Opinion: New Zealand needs to pedal faster on climate change

International climate policy is like a long-distance cycle race in which countries collectively aspire to set a fast time, but are not on course to do so.

New Zealand, along with the EU and a few other developed countries, has been in the leading bunch, or peloton, though even this is moving slowly.

What should be our strategy? We could break away from the peloton and try to stay in front. We could try to play an active role in the peloton. We could try to stay in the peloton but freeload on the efforts of others by not taking our turn at the front.

We could fall behind the peloton. Or we could abandon the race.

Though they tend to dominate public discussions of climate change, breaking away and dropping out are both bad ideas. Unilateral breaks on the field seldom work – you get caught by the peloton and you've burned too much energy even to stay with them. So you end up further back than before.

Abandoning the race is not a credible option so long as international reputation matters to us.

Reputation is about how much we are seen to be doing, relative to others. There's no agreed method for making that assessment. The dominant comparator has been the percentage emissions a country will reduce by year 'Y'.

This happens to suit Europe very well, though it is as inadequate and unfair as it is simple. Those who do well under that measure have been blessed with favourable circumstances for decarbonisation: they are peddalling downhill since they are able to exploit the combination of a high starting point and cheap reductions, for example by large-scale replacement of coal-fired electricity generation by gas and renewables.

A more robust measure, better aligned with the goal of restricting global warming to no more than 2 degrees, is how far a country is already down the decarbonisation road. That implies a sector by sector comparison – and makes it plain which sectors in which countries matter most.

Very few countries are currently fully aligned with the 2 degrees or global decarbonisation goal. Many are tracking in the wrong direction: Singapore, with far higher income per capita than New Zealand, aims to increase its emissions until 2030.

New Zealand in comparison will continue to reduce net emissions, to about 11 per cent below 1990 levels by 2030.

In Europe, Spain, with similar per capita income, and similar emissions growth since 1990 as New Zealand is permitted, under the EU arrangements, to continue to grow its emissions until 2020.

The UK has some strong targets, some of which it will miss.

Where does New Zealand stand? We have done OK so far without trying very hard, because forestry in particular provides us with the ability to freewheel.

New Zealand has achieved little real reduction in gross emissions beyond those resulting from increased efficiency of production.

For the most part, we have met targets by paying for reductions elsewhere. This ought to be perfectly respectable as an interim measure.

But it is one thing to pay for emissions reductions elsewhere; it is another to pay for imaginary emissions reductions elsewhere, which is largely what New Zealand has been doing.

But the next phase of the decarbonisation looks like a hill climb. Forests in New Zealand are likely to become a source of emissions in the next decade. Future access to carbon units is not guaranteed and prices are likely to be higher.

Different tactics are required for deeper, long-term decarbonisation. Countries such as Sweden and the UK are adopting this perspective. New Zealand's current position seems to assume the indefinite availability and affordability of international credits. Neither is certain.

In any case, offshore credit purchasing does nothing towards the long-term goal of decarbonisation of our economy.

This could be aided by reforms to the currently ineffectual Emission Trading Scheme (ETS).

Get rid of the "interim" two-for-one arrangement; set a floor price; reconsider its unique 100 per cent openness to international markets; fix these points, consider a special regime for agriculture (currently excluded), and there is nothing much wrong with it.

Finally, we need an organised and coherent approach to unlock emissions reduction potential across the economy. Transport, where electrification holds promise, and industrial energy for a start. Then agriculture.

Properly addressing these domestic issues need not be expensive – it is more about organisation and strategic thinking than the imposition of large costs. And the failure to think about the next phases of climate policy brings clear risks.

Whatever the outcome of the Paris climate change talks, New Zealand and other countries will be forced to think seriously about future domestic climate change policies.

The ETS review, if it is put in this broader context, is an opportunity to get things right – and for New Zealand to remain comfortably in the leading peloton.

Provided by Victoria University