Climate update

Cost of pollution will rise

“Only the impotent are pure.”

So noted former MP Peter Dunne in commenting on the effort of more ideologically pure Green Party activists to oust pragmatist James Shaw as Green Party co-leader.

Dunne went on to observe: “As Climate Change Minister, Shaw has responsibility for not only the most important long-term issue facing New Zealand, but also the one dearest to the Greens’ hearts.

“He knows that to make sustainable progress he must do much more than keep the Green Party’s activists on-side. Far more importantly, he needs to win over not only the major party of government, Labour, but also enough of the National Party to ensure the policy momentum is maintained when a change of government occurs. He also knows that he needs at least tacit, if not more active, support from the business community and major greenhouse gas producers like industry and agriculturalists.

“To that end, he has skilfully steered New Zealand to a position where, following the passage of the Climate Change Act in 2020 and the establishment of the Climate Change Commission, the future direction of NZ’s climate change has been broadly settled.”

That’s a monumental achievement, for which Shaw deserves huge credit, setting in place a framework that will now set in motion Government decisions that all sectors of NZ society will find painful.

Case in point, some recent pronouncements from the Climate Change Commission (CCC).

The first of these involved policies recently recommended by the CCC regarding agricultural emissions. As perceived by the ag sector, there was good news and bad. On the one hand, the CCC endorsed the sector’s preferred two-path approach, which would treat long-lived CO2 and short-lived (but with higher immediate impact) methane emissions differently. The latter are what the meat and milk producers are most liable for and the biggest source of NZ’s GHG footprint. They want methane emissions kept out of the emissions trading scheme (ETS), where they would face major price impact.

However, the CCC rejected other key provisions of the sector’s carefully negotiated (within the farming family) He Waka Eke Noa proposals, notably the sector’s demand for farmers to be able to claim carbon sequestration credit for vegetation types that are not presently included in the ETS and provisions for levying costs against fertiliser use.

Affecting all of us more broadly are the CCC’s recommendations regarding the ETS itself and how emissions credits should be priced – in a word, much higher, according to the CCC.

Under the ETS, businesses that emit carbon must surrender a carbon credit for every tonne of pollution they emit. They must buy their credits in regular auctions. What the CCC has done is recommend lowering the number of units available and setting price triggers that would bring these costs to levels more congruent with values now place by the international carbon market – in fact create sufficient economic incentive for businesses of all kinds (and their consumers) to lower their carbon use. 

As CCC chair Dr Rod Carr put it: “High emissions activities will become more expensive and low emissions options more cost effective as the world prices the damaging effects of greenhouse gas emissions.” 

The CCC doesn’t set a price, but rather defines a range in which, as Shaw puts it, “the price of pollution is discovered.”

Effectively the Government sets a floor price – the auction reserve price below which the Government will not sell units at auction. And the CCC has recommended almost a doubling of that price, as this table indicates. The current price of a NZ unit is $76. 

As higher carbon prices are incorporated, mainly via higher energy prices, into the products and services we all consume, every business and household budget will feel the impact. Feel the pain … that is the price we will all need to pay until and unless we change our habits to squeeze down our carbon usage.

Working with Treasury, the CCC has estimated the economic impact of their recommended carbon pricing, summarising detailed analysis as follows:

“Without any behavioural or technological change, increases in the emissions price will increase energy prices, leading to higher energy costs for food producers and retailers. If these are fully passed onto consumers, food prices could increase between 0.11% and 1.08% across our range of modelled emissions prices (relative to the year ending June 2019, when the emissions price was $24.73/tCO2e (nominal)).

“While this provides useful insight about the potential magnitude of financial impacts from a higher emissions price, it does not account for longer term changes to the economy in the transition, or from measures such as improved housing quality, declining total cost of ownership for electric vehicles, and improvements in the energy efficiency of appliances. As a result, the long-term impact of emissions prices will be less than stated above, as households take up low carbon technologies and change their behaviour.”

It should be noted that the Government has taken in almost $5 billion in carbon credit payments, all of which is earmarked for programmes to incentivise GHG emissions reduction. 

Are we ready for the pain?

The international polling firm, Ipsos, in July released results of its annual survey on climate attitudes across 32 countries, including New Zealand.

Of the countries surveyed, NZ respondents showed the highest concern about the impact of climate change. And our concern seems to be rising by the year. Amongst New Zealanders …

86% believe that the government has a great deal/a fair amount of responsibility to reduce carbon emissions, while 65% stated that if the government does not act now to combat climate change, it will be failing the people of New Zealand (from 57% last year);

84% believe that businesses have a great deal/a fair amount of responsibility to reduce carbon emissions, while 70% stated that if businesses do not act now, they will be failing their employees and customers (up from 60% in 2021);

79% believe that individuals have a great deal/a fair amount of responsibility to reduce carbon emissions, while 73% stated that if individuals like me do not act now, we will be failing future generations (up from 62%).

Against those numbers, nearly a third (31%) of New Zealanders don’t think that the country will make significant progress against climate change this decade.

And as individuals, we are not that well-informed about what we can do.

According to Ipsos: “People’s understanding of what to do as individuals to reduce contribution to carbon emissions also remains low. Recycling and growing/producing your own food are incorrectly identified by New Zealanders as the top-2 most impactful carbon-reducing actions (the true rank for reducing emissions has recycling in 60th place, and growing/producing your own food in 23rd place), while living car-free or changing to a vegan diet (which have a far higher impact) are not seen by most as being particularly impactful.”

Cars as culprits

In 2021 worldwide car sales grew to about 66.7 million units, led by Toyota at #1 with 9,562,483 units. Today there are about 1.45 billion cars on the road globally, not quite 5 million of those in New Zealand. 

Only five countries have more cars per 1000 population than us. Surprisingly, at 897 per 1000, we have more than the much-maligned US, at 868 per 1000. Australia has 748 per 1000.

It’s a ‘Top 10’ list not to be on. 

For NZ’s non-farming population, transport is where we have the greatest GHG impact. Around 20% of New Zealand’s emissions come from the transport sector.

For most of us that boils down to what kind of car we drive – petrol or diesel hog, relatively fuel efficient, or more lately, EVs. For most of us, our biggest single consumer purchase, and one we make every 6 to 11 years.

Most of us know that the Government now has a programme in place to incentivise purchase of fuel efficient cars and EVs … and EVs are now selling like hotcakes in NZ. According to Transport Minister Michael Wood, since the Clean Car Discount scheme came into force on 1 July 2021 there has been a 56% increase in the number of light-electric and Non Plug-in Hybrid vehicles registered in New Zealand, compared to the same period last year.”

BayBuzz asked HB Toyota/Lexus CEO Angus Helmore for his take on our local market. His reply: “We are seeing a significant customer shift towards our electrified range. New vehicle orders in July show this with 60% of our Toyota customers and 100% for Lexus choosing BEV or HEV options. Our used vehicle customers are also moving towards Hybrid options as we increase supply across a broader range of models and prices.”

So, the trajectory is promising but still not good enough. According to NZ Motor Industry Association, the burst of EV sales in 2021 reduced CO2 emissions by 4.7% for the sector, but a reduction of 10% would be needed to be on course for meeting Clean Car standards set for 2025. The Government has balked at the Climate Commission’s recommendation to ban ICE imports no later than 2035, ideally by 2030; instead the Government’s plan aims to increase zero emissions vehicles to 30% of the light fleet by 2030.

That’s the Government picture, what about the manufacturers?

All of the major manufacturers have announced aggressive plans for downsizing, in come cases entirely phasing out, their internal combustion engine (ICE) vehicles. They are literally making the EV market.

And fuelling the millions of EVs of the future is driving a new era of global geopolitics. What oil has been in the last century, batteries and their components will be in the future. The scramble is on.

General Motors (GM), ranked #4 in auto sales with 6.3 million units in 2021, recently announced it had lined up suppliers for all battery raw materials, including lithium, nickel, cobalt and cathode active material needed to make 1 million EVs annually by 2026. Sources include Korea, China and Argentina.

Similarly, Ford ranked #8 with 3.9 million units, and the biggest seller of trucks, is aiming for 40% of its sales to be EVs by 2030. It announced deals for components like nickel, lithium and graphite – in countries including Australia, Indonesia, Argentina, China– that will enable enough batteries for an annualized production rate of 600,000 EVs by late 2023 and 70% of what’s needed for 2 million-plus annually by 2026.

Of course, not all cars are created equal!

According to the International Energy Agency, petrol SUVs, representing 45% of global car sales, were the second largest contributor to the increase in global carbon emissions from 2010 to 2018 – bigger than either heavy industry or aviation. If SUVs were a country, they would be the sixth biggest emitter in the world, accounting for more than 900 million metric tons of CO₂

Enter Tyre Extinguishers

According to a report in Bloomberg Green, since March, the group has deflated the tyres of nearly 6,500 SUVs in Austria, Canada, France, Germany, New Zealand, the Netherlands, Sweden, the UK and the US. They are aiming to force attention to gas-guzzling vehicles’ impact on climate change and air pollution. 

“We are aiming to grow this movement to the point where it becomes impossible to own a SUV in the world’s urban areas,” a spokesperson told Bloomberg. “A relatively small number of people can make this happen.”

That’s a far cry from composting, recycling and eating fewer steaks. It turns out the real environmental radicals aren’t futzing around with kicking James Shaw in the shins.

It’s not clear how intense this level of anger with slow-paced and/or weak government action – inaction in many cases – is around the world, or here in New Zealand. Tyre Extinguishers say they currently have 50 groups worldwide.

“We have to try everything,” the Extinguishers spokesperson says. “However, it’s clear that the climate movement needs to embrace sabotage in a big way. The pollution is not stopping. Emissions are still going up. We’re marching towards death.”

The current generation that has brought the planet to this crisis point is more apt to feel some quiet guilt, perhaps inspiring ourselves to recycle. Or we simply continue whistling past the graveyard. 

Our children and grandchildren inheriting the mess, perhaps impotent now, have every reason to be mightily pissed. How long, how far will they take it?