Hon David Parker
Minister responsible for Climate Change issues
Minister of Energy

12 December 2007

Speech notes

Designing a national policy framework to reduce emissions across sectors and gases: New Zealand’s climate change solution

Climate Change and Energy Minister David Parker’s speech notes for the OECD side event, 12 December 2007,

Bali, Indonesia

Good afternoon. It is a pleasure to have the opportunity to outline New Zealand’s strategies for addressing climate change.

We all know climate change presents a significant challenge for governments around the world.

We must design policies which re-orientate how we live. We must maintain economic growth. And we must do this without too much regulatory complexity hobbling the economy.

At 0.2% of world emissions New Zealand can’t fix climate change on its own. But we are determined to contribute.

New Zealand has taken several key steps along the way towards a low-carbon economy. We are seeking solutions which will put our economy and society on the path towards a sustainable, carbon neutral future.

Our initial policy initiatives are wide ranging from relatively simple regulatory measures to improve energy efficiency to the more complex, such as an Emissions Trading Scheme. We have set ourselves some lofty goals:

- By 2025 ninety per cent of our electricity will be generated from renewable sources

- We want to have reduced our per capita emissions from transport by half by 2040; we are setting out to be one of the first countries to introduce electric vehicles widely, powered by our renewable electricity

- We intend to achieve carbon neutrality in both the whole energy sector including both stationary energy and transport by 2040; carbon neutrality in our public sector will be achieved much sooner

- By 2020 we aim to achieve a net increase in forest area of 250,000 hectares

- We are already a world leader in emissions reduction for livestock agriculture and intend to continue this, as part of our contribution to the world’s effort

To these ends New Zealand has introduced a number of wide-ranging sustainability measures, including national action plans for energy, support for energy efficiency, transport and sustainable land management.

Features include:

- The introduction of a mandatory biofuels sales obligation which includes environmental rules to ensure they are sustainably-sourced

- The introduction of forest sinks initiatives to encourage the planting of forests. This will also have the advantage of reforesting erosion-prone hill country, reduce the risk of downstream flooding after severe weather events, and improve water quality

- Changes have been made to our building code to significantly improve the energy efficiency of our new homes and buildings

- Initiatives to promote greater sustainability in households and business, ranging from providing more information and advice, to stronger legislation on waste management and product stewardship

- Substantial increases in investment in public transport

- Support for emerging renewable energy sources including marine generation

Our approaches include price-based tools, incentives to change behaviours, direct regulation, and supporting education programmes.

And we are already making progress, particularly in the energy sector.

Our climate change policies have already brought forward significant commercial investment in wind powered electricity generation and hydro electricity upgrade projects. This drive to promote investment in renewable electricity generation has been reinforced by our announcement of a 10-year restriction on new fossil-fuelled, thermal baseload generation.

Many New Zealand businesses have already made the calculation that the risks of inaction on sustainability are too great, while the opportunities of leadership are substantial.

Important sectors of the economy – notably tourism, the wine industry, and agriculture - are already developing long-term strategies based on achieving sustainability.

New Zealand Winegrowers, for example, have set the goal of having 100 per cent of their industry operating under independently audited sustainability schemes by 2012.

Tackling climate change enables us to not only work to sustain our environment and New Zealand’s reputation for being clean and green, but also to improve our quality of life and to give our businesses a competitive edge in a world which cares about sustainability.

Our green credentials must be rock solid to compete in a global market place which increasingly values sustainability.

One of the most important aspects of our policy framework is our emissions trading scheme.

The New Zealand government has introduced legislation to establish an emissions market which will help reduce greenhouse gas emissions while maintaining economic flexibility and environmental integrity.

Putting a price on emissions will change investment and consumption patterns, so that we develop an economy and lifestyle with lower emissions.

We are bringing sectors into the scheme in steps, reflecting the different challenges and the differing capability of sectors to adapt.

Our scheme covers:

- Forestry and deforestation

- Liquid fossil fuels

- Electricity generation, industrial heat and power and other industrial processes

- Agriculture, waste, and all other significant emissions sources

In other words our emissions trading scheme will include all sectors of the economy and all greenhouse gases. Not just CO2 but all six Protocol gases; this is a world first.

Our reason for this direction is because we want our emissions trading scheme to maintain equity between sectors, and between industry, consumers and taxpayers.

The New Zealand emissions trading scheme will operate within Kyoto and each unit will be fully comparable to a Kyoto-compliant unit in the international market.

All sectors of the economy will be exposed to the full cost for increases in emissions and will receive the full economic benefit of emissions reductions, at the international price of carbon.

The scheme will lead to greater investment in energy efficient infrastructure, renewable energy, and low-carbon consumer goods. It will also help developing countries finance clean development.

All countries have their cross or crescent to bear. For New Zealand this is true for Agriculture. Agriculture accounts for half of New Zealand’s greenhouse gas emissions, is our greatest challenge.

While we can reduce energy emissions to close to zero through use of alternative low-carbon technologies, we will always need cows to produce milk. Although our agriculture emissions can be reduced, they can’t be eliminated.

The New Zealand government is making a substantial investment in research and development into agriculture mitigation.

Through the New Zealand government’s Sustainable Land Management and Climate Change Plan of Action we will invest more than 175 million dollars to help land-based sectors adapt to, mitigate, as well as pursue the business opportunities of climate change.

We are committed to leading the world in the research and innovation required to tackle the challenge of livestock emissions. Our international partnerships with developed and developing countries will help the world reduce, but not eliminate, these emissions.

As I hope you can see, we are committed to a sustainable future, across our whole economy, and our emissions trading scheme will help create the economic incentives for that to occur.

ENDS

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