The Productivity Commission has completed its inquiry into transitioning to a low-emissions economy and presented its final report to the Government.
The Government asked the Commission to identify options for how New Zealand can reduce its domestic greenhouse gas emissions through a transition to a low-emissions economy, while at the same time continuing to grow income and wellbeing. The inquiry investigates the challenges of, and identifies opportunities for, reducing New Zealand’s emissions, in the context of an ambition to achieve net-zero emissions by 2050.
The Commission engaged with a large and diverse group interested in climate change and mitigation policy. We completed over 120 engagement meetings (including overseas), 34 conferences/events and received 403 submissions. Modelling work was also undertaken by a consortium of Vivid Economics, Concept Consulting and Motu Economic and Public Policy Research of different transition pathways to a low-emissions economy, examining respective impacts and outcomes.
What did the inquiry find?
Numerous changes will be required across the economy – some disruptive, some less obvious. Three particular shifts must happen for New Zealand to achieve its low-emissions goals:
We stop burning fossil fuels and switch to using electricity and other low-emission energy sources. This means a rapid and comprehensive switch of the light vehicle fleet to electric vehicles and other very low-emissions vehicles, and a switch away from fossil fuels in providing process heat for industry;
We undertake substantial levels of afforestation to offset New Zealand’s remaining emissions. This will require sustained rates of planting over the next 30 years, potentially approaching the highest annual rate ever recorded in New Zealand; and
We make changes to the structure and methods of agricultural production. This will include diversification of land use towards more horticulture and cropping, and greater adoption of low-emissions practices on farms.
What needs to be done now?
The Government needs to prioritise the following actions to achieve the above shifts at the right scale and pace:
Establish a comprehensive and durable climate change policy framework, including separate legislated long-term targets for short- and long-lived gases; a series of successive emissions budgets; and an independent Climate Change Commission;
Reform the New Zealand Emissions Trading Scheme and apply some form of emissions pricing to methane from agriculture and waste;
Devote significantly more resources to low-emissions innovation and technology to account for the long timeframes involved in bringing innovative ideas to fruition.
The report also recommends a suite of other policy reforms to help drive the transition. These include introducing emissions standards for newly registered vehicles, a feebate scheme to accelerate the uptake of EVs, and mandatory climate-related financial disclosures.