$30b gain in becoming a low carbon economy – report

Getting an early start on reducing greenhouse gas emissions could result in a $30 billion gain for New Zealand‘s economy, according to a new report.

Photo: 123RF

The report – commissioned by Westpac Bank – said it will cost less if the country moved to a low carbon economy over the next decade, rather than being forced into action or waiting for the rest of the world to respond.

The report showed New Zealand could reduce carbon emissions and still achieve economic growth, although significant adjustments would be needed by some sectors, including agriculture and fossil fuel industries.

“This research demonstrates the importance of taking immediate steps to cut our greenhouse gas emissions. The alternative is waiting and taking action later, but that is likely to require more drastic changes in behaviour and over the long-term hit people harder in the pocket,” Westpac chief executive David McLean said.

The report puts forward two scenarios – one involves an earlier and smoother transition to a lower carbon economy, and another in which the move to cut emissions is delayed for more than a decade.

The two models are based on meeting the Paris Climate Accord, which aims to limit the rise in global temperatures to within two degrees of the pre-industrial era by 2050.

Mr McLean said the report showed that delay would be costly.

“But that is likely to require more drastic changes in behaviour and over the long-term hit people harder in the pocket,” he said.

The $30 billion gain is the difference between an average annual economic growth rate of 2.015 percent if industries take early action and a growth rate of 2.005 percent if there is a delay.

A common criticism levelled at policy decisions based on climate change goals was that they would impact business profitability and job security.

Mr McLean said Westpac had commissioned the report because its lending decisions would be affected by climate change.

“We currently provide $1.5 billion in lending to companies providing climate change solutions and our lending exposure to fossil fuels has decreased by 55 percent over the past five years to $318 million.”

Climate Change Minister James Shaw said the government will introduce a Zero Carbon bill later this year to help New Zealand stay on track to meet its obligations under the Paris agreement.

Mr Shaw said the bill will set out five-yearly carbon emissions targets and an independent commission to enforce them.

He said the bill will provide a strong policy framework so businesses can make carbon-friendly investment decisions.