Opening Address at Chapman Tripp Symposium the Carbon Compact
In the past year we've seen public opinion here and abroad firm considerably in favour of taking climate change seriously. The subject is taking centre stage at international meetings from Davos to APEC.
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Thank you for the invitation to open this symposium on New Zealand's response to the challenge of climate change, and on how business in particular can engage with and participate in this response.
It is just over a year since I issued the challenge for New Zealand to work towards becoming a truly sustainable nation and to aspire to be carbon neutral.
That challenge was very much linked in my mind with the need to find effective responses in New Zealand to the problem of climate change.
In the past year we've seen public opinion here and abroad firm considerably in favour of taking climate change seriously. The subject is taking centre stage at international meetings from Davos to APEC.
Last year's report by the former World Bank Chief Economist Sir Nicolas Stern was a turning point in the debate about the economic impact of climate change.
Sir Nicholas concluded that:
'.the benefits of strong and early action far outweigh the economic costs of not acting.'
How to act effectively is a major focus for the Labour-led Government.
We believe that it is in New Zealand's interest to be at the forefront of those developing a comprehensive response to climate change.
There are many good reasons for taking this approach.
In the first place, there are significant risks to our major industries - like tourism and agriculture - from the direct and indirect effects of climate change.
There is also the broader risk to our reputation as a clean and green nation from not acting on climate change. This reputation is priceless in a world where affluent consumers will increasingly demand that products and services are sustainably produced.
We believe that tackling climate change and becoming more sustainable will benefit New Zealand.
As a sustainable producer of goods and services, we can attract and retain consumers at the high value end of markets.
Then, developing renewable, and low-emission energy sources will reduce our dependence on fossil fuels and lower our exposure to fluctuations in their price.
And, developing new low emission and emission reduction technologies also creates commercial opportunities.
Many New Zealand businesses have already made the calculation that the risks of inaction on sustainability are too great, while the opportunities of leadership are substantial.
Among our businesses we have fantastic examples of leadership from the smallest to the largest.
. Air New Zealand is trialling biofuels.
. The wine industry wants all its businesses in accredited sustainability schemes by 2012.
. Sustainability is at the core of the new tourism industry strategy I'm launching this week.
. Our agricultural industries are supporting the research and innovation which will help lower their greenhouse gas emissions.
While initiatives by individual industries are important, it is vital that New Zealand takes an economy wide approach to sustainability. It is the role of government to encourage that.
In the last year we have been putting in place an integrated set of strategies and programmes to move New Zealand toward our goal of being a truly sustainable nation. They include:
. the proposed Emissions Trading Scheme, announced in September.
. the New Zealand Energy Strategy and the New Zealand Energy Efficiency and Conservation Strategy launched last month.
. the programme for a carbon-neutral public sector, and for sustainable procurement by the sector.
. initiatives in business partnerships for sustainability.
. promoting more sustainable households.
. an obligation to introduce biofuels.
. new rules to improve vehicle emissions standards.
. unprecedented levels of investment in public transport, including the rebuilding of both Auckland and Wellington's passenger rail systems.
. changes to how we manage waste, and improvements to public recycling systems.
. the review of the Building Act and building codes, and
. greater investment in climate change - related science and research.
Taking a comprehensive and integrated approach is the smart, fair way of tackling sustainability. We have been guided in developing these programmes by commonsense principles such as:
. everyone should be encouraged to play a part in the sustainability challenge.
. those who cause emissions, or contribute to unsustainable activities, should face at least some of the true costs of their actions.
. the measures must be fair and be phased in over time.
These principles can be seen at work in the proposed Emissions Trading Scheme.
It is designed to be comprehensive. It is the first scheme in the world to propose covering all sectors of the economy and all greenhouse gases.
The EU scheme covers only around thirty per cent of its emissions of greenhouse gases.
Our scheme is designed to be fair, and to recognise the different challenges faced by different sectors. To mitigate these challenges we have proposed that entry into the scheme is phased. And, where appropriate, sectors will receive assistance, such as through free allocation of emissions units, to support their transition to meeting the full cost of emissions
It would not be credible for New Zealand to exclude the pastoral agricultural gases - for us they are 49 per cent of our emissions profile, and they're not insignificant for many other countries either.
But clearly agriculture faces more challenges in reducing emissions than do other sectors.
Thus it will not come into the Emissions Trading Scheme until 1 January 2013. That gives the sector five years to begin adapting. Meantime the government accepts the liability for agricultural emissions during the first Kyoto commitment period.
The government has been working with the pastoral agriculture sector to make substantial investments in the research which can identify ways of mitigating and reducing emissions.
And we will work with agriculture, as with other sectors, on the detail of the scheme's design prior to entry.
I am confident that New Zealand can be a world leader in finding the answers to reducing those pastoral agriculture emissions.
Already our brilliant scientists have found ways of cutting the nitrous oxide emissions - and how to increase on-farm productivity by doing so.
These new technologies will give New Zealand farmers a further market advantage, and may well become important commercial technologies in their own right.
Since its launch in September, the Emissions Trading Scheme has received widespread support and has attracted positive international interest.
Two weeks ago the International Energy Agency wrote to us to:
'compliment the government for a well-integrated strategy in an area - greenhouse gas mitigation - where a piecemeal approach could lead to a more costly outcome.'
The IEA added that :
'The framework also takes a very realistic approach to . New Zealand's climate strategy, recognising its small contribution to global climate change, but [also] its responsibility in setting an example in terms of policy implementation.'
Recently New Zealand was invited to join the International Carbon Action Partnership - alongside Britain, Germany, and other European nations, and states within the United States.
That's fantastic recognition of the part our small nation can play in developing the important carbon trading markets of the future. It is also a tremendous opportunity to be on the ground floor of the development process for these important markets.
While the overall response to the proposed Emission Trading Scheme has been positive, some criticism from lobby groups has been aired.
Overall though, mainstream business, community, and non-governmental organisations are taking a constructive approach.
The government made it clear at the time of the announcement that we expect and we welcome constructive input into the detailed design of the emissions trading framework, and of the sector plans to come into effect between 2008 and 2013.
For this reason, there is in place an extensive engagement programme with sector groups.
In the past six weeks officials have undertaken:
. three two-day workshops on the design of the Emissions Trading Scheme in Auckland, Wellington and Christchurch.
. thirteen regional and one national hui with Maori.
. seven regional forestry meetings.
. numerous "one on one" meetings with individual businesses and sectors.
. a forum for non-governmental organisations, and
. the first meeting of the Leadership Forum.
In total, just under 2000 people have attended these meetings already.
As well around ten days ago, close to 200 people attended a forum on climate change and sustainability I and other ministers hosted in Christchurch.
The Government invited 32 leaders from business, agriculture and forestry, science and the environment, the union movement, and non-government organisations to participate in a Leadership Forum to work with us on climate change issues.
The Forum, chaired by Stephen Tindall, is providing input to the government on some key issues around the design of the Emissions Trading Scheme including;
. allocation
. the unit of trade
. liquidity in the market, and
. how to account for carbon decreases in pre1990 forests.
Recommendations and issues arising from their next meeting - to be held this Thursday - will be presented to ministers and fed into the Cabinet process prior to the core design decisions being made.
We are working to a timetable for having the Emissions Trading Scheme legislation introduced to Parliament before Christmas. This will enable the legislation to be passed during this parliamentary term, and will provide the legislative backing for the forestry sector's entrance to the scheme on 1 January 2008.
Further refinement, improvement, and changes to the Bill can be made during its passage through Parliamentary processes, including the select committee stage.
The government recognises that it is important to continue engaging with the business community over the design and implementation of the Scheme. Accordingly the engagement process I have described will not end with the introduction of the Emissions Trading Scheme legislation.
The government will continue to work with business and other stakeholders on the details of the scheme for each sector. The Ministry of Agriculture and Forestry has established a peak group involving its key stakeholders, and officials are establishing technical advisory groups to work through the fine details of later entry sectors, such as industrial processes and agriculture. We will also undertake regular reviews of the scheme.
I know that many of you here today will be part of the engagement around the design of the Emissions Trading Scheme.
Officials are also attending forums like this one to ensure that the issues raised and the ideas generated are feeding into the ongoing development of our climate change response programme.
The positive reception the Emissions Trading Scheme has received reflects not only the care with which it was developed, but also widespread public acknowledgement that action to reduce emissions and make us more sustainable is necessary.
It was heartening to see a recent opinion survey report that 85 per cent of New Zealanders expect the government to take action on climate change and sustainability.
Taking the moral low-ground has never been the New Zealand way. We like to be leaders.
That's why New Zealanders are picking up the sustainability challenge. I believe that being sustainable will come to be recognised in future as part of our country's unique identity and personality.
The fact that so many of you are here today to discuss the details of where we might go as a country on this issue is another example of the preparedness of people to get involved.
I wish you well in your deliberations and I look forward to receiving reports on the ideas which this forum generates.