Budget 2021: Aged policies are essential to save the climate

Budget

Analysis: As with most things in climate space, the nerd and more understated the policy announced on Budget Day, the greater its likely impact, writes Marc Daalder.

Climate change has an image problem.

I’ve written about this before – a lot of people say they’re very concerned about climate change, but don’t really know much about it. When they hear “climate change” they imagine the oceans rising to wash away entire cities, they think of the world literally on fire, they think of seabirds drowning in oil spills … oh, and plastic bags.

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When asked what is one of the most important things a person can do to reduce emissions, more New Zealanders say they recycle plastic than drive their cars less, according to an annual survey. last by the Energy Efficiency & Conservation Authority. But recycling has an almost negligible impact on emissions, while driving is one of the most carbon-intensive activities an average person engages in.

The other stuff, too, is a little offbeat. The risk of sea level rise (at least in the short term) is not that Wellington, Auckland or Christchurch will soon be below sea level, but that intermittent flooding will become more common, making vast Dangerous and uninsurable stretches of the country’s coastline.

Most important old-fashioned and low-key policy

The solutions to climate change are also nuanced. People see renewables as a savior, but in New Zealand our electricity is already four-fifths renewable. While building offshore wind turbines in place of Taranaki oil rigs or gargantuan solar farms on old dairy farms would be welcome, some of the most effective climate policies are the most … well, boring.

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Last year, the government announced plans to require some 200 of the country’s largest companies to assess and report their financial and physical risks to climate change. Climate finance experts like University of Otago economist Ivan Diaz-Rainey hailed it as New Zealand’s “most important” climate policy to date. Even in the shadow of the zero carbon law and the ban on further offshore oil and gas exploration, Diaz-Rainey said this “could be the Greens’ biggest victory in this political term.”

“It’s the transition thing, it’s the collection of a lot small things – and very big things – that will get us there, ”Climate Change Minister James Shaw told the newsroom after the budget was released.

Thursday’s budget proposed a number of other policies in this direction, such as the $ 300 million for the New Zealand Green Investment Finance (NZGIF) fund. Shaw said NZGIF would have the ability to invest in a range of different areas.

“I know Greenpeace wanted a billion dollar fund for regenerative agriculture, which I think would be great, but the Green Investment Fund has the capacity to invest in regenerative agriculture and in d ‘other things that help reduce emissions from agriculture,’ he said. “And so, by quadrupling the size of this fund, they can do more of that sort of thing.”

The most significant changes, however, have yet to be felt. Shaw said that, for his money, the most impactful climate policy in the budget will be the so-called mortgage on emissions trading system (ETS) revenue.

Simply put, the money raised by the government that auctions carbon credits four times a year will be recycled into emission reduction programs.

“Slowly winning on climate change is losing.”

“The most important announcement is actually the commitment to recycle all ETS revenues starting next year,” Shaw said. According to current projections, this will provide more than $ 3 billion over the next five years to the fight against climate change.

“What that does is that it sets up – it won’t be the limit of what needs to be invested, but it sets up a long-term structure for the transition. Rather than this budget by budget, “Oh crikey, what should we fund this year? “.”

These ETS revenues will not cover the full cost of decarbonization, he conceded. It will also not be as reliable as some other sources of funding.

“ETS revenues will be flat-rate. There is a question of what is the best way to maximize the use of this particular revenue stream.”

Rethinking the budget

Shaw said the government is working to reform how climate policy is financed because existing frameworks under the Public Finance Act are not suited to this work.

“I am of the opinion that the current way in which budgets are to be produced makes it difficult to make the sustained and long-term investments necessary to solve an intergenerational, complex and complex problem such as climate change”, said the Minister of Finance, Grant Robertson. Parliament in its budget speech.

“Climate Change Minister James Shaw and I are currently working on a long-term plan to fund our climate change goals. We will report to Cabinet before the next budget process begins on our proposals on this work.

“The way the PFA is structured and the way we budget is really poorly designed to deal with challenges like climate change,” Shaw told Newsroom.

“What I’m talking about are things like, if you take the transportation budget, for example, to say that if you’re going to achieve net zero emissions, then every dollar of transportation spending has to be spent on that. At the moment this is not the case. When we talk about the institutional framework, it’s things like that. How do you view what you are currently spending on something, but the result is different?

This includes things like reconsidering spending that was previously incurred on highway projects, Shaw said. This was a key suggestion from a transport ministry report released last week on how to achieve net zero emissions in the transport sector.

Another key transportation policy highlighted in the budget was a mysterious $ 302 million fund intended to encourage the adoption of low-emission vehicles. While few details are available in the budget itself, Shaw said it would look somewhat like the clean car rebate or fee rebate program nixed by New Zealand First in 2020.

“It has changed, there has been more work on it, but I wouldn’t want to spoil [Transport Minister] Michael [Wood]Today is the day, “Shaw said. An announcement will be made in the coming weeks.

Climate advocates are critical

When taken as a whole, budget climate policies don’t quite suit climate activists. A total of $ 2.3 billion has been allocated for policies with potential climate benefits – including $ 1.3 billion for rail – but Greenpeace says agricultural emissions are noticeably absent.

“Today’s budget announcement offers little more than cowardly changes to tackle the climate crisis. The $ 1.3 billion spent on improving rail transportation is good news, but the government is really absent when it comes to tackling New Zealand’s biggest climate polluter – intensive dairy, ”said Amanda Larsson, climate and energy activist.

Nicola Gaston, associate professor in the Department of Physics at the University of Auckland, said that “the 2021 budget is not the investment we need to see, proofing the future of our economy for a world in which carbon costs. None of the investments reported in this budget are transformational. “

“None of this signals a strong reset in New Zealand’s economy towards a low-carbon future,” said Janet Stephenson, director of the Center for Sustainability at the University of Otago.

“For the most part, these are continuations of existing projects or initiatives that have long been reported but not yet implemented, such as the incentive to adopt low-emission vehicles. the scale and speed of the changes required, the budget is disappointing. “

Shaw said future budgets will focus more on the climate.

“The Greens have been forcefully asserting that, for example, in a period of historically low interest rates, we could have had an extra 2% on the debt trail, still be one of the healthiest economies in the world and be able to spend much more [to climate],” he said.

“If you say, well, given that we don’t write the budget, and the Labor Party is, in the framework that they did, that’s a very good investment. Obviously, they made the choice to really focus this budget on people. on low income – and I applaud it.

“It means other things have to take a back seat, but it’s something of critical importance to the country. If you increase the benefits a bit, you haven’t solved the problem. Why would you spend money not to fix the problem? the problem? While this gives the impression that they are actually starting to do what it takes to fix the problem. I am very keen that we then begin to apply this level of thinking to climate change. “

These structural changes in the financing of climate policy will help, Shaw said. Plus, once the government presents its plan to cut emissions in the second half of the year, Robertson and Shaw will know where to direct the money.

That explanation did not appeal to Larsson, who said the government “kicks the box on the road” when time is running out.

“It is incredibly frustrating to see this government continuing a slow, gradual approach to dealing with what is a major and urgent crisis. Slowly winning on climate change equates to losing.