The Government and many commentators have given plenty of reasons for our inaction on climate change. However, most of those reasons are now out of date, and no longer stand up to scrutiny.
“China’s not doing anything”
This is just so wrong.
If you’d said this ten years ago, it would have been fair enough. China’s emissions have grown at a frightening rate since the turn of the century, from 2.7 tonnes of CO2 per capita in 2000 to 7.1 tonnes in 2012 – close to the EU average. China alone contributed the majority of the growth in global emissions over this period.
But if there’s one thing you can say about China it’s this: when its leaders decide to change tack, it happens. Fast.
China is undergoing a quiet energy revolution as a result of what Australian economist Ross Garnaut calls their “new model of economic growth”. Garnaut is an expert on the Chinese economy and this lecture he gave last year is filled with compelling insights (transcript here).
Chinese citizens’ concerns about local air pollution caused by all those dirty coal plants have reached a tipping point, and China’s leaders recognise this as a threat to social and political stability. For this and other reasons – including climate change – they are shutting down the dirtiest coal plants and going like gangbusters on energy efficiency and clean energy deployment. Wind and solar power generation have been growing at average rates of about 40% and 270% per year respectively since 2010.
Far from being rhetoric, the commitment China has made to peak its emissions by 2030 or sooner is looking conservative given the change that is actually happening on the ground. Garnaut reckons China’s emissions from electricity generation have already peaked and its total emissions could peak as early as 2020. This is backed up by a new London School of Economics study authored by Sir Nicholas Stern, which concludes: “China is moving decisively to a ‘new normal’ – a development model based on the notion of better quality growth. Under China’s new development model, its emissions are likely to peak by 2025, and could well peak earlier than that.”
Still don’t believe it? Get this. China’s coal use actually fell 2.9% in 2014 and the decline has accelerated in the first quarter of 2015. Its steel output fell 1.7% this quarter compared with last year (the first time this has happened in 20 years) and some experts, including Garnaut, believe the demand for steel in China has already reached its peak. As a result of all of this, China’s total CO2 emissions fell 2% last year – the first time in 40 years this has occurred while its economy has grown.
So to say China isn’t doing anything to rein in its emissions couldn’t be more wrong. In fact, according to the international experts behind Climate Action Tracker, China is doing relatively more than we are, considering they are still a developing country. Of course, then the naysayers will point at other countries whose performance is similarly lagging – probably not India as they also rank above us – so Canada or Russia maybe. Pointing to stragglers and bigger polluters doesn’t change the fact the whole world will be moving to low carbon sooner or later and NZ needs to think about where it wants to position itself. The ‘stragglers’ club is getting smaller and smaller as time passes.
NZ is different
Yes we are different – with relatively high levels of renewable electricity generation and lots of agriculture. But lots of places are different. Some other countries have car industries, or make most of their money from digging up oil and coal. Being unique is not unique. And it doesn’t mean there is nothing we can do. This excuse comes in a couple of variants, so let’s look at each of the two ‘New Zealand is different’ arguments in turn, starting with electricity before covering agriculture.
NZ is different #1 – “We already have a high renewable electricity base”
As the Government loves to point out, we have generated up to 80% of our electricity from renewables (mostly hydro) in recent years. That’s a lot higher than most developed countries. Great – off the hook right?
Nope. For starters, there is still plenty of easy progress to be made in reducing our use of coal and gas for electricity. Did Sir Ed get complacent when he got 80% of the way up Everest?
MBIE has published scenarios showing we could reduce CO2 emissions in the electricity sector from the current level of seven million tonnes to around three million tonnes by 2025. That would be a 12% reduction in our total CO2 emissions. What’s more, this would make bugger all difference to the cost of electricity thanks to our cheap geothermal and wind resources, which have been cost-competitive without subsidy years ahead of most countries.
In some good news, Genesis Energy recently announced it will be closing the remaining coal units at Huntly in 2018 – earlier than MBIE expected. This was a purely commercial decision and had nothing to do with government policy.
Getting rid of that last few percent of gas generation while maintaining a secure electricity supply would be tricky and expensive at present, but this is an area where NZ could show some real leadership through developing smart and innovative solutions which other countries will need too. In particular, we could lead the way on integrating a ‘smart grid’, which will allow us to control electricity demand, supply and storage to balance the grid in the cheapest way possible.
The bigger point here though is that electricity is only one piece of the energy puzzle. We generate much more carbon emissions from burning fossil fuels for transport, direct heat (e.g. coal boilers for processing milk into powder) and other uses. In this complete picture, only about 35% of our energy is from renewable sources – we have a long way to go. As we have discussed before, there is a lot more the Government can do in areas like transport.
When we look at it this way, our strong base of clean electricity is actually a big opportunity. With electric vehicles and heating technologies we can shift that energy demand onto the grid. And in New Zealand, doing this today would deliver much bigger emissions reductions than it would in countries with a high carbon electricity mix, like Australia (because there electric cars would be powered by coal power stations!).
Finally, let’s add nuclear power into the mix. When you look at countries’ total non-emitting electricity generation – including nuclear – we find New Zealand’s actually not so special. For example, did you know that Canada too can boast that 80% of its electricity is non-emitting? (65% hydro, 15% nuclear.) New Zealand shouldn’t be providing excuses for these guys to do nothing.
A better role model for both Canada and New Zealand is Switzerland. Their electricity is already almost completely decarbonised (60% renewable, 37.5% nuclear, 2.5% fossil). Their per capita emissions are just 6.4 tonnes CO2-equivalent, compared with NZ’s at around 17 tonnes. Looking at CO2 only, their emissions are less than 5 tonnes per capita compared with ours at around 8 tonnes. Yet they have still set a 2030 emissions target of 50% below 1990 levels, which makes our Government’s offering of an 11% reduction look utterly pathetic.
NZ is different #2 – “Half of our emissions come from agriculture”
There is a fair point here with methane. So far the options to reduce methane emissions are limited. The science suggests that we should account for methane differently than carbon dioxide, and regardless our priority should be to reduce CO2 emissions rather than methane.
However, while there is no need to go shooting cows to reduce emissions, do we really want to keep increasing our national herd? If we really want to maintain or improve our water quality, we have to stop putting more cows on the land.
Some argue that by stopping the growth of our herd, we will push dairy production to less efficient producers overseas. Are overseas producers really less efficient? Perhaps on average, but not necessarily at the margin. We may have reached the limit of our efficient grassland farming methods – so any further cows added to our system are not as efficient as the existing ones. This is borne out by the fact that recent increases in milk production have been fuelled by the use of supplements such as palm kernel.
“New Zealand is too small to make any difference”
Jan Wright summed up this issue nicely in her fracking report from last year:
“Perhaps I have become particularly sensitive, but I seem to be increasingly hearing that it is pointless for our small country to reduce our emissions of greenhouse gases because our contribution to the global total is insignificant. But this is a recipe for inaction everywhere. The Minister of Climate and Environment in Norway – another small country – recently said it better than I can:
“Norway accounts for 0.04 per cent of global greenhouse gas emissions. In isolation, what we do is of little significance. But we cannot think like that. EveryChinese city, every U.S. state, every coal power plant emission is small in the larger whole. We will not get anywhere if we just point at each other.””
“If we do anything it will just force businesses overseas”
This is a risk, but one we can avoid with good policy.
By charging businesses for emissions, they might well go somewhere where they don’t have to pay for their emissions. This is known is carbon leakage – and is a real problem if they companies end up going somewhere they create even more emissions than they would have here. There are many ways to address carbon leakage concerns to avoid perverse outcomes – either transitional assistance as currently happens through free ETS permits, or border adjustments for the carbon price as we do with GST.
However for most industries this risk is probably overstated, as the economy will adjust to any changes. If carbon charging hits exporters and reduces exports, then the dollar would fall, making life easier for exporters overall. By charging for emissions, we will ultimately encourage new economic activity that has lower emissions.