Tag: NZ

Things to come: adapting to climate change in NZ

When I first began to realise what a serious matter climate change was I found it difficult to get interested in adaptation. It sounded to me like acceptance of something that should be resisted. And I disliked the bland voices claiming that the effects of global warming would be easily adapted to if not positively beneficial. However with time I’ve recognised that there is no escaping adaptation. It is as much a part of coping with the threat of climate change as mitigation, and the one doesn’t displace the other. Indeed the need for adaptation may sharpen awareness and spur determination to turn away from fossil fuel energy.

New Zealand appears unlikely to be one of the worst-affected countries as climate change begins to bite. But changes will occur and adaptive responses be demanded. The Climate Change Centre’s recent publication Climate Change Adaptation in New Zealand: Future scenarios and some sectoral perspectives (pdf download here) is a contribution from the scientific community towards discerning what form those responses may need to take.  Gareth announced its publication a few weeks back and over coming weeks I’ll try to report on at least some of the chapters.  I’m starting with a look at the second chapter Global & local climate change scenarios to support adaptation in New Zealand, written by Andy Reisinger and four others.

 

What will we need to adapt to? That depends on what the world does about future carbon emissions. The paper selects and explores two different global scenarios following divergent emissions pathways. One is a high carbon world. It assumes that there will be no concerted efforts to reduce greenhouse gas emissions. It represents a fractured world with varying socio-economic and technological development in different geographical areas. It will likely result in large rates of climate change, warming of almost 4 degrees above pre-industrial levels by the end of the century, and severe impacts in many regions.

The other scenario is of a rapidly decarbonising world with rapid concerted global action to reduce greenhouse gas emissions and to limit greenhouse gas and aerosol concentrations to about 450 ppm CO2-equivalent. This results in a long-term increase in global temperature of about 2 degrees above pre-industrial levels. In this scenario the global impacts of climate change impacts would be limited in their severity and extent, but some regions would still experience significant negative impacts.

The paper envisages possible strains between the two nations in the high carbon scenario, including population pressure on New Zealand and a more protectionist stance in Australia.

Before moving to specific effects on New Zealand climate the paper discusses the possible flow-on effects for us from the more generalised global impacts of the changing climate.  Our near neighbour Australia, likely to suffer severe effects from climate change, figures largely in these considerations. The paper envisages possible strains between the two nations in the high carbon scenario, including population pressure on New Zealand and a more protectionist stance in Australia.  Under the rapidly decarbonising scenario by contrast we could expect a more harmonised and cooperative approach to mitigation and adaptation. In relation to the wider world the paper points to a number of possible effects for New Zealand in the high carbon scenario ranging from instability in the Pacific Islands to possible new international trade barriers and new alliance groupings. In the rapidly decarbonising world we can expect some benefits from the changes in energy production systems and technologies, as well as some costs.  International trade agreements are likely to be linked to climate and environmental efficiency standards.

The paper then turns to specific climate changes in New Zealand, focusing mainly on temperature and precipitation. One or two things struck me particularly in this section. In relation to temperature it is in the latter half of the century that the high carbon scenario diverges most strikingly from the rapidly decarbonising scenario. Projected temperatures rises in New Zealand are below the global average, but coping with around a 1.25 degree change by the end of the century looks much preferable to the around 2.5 degrees over much of the country that is projected under the high carbon scenario.  Precipitation changes show a strong west-east gradient driven by the expected increase in southern hemisphere westerly winds. The increases in the west and decreases in the east are markedly stronger in the high carbon scenario by the end of the century.

In treating other climate elements and extremes in New Zealand the paper is less specific, on the grounds that not enough scientific work has yet been done. However in the matter of temperature extremes it finds decreases in frost occurrence and increases in high maximum temperatures are robust findings. It expects roughly that by the 2030s what is currently an unusually warm year will have become the norm, and an unusually warm year in the 2030s will be outside the ranges of temperature experienced in New Zealand to date.

On precipitation extremes it suggests that a currently experienced extreme rainfall with a 100-year return period could occur approximately twice as often under a local warming of about 2 degrees. It notes that increasing flood peaks resulting from these extremes will interact with rising sea levels.

Drought magnitude and frequency are expected to increase, with the possibility of a current 1-in-20 year drought occurring at least twice as often in some eastern areas under a warming of about 2 degrees.  Fire risks are likely to be more marked, especially in eastern areas.

Sea level rise receives separate attention.  The paper suggests that coastal risk assessments should assume that the probability of sea level rise of at least 0.5 m by 2100 is high, but the possibility of even 2 m cannot be absolutely excluded and sea level will continue to rise beyond 2100 for many more centuries.  Compounding factors such as storm surges and changes in wave patterns need to be taken into account.

It would be a mistake to assume that, because the climate changes projected for New Zealand are relatively lesser in rate and magnitude compared to the rest of the world, adaptation is therefore a less important question for us.  Sea level rise will be at least the global average of change. Effective management of the large range of ecosystems and natural hazards is constrained by our small budgets and pools of expertise to inform decisions, all the more because of our decentralised approach to decision-making in such areas. We are strongly linked to global processes through international policies, technologies, trade and flow of people and goods and services and must be sensitive to this.

There’s much for New Zealand to be concerned with internally in the ongoing process of adaptation. Climate risk assessment should precede new infrastructure development. Difficult conflicts may be associated with the loss of opportunity in, for example, the development of a coastal property because of its vulnerability to future sea level rise. The danger of local councils with limited resources being captured by special interests raises the question of the extent to which binding guidance should be provided to councils by central government on matters of adaptation.

As the selection of scenarios indicates, we can’t be sure what adaptive measures will be required in the future. But we will have no reason to be taken by surprise.

No energy for change

Gerry Brownlee’s draft energy strategy for New Zealand is an interesting read, but not perhaps in the way the government intended. As Bryan discussed in his comment on the strategy, Brownlee puts mining and drilling up front and centre, and relegates environmental and carbon issues to a definite second place in government priorities. You might infer from the document that this is a “strategy” that has been designed to fit with what the government wants to do, rather than what is actually necessary. But what struck me most forcefully was the apparent lack of any well-thought out or detailed context for the strategy. Let’s see if we can supply some, and see where that leads us…

Continue reading “No energy for change”

The Carbon Challenge

The Carbon Challenge: New Zealand's Emissions Trading Scheme

Empty rhetoric.  That’s the verdict on the Emissions Trading Scheme (ETS ) from Geoff Bertram of the Institute of Policy Studies and Simon Terry, Executive Director of the Sustainability Council, in their searching book The Carbon Challenge: New Zealand’s Emissions Trading Scheme.

They present a picture of governmental processes captured by powerful groups pursuing their own interests at the expense of the rest of the community. Large industry and agriculture have won for themselves exemptions and delays of such an order as to make significant emissions reduction impossible in the first commitment period (CP1) of the Kyoto Protocol. At the same time the costs have been loaded disproportionately on to households and small industry. Those responsible for 30% of emissions will carry 90% of the cost. Agriculture with 49% of emissions will pay 3% of the costs.

The authors don’t accept the claim of the agricultural sector that there are few options open to them to reduce emissions. In fact they claim agriculture offers by far the biggest set of low-cost abatement opportunities. There are a number of options that are not only commercially available but profitable to undertake. They instance means for reducing nitrous oxide emissions – nitrification inhibitors, stand-off pads, new grasses, supplementary maize feed, improved soil drainage.  Selective breeding offers the possibility in due course of some reduction of methane as does the supplementary feeding of various plant matter. The processing of casual effluent from milking sheds through bio-digesters cuts both carbon dioxide and methane. Improved carbon storage in soils through pasture management appears possible as does sequestration through biochar burial. Meanwhile agriculture’s exemption from the ETS bolsters higher land prices. Nice for landowners, but subsidised by the community at large.

In the longer run the ETS exemption is against farmers’ own best interests. It is shielding them from likely winds of change in world markets. The authors instance large companies in other countries seeking low-emissions milk, as Cadbury is doing in the UK,  and point to the likelihood that New Zealand will surrender first-mover advantage to such countries if we continue with our present dogged denial.

There is self-defeat for large industry, also, in the favoured position they have gained for themselves. The ETS opens the possibility of production subsidies for high-emission industries by focusing on the intensity rather than the overall quantity of emissions. It is likely, for example, that Solid Energy would be entitled to subsidies for the manufacture of urea from South Island lignite, even though it would be the country’s biggest single industrial emitter of greenhouse gases after the Huntly power station. By this provision New Zealand could provide a welcoming environment for industries relocating from other Annex I countries, via ‘carbon leakage’ from those economies. Such production subsidies will invite tariff retaliation from other countries and could shut New Zealand exports out of key markets.

New Zealand will emerge from CP1 with a level of emissions considerably higher than the 1990 benchmark to which we are expected to have returned. The role of forestry as a carbon sink to offset the country’s emissions is the subject of close investigation in the book, which warns of the reckoning which must be faced when the trees are cut down. Potentially enormous costs could be faced by the next generation when the final accounting is made. Indeed, the costs may be so high as to raise questions about the country’s ability to meet them. This prospect may see other nations disallowing the plantation forest offsetting practice in successor arrangements after CP1. Permanent forests are a different matter, and the authors see these as a real key to balancing the country’s future carbon budgets. They lament the uncertainties and potential retrospective taxation the forestry sector faces by comparison with the government response to demands from large industrial operations.

The book’s discussion of forestry, as of many other aspects of the ETS, is complex and demanding for the general reader. But the ETS itself is highly complex and often difficult to follow. I can well understand the authors’ claim that it’s a reasonable guess that no more than a handful of MPs understood the detail of what they were voting on in 2008 and 2009. I often found myself struggling to get a proper hold on the ramifications of the various processes the book explores, even though the authors have been exemplary in the patience and thoroughness of their explanations.

It is the exhaustive care they bring to their task which makes the reader respectful of the summary statements which emerge from time to time in the course of their discussion, such as this one:

“The ETS has not been designed to promote economically efficient abatement.  It has been designed firstly to protect and promote the position of vested interests that are unwilling to shoulder asset write-downs required to recognise a price on carbon, and secondly to transfer the costs of this to future generations.”

However there are countervailing forces at work against the formidable clout wielded by agricultural and other major emitter lobbies. The authors nominate three domestic factors which could upset the current political equilibrium. One is the possibility that the lack of trust in the forestry regulatory regime may deter new planting in general and permanent afforestation in particular; this would increase pressure for reform of the ETS.  The second is that sections of the population and the economy will become more concerned about climate change and the lack of any effective action at home to reduce emissions. The third is that the recognition of the size of the carbon debt we are passing to future generations by using forest credits to cover excess emissions may become a moral issue.

They also point to international factors which will put our ETS under pressure. One is the pressure we will come under if international emissions targets move towards being set more on a per capita basis. It would be very risky for us to go forward with gross emissions far above any we could hope to defend in a global commons debate.  Another is the possibility mentioned above of changes to the rules relating to forestry in a CP2 period. A third is the risk of border taxes and other adjustments we could well face from other governments and from private-sector firms if our climate change policy is shown to be incapable of matching the climate change objectives it espouses.

In the ETS we have shied away from the present costs involved in serious action to reduce emissions. But in doing so we have laid up for ourselves the far greater costs which will be the result of doing nothing now. That is the basic warning of the book. New Zealand is part of the developed world and will not be able to escape its fair share of responsibilities as we appear set on trying to do.

Four seasons in three days

Changes in climate extremes — the heavy weather — are where society will take “the big hits” of climate change, as I discussed last month. I will therefore need to arrange to be in Wellington (no stranger to weather extremes, it has to be said) for the joint MetSoc (Meteorological Society of NZ) and AMOS (Australian Meteorological and Oceanographic Society) conference, Extreme Weather 2011 at Te Papa from February 9 – 11. The meeting will include six special sessions each with a keynote address:

  • Extreme weather in the Australasian region – from floods to droughts
  • Impact and meteorology of the main climate drivers (ENSO, SAM, Monsoon)
  • Using high resolution models to understand local meteorology
  • Oceanography of the Australasian region
  • Climate change in the Australasian region
  • Riskscape – Impact of weather on disaster planning in the Australasian region

A good excuse to visit the capital in summer, perhaps? It’ll be windy…

[Disclosure: I’m the least-qualified member of the MetSoc committee.]

[Any excuse for the House]

NZ ETS passes the Kyoto bill to our children

This guest post is by Simon Terry, Executive Director of the Sustainability Council and co author with Geoff Bertram of “The Carbon Challenge: New Zealand’s Emissions Trading Scheme” (published by Bridget Williams Books).

New Zealand’s failure to reduce emissions to its Kyoto Protocol target means the taxpayer still faces a $1.1 to $5.7 billion net liability after all the ETS charges have been paid. That is the bottom line after taking account of what the ETS will contribute to paying off the Kyoto bill and Treasury’s advice about how to price what is left.

Years of narrow accounting, which had given the impression that the government was at various times in credit under the Protocol, was finally abandoned in the May Budget – at least in part. It broke with the past by recording key deforestation liabilities on the books, thereby signalling the real cost of New Zealand’s 22% overshoot of its Kyoto target.

This Budget entry officially scotches the myth that the government faces no financial impacts under the Protocol because it can rely on offsetting credits from plantation forests. Those plantation forests are earning credits now, but the credits must be paid back when the trees are harvested in the 2020s. Using these credits to pay the Kyoto bill is the equivalent of putting the cost of these emissions on the plastic for the next generation to pick up.

The Budget’s inclusion of a contingent liability for harvesting forests that are earning credits today is an important step, but it covers only the five years of the ETS to 2012. What the Budget failed to show is that the next period from 2013 to 2020 will be even more costly. New Zealand is actively negotiating a new international commitment that it expects will involve a stricter emissions target, while official projections are for the nation’s emissions to keep rising and carbon prices to also go up.

During that period there will be an even larger volume of forest credits earned by New Zealand and a corresponding contingent liability for their harvesting, which the Budget still does not record. This is despite a Treasury statement a year ago that it “will be necessary to recognise” a contingent liability right out to 2020. While the detail of the international commitment New Zealand will take on remains to be agreed, based on pledges to date and the current ETS settings, there would again be a very significant taxpayer liability after all ETS charges are paid.

The ETS simply fails to collect enough revenue to cover expected international commitments.

The ETS simply fails to collect enough revenue to cover expected international commitments. During the first Kyoto period, after all the exemptions, rebates and compensation payments are allowed for, the Government will receive just 12 million emission units net under the ETS, with each unit accounting for a tonne of greenhouse gas emissions. Compared to the current estimate for the Kyoto liability of 69 megatonnes (Mt), the ETS will reduce this by only a sixth during the Kyoto period.

That means over 80% of the cost of dealing with today’s emissions is to be dumped on a future generation of taxpayers.

You can imagine the reaction if someone proposed that the government take out a loan to cover 80% of everyone’s power bills and that loan was not due for payment until the 2020s. Yet that is the direct equivalent of what is happening under the ETS during its first five year at least. Consumers may not be accustomed to facing a price on carbon, but newness is hardly a moral defence for passing the bill to our children. Unless Parliament votes to withdraw from Kyoto (and only Act supports this), it is basic that today’s polluters pay today’s emissions bill.

The remaining unpaid liability of $1.1 to $5.7 billion is calculated as set out below:

  • The Budget lists, as a contingent liability, the need to cover 86.1 Mt of emissions resulting from harvesting forests that earn credits between 2008 and 2012. On the basis of the low carbon price of $20.29/tonne used in the Budget, it puts the gross liability for this at $1.747 billion.
  • The deficit from the Kyoto agreement however is only 69 Mt and once ETS revenue equal to 12 Mt is accounted for, the shortfall of 57 Mt represents a net Kyoto liability of $1.1 billion. Yet the Treasury warned in July 2009 that carbon prices could go as high as $100/tonne, and so the net liability could be as much as $5.7 billion.
  • During the next period from 2013 to 2020, the Treasury has projected a related contingent liability of roughly another 100 Mt. On that basis, the Budget should also show a further entry for this of about $2 billion at the $20/tonne carbon price.
  • It is possible that certain forests that are earning credits today will never be cut down, but there is no scenario under current government policy in which forest owners do not need to be paid for the newly stored carbon in those forests.

For today’s polluters to fully meet the Kyoto liability, total ETS payments obviously need to rise a great deal. However, households and small businesses are paying their fair share of the Kyoto bill, and it is major industrials and pastoral farmers that receive the heavy discounts at the taxpayers’ expense.

These subsidies and other compensation arrangements dominate the ETS flows such that only one in five of each dollar charged under the ETS becomes available to the Government to pay off the Kyoto liability.

Households already bear half the total costs resulting from the ETS during its first five years (52%), while accounting for just a fifth of all emissions (19%). Together with small-medium industry, commerce and services, and transport operators, they would pay 90% of the costs resulting from the ETS during the first five years while being responsible for 30% of total emissions.

With a tighter international commitment to come and New Zealand’s gross emissions still rising, the scale of the subsidies to major industrials and pastoral farmers is set to deliver increasing fiscal stress that will build up pressures for change in addition to the inequity that will be increasingly observed. Other moves overseas will also tend to put pressure on the ETS, including carbon border taxes.

Fortunately, New Zealand is well endowed with low cost options for reducing its carbon footprint

Fortunately, New Zealand is well endowed with low cost options for reducing its carbon footprint, including agricultural efficiency measures that cut emissions and the planting of permanent forests to newly store carbon. Once the notion that doing nothing will be costless is abandoned, it is surprising how much progress can be made under even modest assumptions. There are a series of options that together could deliver a 40% net reduction on the business-as-usual emissions otherwise expected in 2020 – and at no economic cost if the effective carbon price is assumed to be $30/t or higher.

As it currently stands, the ETS will reduce gross emissions by less than 1% during its first five years – relative to what they would have been anyway. Emission actually keep growing, but at a slower rate. Much the same is true out to 2020 if the ETS settings are not changed. Getting the Kyoto accounts straight is the starting point for a major reworking of carbon pricing policy.

Note: The Budget estimates of contingent liabilities can be viewed at: http://www.treasury.govt.nz/budget/forecasts/befu2010/038.htm The Treasury document drawn on states with respect to the gross liability for both periods: “180 million forestry credits will be used … At a price of $100/unit, this contingent liability could be as much as $18 billion for the period 2008 – 2020”. See: 2020 Emissions Reduction Target: Further Analysis, T2009/1811, 31 July 2009, p.7. While the Treasury amended the government’s online accounts following this July document, it has not registered a contingent liability for harvesting on its own website that tracks the Kyoto “net position”.