New Zealand businesses advised to prepare for world price on carbon

Monday 29 March 2010, 3:51PM
By New Zealand Business Council for Sustainable Development

New Zealand businesses need to be preparing for world where there is a price on carbon in the major emitting economies.

They also need to prepare to report the level of carbon in their products to all major world retail chains, a business group was told in Auckland this afternoon.

The Chief Executive of the New Zealand Business Council for Sustainable Development, Peter Neilson, told a briefing session hosted by law firm Minster Ellison Rudd Watts that while New Zealanders have been arguing about the science of climate change and having an ETS, the world has been marching on and adapting to a world where carbon is more fully priced.

There were major opportunities for businesses and economic growth from early adoption and mitigation:

Mr Neilson says the European Union, United States and China are all aiming to become the world leader in Clean Tech:

China is spending research money on battery technology to produce electric cars that are price-competitive with more traditional vehicles;

The US, in the Waxman Markey Bill, is proposing to give farmers incentives for the early take up of emission reduction innovations;

Denmark has become the major exporter of wind turbines for wind generation.
In Australia, the EU, UK or US, a businessman or farmer is more likely to be given a government grant to invest in lower emission plant than in New Zealand.

Mr Neilson says: “The opportunities for New Zealand from a clean tech world are immense:

There are 1 billion farm animals worldwide that could use a methane reducing inoculation if we can learn how to manipulate the methane producing capacity of ruminant animals;
We have hundreds of thousands of hectares of marginal land with the potential to become plantation forests or permanent forest sinks. Imagine Maori-owned marginal land, growing Manuka producing organic Manuka honey to be exported by Comvita and others, and earning a premium on the carbon sequestered and the honey;

Landcare owned Carbon Zero has franchised its systems for measuring and managing emissions internationally, and other less well known companies are doing the same. Somewhat ironically they often find this easier to sell in the rest of the world;

As the Wall Marts, Marks & Spencers, and Tescos start putting carbon content labels on their products, everyone in their supply chain needs to measure and monitor their emissions. The software to do this can be developed anywhere, but why not New Zealand?

New Zealand has been selling its geothermal consulting expertise for decades. Why couldn’t we have a New Zealand based company that developed geothermal opportunities and owned the generation facilities? Our SOEs, engineering consultancies, and CRIs would all benefit from such an effort;

Becoming a test bed for the introduction of electric powered vehicles to take advantage of our standard voltage and majority renewable electricity.

“New Zealand business need to be applying cost-effective mitigation and adaptation approaches at home, and preparing for a world where there is a price on carbon in the major emitting economies and carbon supply chain carbon content reporting for all major retailing chains,” Mr Neilson says.

Most of New Zealand’s commentary on climate change and the ETS is based on the assumption that we are proposing to do something that no one else is:

The Swedes have had a carbon tax since 1991 – currently it is $150/tonne;

The EU has had an ETS in place for industrial emitters since 2005 and is now requiring non-ETS sectors to come up with reduction plans;

The US and Australia are both dealing with legislation, to put a price on carbon that will be likely to be enacted within the next year;

New Zealand has an ETS that will, other than for forestry, put a price on carbon effectively capped at $12.50 a tonne for the next three years.

The International Energy Agency (“IEA”) says we need a price on carbon of USD$180 (NZD$250/tonne) to provide the financial incentive to move us to a low carbon economy.

Most of our exports have a delivered carbon content that is less than other countries’ products. With 60% or more of our electricity from renewable sources, and with the potential to grow that proportion with a higher price on carbon, New Zealand would have improved competitiveness if all our competitors faced the same price on carbon.