clause requiring future commitments to be at least as great as the previous period.  Also as we use up the easy wins, including any options for purchasing credits overseas, it is likely that costs per unit, and total unit reductions will rise quite rapidly with time.

It has been suggested (by Globe-NZ) that our commitments beyond 2030 should be to a net zero emitter by 2050, ideally doing this completely internally.  And they provided a study (by Vivid Economics) with suggestions on how this could be achieved, by land use change, without the need to buy overseas carbon credits.  This makes some sense with the uncertainty of international carbon markets, but the costs are likely to be considerably higher than for our 2021 to 2030 commitment.  The Vivid study, wisely, didn’t try and quantify the costs for the proposed land use change.  But a very rough order costing (based on current returns on different land uses) suggests it would be of the order of $24B pa.  To put this in context this is about the current cost of our ‘free’ publicly funded health and education sectors.  So some even harder policy trade-offs to be made.

 

Long Term Benefits to New Zealand of Our Climate Change Policy Currently Uncertain

Because the costs are very real and immediate then any offsetting benefits need to be immediate and credible.  It is all very well to say we are helping save the world from climate change risks but:

  • We can’t do much to change overall climate change impact on our own;
  • The actual world costs of climate change adaptation are uncertain and a very long way off (but the costs are real and now); and
  • It appears we may be one of the ‘lucky’ countries who have a net benefit from climate change.

That last point needs a bit of explaining but the studies I have read so far suggest we have a number of factors in our favour.  Namely:

  • Being a small and relatively cold island surrounded by ocean shields us from the worst of the temperature effects; (MPI study of 2012 on impact of climate change on Land-based sectors and adaptation options)
  • Our grass based agriculture benefits more than most from the fertiliser effect of CO2 (MPI study again); and
  • Our options for managing the impact sea level rise on our built environment appear relatively low cost (for example see Dunedin City Council Study on options for managing impact of sea level rise on South Dunedin).

 

Identified Benefits Need to Be Immediate and Credible

One source of likely immediate tangible benefits of our climate change policy are likely to be improved trade agreements, or at least avoidance of trade sanctions.  But as the current government well knows the benefits of even the largest trade agreements (TPPA) need to be credible, immediate, clear and tangible to the voting public to support a policy.

So who is willing to take up the challenge to identify the immediate, credible and robust benefits of our climate change policy commitments?  This an urgently needed to feed into public policy debate on this issue.