Archive for the ‘Emission pricing’ Category

New Zealand’s journey toward a low-emission future: Today’s climate change landscape

Note: Through Motu Economic and Public Policy Research, I have just published two Motu Notes on climate change issues prepared as background papers for Motu’s Low-Emission Future Dialogue. The first in the series presents an overview of the climate change challenges facing New Zealand and the current policy context.  This information is highly relevant because in 2015 New Zealand will need to present its post-2020 emission reduction commitment – referred to as an Intended Nationally Determined Contribution – under a new international climate change agreement currently under negotiation. The paper’s executive summary is provided below.  The full paper is available here.

Motu note v3 300In the coming decades, New Zealand will face important choices shaped by both the risks and opportunities created by climate change. This paper provides an overview of the current climate change landscape from which New Zealand is starting the next stage of its journey toward a global low-emission future. The key findings are:

Climate change science, emission trends and mitigation scenarios The latest reports from the Intergovernmental Panel on Climate Change (IPCC) reinforce the case for significant reductions to global greenhouse gas (GHG) emissions. Under business-as-usual growth in emissions, the global mean surface temperature in 2100 could increase by 3.7oC to 4.8oC compared to pre-industrial levels. A least-cost pathway to limit temperature increases to not more than 2oC above pre-industrial levels would involve reductions of 40–70 percent below 2010 levels by 2050 on the way toward a zero-net-emission global economy. A key objective should be limiting cumulative emissions, and delaying action significantly increases the costs of mitigation. (more…)



“Hot Air”: Searching for the winds of climate policy change

On 2 November 2014, the Intergovernmental Panel on Climate Change released its Synthesis Report 2014 with the headline “Climate change threatens irreversible and dangerous impacts, but options exist to limit its effects.” The report is a sobering reminder that limiting temperature increases below 2° Celsius relative to pre-industrial levels could entail reducing emissions by 40-70 percent of 2010 levels by 2050, and bringing net emissions near or below zero by 2100.  It emphasises the clear benefits of near-term action given the inertia of economic and climate systems.

A White House report issued in July 2014 also highlights the costs of delaying action to reduce emissions.  Two key findings were:

  • Based on a leading aggregate damage estimate in the climate economics literature, a delay that results in warming of 3° Celsius above preindustrial levels, instead of 2°, could increase economic damages by approximately 0.9 percent of global output… The incremental cost of an additional degree of warming beyond 3° Celsius would be even greater. Moreover, these costs are not one-time, but are rather incurred year after year because of the permanent damage caused by increased climate change resulting from the delay.
  • An analysis of research on the cost of delay for hitting a specified climate target (typically, a given concentration of greenhouse gases) suggests that net mitigation costs increase, on average, by approximately 40 percent for each decade of delay. These costs are higher for more aggressive climate goals: each year of delay means more CO2 emissions, so it becomes increasingly difficult, or even infeasible, to hit a climate target that is likely to yield only moderate temperature increases.

The global case for near-term action is clear.  What about the case for near-term action in New Zealand?

This issue has proven challenging for New Zealand so far.  In addition to economic and climate inertia, New Zealand has faced a third important dimension: political inertia.  This was the subject of Alister Barry’s 2014 documentary Hot Air”.  Using archival footage and retrospective interviews, the film traces New Zealand’s successive attempts to price and reduce greenhouse gas emissions since 1988.  Across policy cycles from the government’s initial consideration of emission pricing to the choice of voluntary greenhouse agreements, consideration and abandonment of a carbon tax and agricultural emissions research levy, the monumental passage of legislation for the New Zealand Emissions Trading Scheme (NZ ETS) and the subsequent decisions that reduced its impact, a similar story was repeated.

Attempts to shift New Zealand toward a lower-emission development pathway were resisted effectively by those with powerful interests in maintaining business as usual.  

(more…)



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