13 November 2009

Hon Dr Nick Smith Hon Tim Groser

Minister for Climate Change Issues Associate Minister for Climate Change Issues (International Negotiations)

C/O Parliament Buildings

Wellington

cc Hon John Key

Prime Minister

Dear Ministers

Post 2012 Climate Change Negotiations

The undersigned urge you, as we approach the UNFCCC climate change negotiations in Copenhagen next month, to proceed with the utmost caution before signing New Zealand up to any future emission reduction commitments that we may be unable to achieve, unable to afford and will likely come at a higher cost to New Zealand than other countries would be prepared to pay.

The government’s own economic analysis indicates that a 15% emission reduction on 1990 levels in 10 years’ time will cost each New Zealander $1,400 a year, or $5,600 reduced income for a family of four. Treasury advice to government was that a 10-20% emission reduction target range would impose a cost on New Zealanders that is 8 times greater than the costs of other countries’ stated targets. The US Environmental Protection Agency estimated the Waxman Markey Bill (the emissions trading Bill passed in the house of representatives) would cost a US family $US 1.00 a day, which is around 10 times less than a 15% emission reduction target will cost New Zealand families.

Because of New Zealand’s projected 35 per cent population growth over the period 1990 to 2020, our proposed target reductions are even more stringent when considered on a per capita basis. A target of 10 per cent below 1990 levels equates to a 35 per cent per capita reduction in emissions from 1990 to 2020. A target of 20 per cent below 1990 levels equates to a 42 per cent per capita reduction in emissions from 1990 to 2020. This would require the average New Zealander to nearly halve their emissions in the next 10 years, or pay for the difference.

As you are aware, the high cost of emission reductions in New Zealand is due to the fact that nearly 50% of our emissions are from agriculture where mitigation options are limited, we already lead the world with our high percentage of renewable electricity generation, we have had the highest population growth since 1990 amongst Annex 1 countries and we have the third lowest GDP per capita amongst Annex 1 countries.

Indeed, of the countries that are considered to be “developing countries” under the Kyoto Protocol and therefore have no emission reduction target, many are richer than New Zealand, including Qatar, United Arab Emirates, Kuwait, Singapore, Brunei and Hong Kong.

We agree that New Zealand should do its “fair share” to reduce global emissions. This is in the interests of the global environment and for reputational reasons. However, taking on a costlier burden than other developed countries that are richer than New Zealand is something we can ill afford.

For that reason we are strongly supportive of the conditions that must be met before New Zealand signs a new international emission reduction treaty, namely:

i. the global agreement sets the world on a pathway to limit temperature rise to not more than 2°C;
ii.
iii. developed countries make comparable efforts to those of New Zealand;
iv.
v. advanced and major emitting developing countries take action fully commensurate with their respective capabilities;
vi.
vii. there is an effective set of rules for land use, land-use change and forestry (LULUCF); and
viii.
ix. there is full recourse to a broad and efficient international carbon market.
x.
Analysis by NZIER/Infometrics found that if we do not get similar action from other countries in putting a price on greenhouse gas emissions in terms of coverage, timing of entry and free allocation, then the cost to New Zealand increases by 33% at $25/tonne and by 50% at $100/tonne CO2e or $8,400 per year in reduced income for a family of four. This is likely to be exacerbated should there be no recourse to a liquid international carbon market.

It has been suggested that there is a 70% difference in cost to New Zealand between LULUCF rules that would best suit our plantation forestry and LULUCF rules that would least suit our plantation forestry.

Given the high cost of meeting emission reduction targets to the New Zealand economy, we believe that the Government should, before agreeing to any final position, consult widely on the extent to which the above conditions have been met, and the range within which our negotiators will be given a mandate to agree to a final outcome. Departmental analysis should be made publicly available in a timely manner in order to better inform the consultation.

More immediately, we believe a failure to reach a global agreement in Copenhagen should trigger a process to put our emissions trading scheme on hold until such time as the stringency of our action is matched by our trade competitors. This should not wait until the first scheduled review in 2011, but be explicitly allowed for in the Bill currently before the House. A failure to do this in such circumstances would once again place New Zealand as a global carbon reduction leader, as opposed to doing our “fair share”, with all of the economic vulnerabilities such leadership would imply.

Finally, on top of the cost of meeting an emission reduction target, we understand that developing countries are demanding significant amounts of money for adaptation to climate change from developed countries before they agree to limit future emissions. We also understand the cost for New Zealand could be equal to our total current aid budget. We think that the government needs to be consulting with the NZ public on this possibility before it commits to a wealth transfer to developing countries.

We are supportive of New Zealand reducing emissions on an equal cost basis to other countries if it is affordable. However, we want to emphasise that this will require the conditions to be fully met before any new emission reduction targets can be agreed to.

Yours sincerely

Greenhouse Policy Coalition.

ends

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