Government’s Climate Change Moves Welcomed

The leader of PricewaterhouseCoopers Climate Change team, Julia Hoare, said she was pleased with the direction of the government’s climate change strategy released earlier today. “It’s important for businesses to be able to plan ahead with certainty when they are considering their long-term investment strategies, so any move to shed light on the future of regulation and legislation in this area should be welcomed.”

Ms Hoare said there was a strong mix of business and environmental factors signalled in the draft government policy and she encouraged businesses to make their views known as part of the consultation process. “The next moves in this area are critical so we have to try and make sure they are the right ones or we will be left behind,” she said. “Businesses should seize the opportunity to have input into the initiatives and measures which New Zealand will be taking to address climate change.”

Two-tier approach

The government has set out a two-tier policy approach – one for the period through until 2012, and one for the period after 2012. The first phase will target the electricity and stationary supply energy sectors with limited measures. From 2012 the second phase will see climate change initiatives apply broadly across key sectors of the economy.

It was good news that a long-term move toward emissions trading was signalled. “In our view that is positive,” said Ms Hoare. “New Zealand needs to have a system that integrates with mechanisms understood around the world, and make sure we are not left standing on our own.”

Ms Hoare said there were some concerns over the compressed consultation process for the pre-2012 measures which will see submissions close at the end of March 2007, then some policies intended to be in effect in 2007 and 2008. “We need to make sure that from a practical perspective, any new climate change initiatives provide businesses with enough time to implement them properly and effectively,” she said. “We suspect the timeframes may be a little too tight for many organisations who will be affected.”

She said it was important the short-term measures that will be required to be implemented by businesses in the pre-2012 period “feed into” the long-term post-2012 policies. “Nobody wants the double whammy of overhauling the way they do business in response to one set of government rules, only to face an incompatible second wave of regulation four years later which forces them to go down a different track.”

Positives for business

There were some positives that businesses should embrace – and the new strategy will provide many with the opportunity for technological advancement in the moves to new types of carbon-aware businesses and business models. “To get ahead, organisations need to gear up their expertise, understand their carbon footprint and take a good look at how they can transfer and export their knowledge in this area.”

Impact on consumers and energy companies

The strategy outlined today contains a mixture of possible measures to address carbon emissions – some are ‘price-based mechanisms’, while others seek to stimulate innovation or provide incentives to businesses who move swiftly and effectively to address their carbon emissions. Ms Hoare said this was the right approach as there was no one single mechanism that would achieve all the government’s objectives.

The government has suggested a staged implementation approach. Ms Hoare said this is “absolutely critical” to ensure that businesses set to face increased costs were not made uncompetitive.

“If we use the big stick too much here then these companies may exit New Zealand and that would be a dreadful result,” she said. “We also need to be careful about the signals we send to new businesses – the last thing we want to see is the economy suffering. Striking a balance so that economic growth and emission management both occur is the aim.”

It is hoped the government’s enthusiasm for ‘negotiated greenhouse agreement’ type processes would be reignited. “We were a little surprised that this wasn’t clearly backed as part of the strategy as we see it as an important part of encouraging businesses towards world best practice in emissions,” she said.

Ms Hoare said the policy looked like it would mean increased prices for consumers, as that was a “natural consequence” of the changes outlined in the strategy today. “The way the market operates in New Zealand, Mums and Dads can also expect to see prices head up as some of these measures flow through.”

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