Seeking a just transition to a lower-carbon economy

16 October 2018

4. Kirk HopeThe climate change report released last week was a real wake up call.

The UN intergovernmental report warns the world has only 12 years to take action to prevent drought, floods, extreme heat and poverty for hundreds of millions of people.

Despite this frightening scenario, ‘taking action’ is still hard to do.

Governments all around the world face hard choices making trade-offs between politics, economics and climate change action, and no trade-off will please everyone.

In New Zealand the government made the choice to wind down the petroleum industry.

The trade-off – no new offshore oil and gas permits to hasten the low-carbon economy – not only dissatisfied environmentalists who wished to go further, but also dissatisfied a business and affected community concerned about the end of a $2.5 billion industry that employs 11,000 New Zealanders.

Whatever action a government chooses to take, there will always be detractors - and consequences.

Managing the consequences of the choice can be well-planned and well-managed, or abrupt and jarring.

I’d argue the process could have been much better managed.

I think the emissions trading system should have been the main mechanism to manage New Zealand’s transition from fossil fuels - after all, that is fundamentally what the ETS is there for.

The power of emissions trading lies in its ability to change behaviour through carbon pricing. Unfortunately, side-lining the ETS in the oil and gas industry could now undermine behaviour change in other industries too.

Secondly, the process could have been better managed by working with business and affected communities rather than imposing a solution on them.

Business is the logical partner in government’s quest to find innovative solutions to climate change through science, research and development.

Business is already focused heavily in this area – for example BusinessNZ’s international summit for energy leaders later this month is bringing together the latest research and development in this sphere.

Working with business - rather than regulating business - brings a far better chance of generating a science-based breakthrough to fight climate change.

The third way the process could have been better managed was through the Government’s own channels of advice.

MBIE recommendations that would have moderated the ban – including limiting new permits to Taranaki rather than banning all new offshore permits - were ignored.

Traditional procedures like full hearings in an appropriate select committee and full Cabinet consultation have also been disregarded.

And the normal period of consultation of four to six months has been reduced to only four weeks, with consultation on the policy ending last week.

This lack of due process means the decision to end new offshore oil and gas exploration is likely to be dogged by a feeling of injustice for some time to come.

We do need to tackle climate change and it’s obvious that there won’t be unanimous views on how to do it.

But an abrupt and jarring transition is certainly not the best way.

The idea of a ‘just transition’ to a lower-carbon economy is very appealing - and not just to some.

Perhaps we could have achieved a transition that strengthened our existing emissions trading policy, that involved business and other partners, and that had the full benefit of evidence and advice.

Instead we are faced with a transition that on the face of it allows for continued exploration for another 30 years, but where the impact of the decision has been to dry up investment immediately.

It’s a pity more care wasn’t taken to craft a truly just transition that could have been supported by many more New Zealanders.

 

Kirk Hope | Chief Executive | BusinessNZ | www.businessnz.org.nz

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