The Climate Change Commission’s final report grapples with new estimates of New Zealand’s historic emissions and recommends cutting emissions harder and earlier than its January draft advice, Marc Daalder reports

Emissions should fall three times more steeply by 2025 than previously recommended, the Climate Change Commission said on Wednesday.

The expert panel’s final advice to Government was tabled in Parliament at noon, and contains a path in which harder emissions cuts are made earlier than the commission’s January draft advice. 

In part, this is a result of a number of modelling changes the commission made in response to feedback, including acknowledging that milk and meat production might fall slightly under its main pathway and that the used electric vehicle (EV) market may face supply constraints in the near future.  

The commission’s draft budgets called for average emissions between 2022 and 2025 to be 2 percent below 2018 levels. Emissions between 2026 and 2030 would fall 17 percent from 2018 levels and the 2031-2035 emissions would be 36 percent below 2018 emissions. 

Now, the panel envisages average emissions in the first budget period to be 7 percent below 2019 levels, falling to 20 percent and 35 percent below 2019 levels in the next two periods, respectively.

This is a far more ambitious decline in the near-term than the commission had previously recommended, but the curve ultimately smooths out to the same point by the end of the third budget period.   

In response to the new data, Prime Minister Jacinda Ardern reiterated that she saw the climate crisis as "my generation’s - and perhaps even more so, the next generation’s - nuclear free moment".

She highlighted climate policies launched by the Government but conceded "there is more to do".

The commission says current policies would see long-lived gas emissions fall to 9.8 million tonnes by 2050, when the Zero Carbon Act set a goal of net zero long-lived emissions by that stage. Agricultural emissions would fall 7 percent by 2030 and 11 percent by 2050, compared to targets of 10 percent and 24 to 47 percent, respectively. This would involve 1.1 million hectares of new exotic forests, often on marginal land currently used by sheep and beef farmers.

"Acting now is not a choice. It’s an imperative," Ardern said.

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Climate Change Minister James Shaw also said the report underscored the urgency of action.

"We are yet to see a sustained decline in the pollution we put into the atmosphere. And even when we do, we need to ensure that decline continues and, in fact, picks up pace, every year until we hit net zero," he said.

The Government is required to reveal an Emissions Reduction Plan for meeting the first budget by the end of the year, under the Zero Carbon Act.

The commission also provided updated estimates of the economic impact of decarbonising, which is expected to lead to GDP that is 0.5 percent lower in 2035 and 1.2 percent lower in 2050 than it would be under a business-as-usual scenario. However, this doesn't take into account the benefits of decarbonising for public health, for example, or the risks of not decarbonising and facing barriers in trade or experiencing worse impacts from climate change.

If agricultural emissions don't fall as quickly as hoped, or if EVs aren't adopted to the degree needed, the GDP differential could grow to 1 percent in 2035 and 2.3 percent in 2050, the commission found. This could occur either as a result of delaying action or hoped-for technology not eventuating and EV supply remaining constrained. 

In such a scenario, further behaviour change would be needed - for example, a greater reduction in overall vehicle travel, more fuel-efficient cars entering the market and more conversion of livestock farmland to forestry and horticulture

Protestations from the primary sector also led to a revision of the commission's estimates of the impact of reducing livestock herds on milk and meat production.

In January, the commission had said farm management changes could help farmers reduce emissions while maintaining or even slightly increasing productivity - while resulting in a 10 to 15 percent reduction in herd sizes. Now, it says those same management practices and a resultant  13 percent reduction in herd sizes would lead to a drop in milk solids production of 4 percent.

However, this decreased production and an 8 percent drop in herds is expected under current policies anyway, in the commission's view. More simply needs to be done to make sure that the greatest emissions reductions possible are squeezed out of these changes.

Other changes to the commission's assumptions included revisions to the role and behaviour of big industrial players in New Zealand. The commission now projects full closure of the Tiwai Point Aluminium smelter by the end of 2024, in line with the smelter's own (subject-to-change) timeline. The smelter uses 13 percent of the country's electricity, which means its closure could free up new power for EVs and the electrification of other industries.

The commission had also thought NZ Steel would reduce emissions by 10 percent in response to Covid-19, but these changes have not eventuated. And the eventual closure of the Methanex ethanol facility, which plays an important role in flexing supply and demand for the natural gas market, was postponed to 2040 from 2029.

None of these were recommendations for specific closure dates, but rather inputs into the commission's models to estimate prices and supply of electricity and other energy sources.

In comments to reporters on Wednesday, commission chair Rod Carr insisted the new budgets were no less ambitious than the draft ones.

Comparing the budgets directly, instead of in percentage terms, is difficult because of methodological changes in the latest estimates of New Zealand's historical emissions that were released between the publication of the draft and final advice. Higher-quality data on pastures provided to the Ministry for the Environment allowed the department to determine that agricultural emissions have been about 2 million tonnes of carbon dioxide equivalent higher than previously recognised. 

For example, 2019 emissions were previously estimated by the commission at 72.1 million tonnes of carbon equivalent, but under the new methodology they are 74.9 million tonnes. A further change to the internationally-agreed ratios for comparing different greenhouse gases has further increased 2019 levels to 78 million tonnes. None of this represents an increase in pollution, but just a better recognition of how much New Zealand emitted in a given year.

This means the commission's initial budgets - which would have, for example, restricted emissions to an average of 67.7 million tonnes a year in the first budget period - would have required steeper relative cuts from the updated current levels. Maintaining those budgets meant they might not be achievable, or at least not achievable without undesirable economic and equity impacts.  

Marc Daalder is a senior political reporter based in Wellington who covers climate change, health, energy and violent extremism. Twitter/Bluesky: @marcdaalder

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