Climate Change – Actions speak louder than words

The New Zealand Institute has issued a report ‘Actions speak louder than words’ . It is rather interesting, but has led to a lengthy post.

In the Executive Summary the authors – David Skilling and Danielle Boven commence as below:-

Global climate change is likely to
have a significant impact on the
New Zealand economy over the
next several decades and beyond,
and there is a reasonable likelihood
that New Zealand will need to
make significant reductions in
its emissions. In response, New
Zealand needs to develop a clear
strategy to guide its response to
the effects of climate change and
commit to the actions required to
enable New Zealand to reduce its
emissions in a meaningful way.

That is a comment and conclusion I have no problems in accepting.

Indeed, I think the report is a significant contribution to the Climate Change debate.

I do have some issues with some of the suggestions made later.

My concerns are more to do with practicality and feasibility than ideological. Plus, I think more thought needs to be given to how the recommendations might be achieved.

In an overview comment on the Institute’s website

New Zealand Institute chief executive Dr David Skilling notes that “A key theme in this report is that New Zealand’s climate change debate needs to be more fact-based”. Commitments such as the government’s carbon neutrality aspiration or the National Party’s ’50 by 50’ target should be assessed in terms of the actions proposed to achieve them rather than simply on the ambition of the target.

Reducing emissions in a significant way will be a challenging process. Indeed the report estimates that the policies announced to date to reduce emissions will only reduce 2050 emissions to their 1990 level.

What I think the authors are saying, albeit politely, is let us cut out the aspirational crap and focus on trying to make a difference.

Elsewhere in the report, the authors state:-

The challenging nature of this
process is not an argument for
inaction. Rather it emphasises the
need to act seriously. Significant
reductions in New Zealand’s
emissions will require sustained
action. This will involve substantial
improvements in the emissions
efficiency of the existing New
Zealand economy, as well as a
shift in the New Zealand economy
towards reliance on lower emissions
types of economic activity.

I can agree wholeheartedly with the necessity of improving the efficiency of the economy. This is desirable in any event.

Further, as I blogged recently, recent research by the McKinsey Global Institute shows that investment in energy productivity not only assists economic efficiency, but reduces GHGs . Investment in energy productivity has substantial economic and GHG reduction payback.

The NZ Institute report later comments

To achieve significant reductions in
emissions will require a change in
the composition of the New Zealand
economy.

In particular, New Zealand
should encourage the development
of strengths in low emissions types of
economic activity.

Developing these strengths will require deliberate action in order to ensure that New Zealand is an attractive location for this type of activity relative to other countries.

This means that investing in education, research,and communications infrastructure,are potentially important elements of New Zealand’s policy response to climate change.

I have split up the original paragraph to highlight the various different and to my mind important comments. I have highlighted in bold text some especially important, in my opinion, comments.

I have no issues with the sentiment, but what precisely is meant by a change in the composition of the NZ economy?

What is meant by low emission activities?

With regard for the need for investment in infrastructure, research and education.

I totally agree.

In fact I think we need it anyway. It is critical to our future success.

The lack of investment, which need not, if the overall investment climate is appropriate, be public investment in these areas, under governments of all shades of blue, red and whatever colour you can think of, has been and continues to be a significant constraint on the ability of the economy and this country to perform in the long term.

My view is that failure in the above is a significant contributor to our productivity and wages gap with other economies and is a key reason in our falling down the OECD rankings. There are others, but this is not the posting to dwell on them.

I do not see all of the required investment, as State investment, as I believe that the private sector could play a major role here. Though others will no doubt think differently.

The authors then go on to say:-

the ambitious talk of aspirations for carbon neutrality or deep reductions in emissions, the commitments and
proposals made to date do not seem
likely to deliver emissions that are
below their 1990 level. This gap
between rhetoric and reality creates
reputational risk for New Zealand
and continues New Zealand’s history
of over-promising with respect to
emissions reduction as was the case
with its Kyoto commitments.

Clearly that was the case and continues to be so. In large part I suggest that much of the commitment to date has been about obtaining ‘brownie points’ internationally and posturing with regard to “NZ is a world leader’ and we are ‘punching above our weight” statements.

In reality we are not doing any of that and far from being a leader we have significant problems in even being a successful follower.

Indeed, the actions announced to
date position New Zealand as a
follower and do not seem adequate
to position New Zealand to compete
in a low-emissions global economy.

This means that New Zealand
continues to face a major economic exposure to the possibility that overseas governments or consumers require New Zealand to make substantial reductions in emissions.

My emphasis. This is something we need to be alert to. This will, if we are not careful cause us major difficulty e. g. food miles, failure to manage a ‘green brand’ whatever we individually feel about being ‘Green’.

New Zealand should slow down
the rhetoric and speed up in terms
of the hard work of reducing New
Zealand’s emissions. Actions that
reduce New Zealand’s domestic
emissions in a meaningful way
speak louder than words.

Absolutely correct. I could not agree more.

It is here that we start to get to the nitty gritty.

New Zealand is a highly emissions intensive economy, and its economic growth continues to be relatively emissions intensive in nature.

Agriculture, tourism, plus poor infrastructure and small poulation relative to land mass.

Even with various measures to reduce the emissions intensity of New Zealand’s economic growth profile, reducing New Zealand’s emissions in a significant way will remain difficult if new lower emissions intensity strengths are not developed in the New Zealand economy.

What will we change to? Do we have the ability to change? How will we change? Do we have the will to change? What is the time frame?

To what extent do we need to change, given that our natural resources, may and I stress may position us to be a produce provider – but should that be the summit of our aspirations?

Indeed, as noted earlier, committing to demanding targets for emissions reduction is equivalent to committing to transform the New Zealand economy. Although more abatement opportunities will likely become available to New Zealand over time as technology develops, the fundamental challenge is that New Zealand’s areas of comparative advantage are in emissions intensive sectors such as dairy and tourism. And these parts of the economy are likely to be important drivers of New Zealand’s economic growth over the coming decades. This generates a significant exposure for the New Zealand economy.

Absolutely.

Whilst I think this is understood by some, perhaps imperfectly in some instances, there is a major education effort which is required. In fact I would go so far as to say we need a fundamental cultural change in our thinking.

I am not, personally, a member of the Climate Change cult, but many of the changes which the adherents of this belief propose are in fact economically rational.. Provided they are in the context of enhancing competitiveness, maintaining our living standards and increasing efficiency and productivity in a manner which will be viable over the longer term.

As the report’s authors say:-

New Zealand’s export profile is dominated by the primary sector and by tourism, which are both emissions intensive. The location of New Zealand’s global comparative advantage is the major reason why New Zealand is the second most emissions intensive economy in the OECD.

Little change to this economic structure appears likely in the short
to medium term. Indeed, strong
growth is observed in New Zealand’s
agricultural sector and this is
projected to continue.

As I noted earlier there are some key questions which need to be addressed.

Given that these activities can be located in many countries,there is a need for New Zealand to act to make New Zealand the location of choice for these activities.

This requires visionary leadership coupled with investment and will need to place NZ at the forefront of attracting inward investment to enable this. The purpose being to utilise our knowledge base in, for example farming, to develop techniques to improve the position for others, with consequent commercial spin-off for the NZ economy through attracting people, retaining skills and uplifting the economic status of the majority over time.

To make significant progress ….. there is a need for a coherent economic strategy to guide sustained policy action across a range of areas. For example, there is a need to invest much substantially and systematically
in research and education. This
is likely to be the foundation for a
knowledge-driven economy…

Earlier I said what do the authors mean by a low emissions economy. They suggest that we should focus on business services. further, they see significant investment in information technologies as a pre-requisite – e. g. broadband throughout the nation.

This is understandable, but we need to look at the service segments and there I think we should take account of my comment above re farming. My concern is what services? why suddenly would we be a player in services, when we have never been so before. This requires debate and major change. I will return to this subject again on another day.

In addition, I think that there is a possibility that over time we may be able to develop an emission trading system that will in a world short of water and food allow us to offset our manifold superiority in food production against the carbon and other emissions. Provided that we continue to invest in and develop our farming and seek to reduce emissions anyway.

This I suggest would be the development of a real marketplace where we barter/ trade our efficiencies in one area for offsets in respect of our deficiencies/ constraints in another.

Surely this is better than an artificial market, distorted by notional calculations.

One of the final statements by the authors is:-

A much more significant policy commitment to transforming the New Zealand economy is a key part of positioning New Zealand to successfully compete in a low emissions global economy. This
requires deliberate policy attention. Otherwise the risk is that emissions
intensive economic activity becomes uneconomic in New Zealand, but that New Zealand does not attract and retain low-emissions activity, and New Zealand’s economic performance slows.

This I can agree with. The key point is what does it mean.

How can we have a debate on this issue without it becoming caught up in political posturing.

I do not think that we have the mechanisms in place as yet to enable such a debate to occur. Yet debate is sorely needed.

This issue is vitally important to our future. It is one where a multi-party, business, union, population nexus is sorely needed.

Education on the issues is required.

In my opinion, it does not matter where you sit on the political spectrum on this issue, nor whether you are advocate or sceptic. At this time, the issue needs to be considered and an approach for all New Zealanders developed.

Note: This post is based on an initial read of the referenced report, plus other readings and opinions I have reached. It is a personal set of conclusions and very much a work in progress, but an honest attempt to contribute to debate.