Today the Climate Change Commission released its final report of its recommendations.
The key changes from the draft report to the Government are:
- Historic emissions have been revised up – we are at a tougher starting point
- Lower uptake of electric vehicles forecasted
- Revisions lower the estimates of primary sector herd reductions
- Increased ambitions on waste
Since the draft report, New Zealand’s greenhouse gas (GHG) inventory has been updated. Historic emissions have been increased to reflect the latest science. It shows the country’s emissions are still increasing. Therefore, it would be more difficult to meet our 2050 targets and so the Commission has amended their emissions budgets to be slightly higher because of the tougher starting point. (First budget period -12%, second -27%, third -42%).
Due to supply constraints, the Commission now forecasts fewer Electric Vehicles (EV) in the early budget periods. All new vehicle sales should be electric by 2035. They have recommended an investigation into how the tax system could be used to discourage the purchase of internal combustion engines (ICE) vehicles and support the adoption of low-emissions vehicles. Hybrid cars may provide a possible partial solution. The Government should also set an emissions efficiency standard for light vehicles. As per the draft report it recommends a feebate type scheme or subsidy to encourage EV uptake.
After submissions from the primary sector, the Commission has revised their estimates on the impact of reducing livestock herds on milk and meat production. Initially stated farm management changes could maintain or slightly increase productivity while resulting in a 10-15% reduction in herd sizes. However now they see a drop in milk solids production of 4%
Increased ambition on cutting waste has led to a revised target up from a 15% emissions reduction target by 2035 to 40% compared to their draft advice. Some of this is due to updates to New Zealand GHG inventory but also more action in the sector is required based on consultation.
The Commission also recommends instead of a 100% renewable electricity target, that it should be to 95-98% renewable electricity by 2030. As the industry has also proposed moving from 98% to 100% would cost about $1,280 per tonne of co2 abated and would result in higher electricity prices for the economy. The Commission remains scathing on the proposed Lake Onslow storage project, which, whilst it could solve dry year risk, would cost taxpayers billions of dollars.
Other key assumptions as it relates to the electricity sector are that the Commission assumes the Tiwai smelter closes in December 2024, however with current aluminum prices and smelter profitability, the balance of risk may have moved to them staying.
Perhaps reflecting on submissions, and the state of the current electricity market with low storage and gas shortages, the Commission expects Methanex is likely to stay until 2040 and not 2029 as previously assumed. The Commission rightly views that gas is likely to be a transition fuel for the economy and without Methanex continued investment in current resources might diminish.
The Government has until the end of the year to respond to the Commission’s climate roadmap, but with a tougher starting point some bold policy decisions will need to be made if we are going to hit our proposed targets.
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