The Climate Change Commission Advice Report: A review and submission Tailrisk Economics Principal: Ian Harrison Contact: e-mail: [email protected] Ph. 0221753669 Part one: Introduction and overview This suBmission focuses primarily on the transport section the of Climate Change Commission’s report. We also comment on several structural decisions that drive many of the specific recommendations, in particular the decision to effectively move from a net to a gross zero carBon target. Our narrower focus does not mean that we necessarily agree with the Commission’s recommendations that we have not covered. The key recommendations on transport are that: electric vehicle suBsidies should introduced as a matter of urgency; no imported light internal comBustion engine (ICE) vehicles should Be registered from 2032 and that some form of emission standard should Be imposed Before that. The effect of these measures could Be to disrupt much of the used import car market, impacting primarily on the lower income people the Commission purports to 1 support. EV suBsidies could Be very expensive But the Commission has withheld any detail on these costs. In terms of getting to a suBstantially electrified vehicle fleet By 2050 this is all unnecessary. The electric car revolution is coming, But it may just Be a few years later arriving in New Zealand. If we simply impose a realistic carBon price and leave the market to work we will get were we want to Be. Moving early could initially cost well over $1000 per ton of carBon saved to the Benefit of urBan elites and virtue signalling corporates. The Commission says that they are committed to a ‘true’ consultation. But they initially gave only six weeks for the consultation and have withheld their models. Without access to the full detail of those models it is not possiBle to properly scrutinize several of the Commission’s claims. The Commission also says that it will: consider all evidence we receive through consultation and are prepared to change any part of our work in light of this. This remains to Be seen, But some of the comments in the report are not reassuring. For example in chapter 17 of the Evidence Report it is stated: Processes that are well known in behavioural science, such as group polarization and science denial, pose a significant challenge to climate policy. This suggests that when the Commission strike a suBmission that it disagrees with it can Be written off as just science denial. The Commission also says that it is independent. But this is a partisan report driven By a vision of ‘the good life’ that is anti-car, pro-compact urBan city and deeply into recycling (regardless of the cost). The discussions and recommendations read straight from the Labour/Green playBook. Many people disagree with some of these policies. The compact urBan form mantra has locked up land and has driven up house prices so they are out of reach of many New Zealanders. Many people like the freedom and convenience that cars provide. They don’t want to Be Bullied out of their ‘dependence’ on them. Others oBject to pointless, financially opaque, and expensive recycling initiatives. They don’t want unnecessary intrusions into their lives in the name of the Commission’s cultural revolution. They don’t want to see the state deeply involved in planning the economy when more efficient market oriented policies are available that allow people to make their own choices. 2 Others disagree, But these disagreements are Best resolved through the political process. That can Be advanced and unwound depending on the philosophy and oBjectives of the party or parties in power. The Commission’s joB should Be a straightforward technical one: how to get from where we are now to net zero carBon emissions By 2050, at the least cost. Instead it has effectively changed the oBjective from net to gross zero emissions, disregarding the clear intent of the legislation that gained near unanimous Parliamentary support a little over a year ago. It is misusing its position to push policies that are sometimes only tangentially related to the oBjective of net zero emissions By 2050. Once cars are electric it doesn’t matter, from an emissions perspective, whether you have a compact urBan form or not. It doesn’t matter whether you take puBlic transport or not. But that is not how it will Be played. Decision-makers will push expensive and ineffectual schemes draping them with ‘climate change necessity’ arguments Backed By the Commission’s ‘evidence’ and recommendations. The Commission is playing a political game that is intended to lock in future governments to the Commission’s vision. But it is a dangerous game that risks undermining the consensus required to reach the net zero target. If people feel they are Being railroaded into accepting Broader oBjectives that they disagree with, they may well reject the whole enterprise. The Commission’s report would have Been more palatable if it was Based on roBust, transparent and honest analysis. It says: The advice and recommendations contained in this report draw on robust evidence and expert analysis. But too often this is not the case. Often the Commission resorts to mantras, or to foreign evidence that is simply not applicable to New Zealand’s particular circumstances. When evidence is cited it is often misrepresented. On the critical issue of using exotic forest to offset gross emissions the Commission was simply deceptive about the evidence. It claims that exotic forests are too vulnerable to increasing high winds, fire and disease associated with climate change to Be a reliable form of carBon sequestration. The supporting reference cited clearly shows that this is not true. 3 Further, the Commission simply ignores the legal requirement to conduct cost Benefit analyses to support certain recommendations. We think that this is Because it could not come up with the ‘right’ answers. The Commission has set out its ‘vision’ of what it wants New Zealand to Be. It is an New Zealand where cities and towns are created around people and supported by low emissions transport that is accessible to everyone equally. Where strong local businesses produce low emissions, high-value products that are in demand locally and globally. Where employers are successful and can support themselves and their employees in the transition to climate-resilience. Where everyone lives in warm, healthy, low emitting homes. Where urban form encourages cycling and walking, alongside efficient, affordable and interconnected public transport networks. Energy is affordable and accessible. Communities can generate their own electricity using low emissions generation. In our vision of the future, Aotearoa has a circular economy and generates very little waste. The waste that we do generate is recovered, reused where possible, and otherwise used to generate energy. We have recently visited a country where much of the Commission’s vision is a reality. There is a heavy reliance on walking and cycling; puBlic transport dominates private cars almost to exclusion; energy use in homes is very low and there is very little waste. That country is North Korea. North Korea is a signatory to the Paris accord. Its intended NDC1, which it descriBes as ‘fair and amBitious’ was prepared By ‘a participatory and transparent process through stakeholder consultations,’ The Commission is not Being paid to have visions. That is for the political process. What we need is dispassionate, roBust, transparent and honest analysis. This is lacking in the Commission’s advice and evidence reports. This suBmission is structured as follows: Part two: Key findings Part three: Recommendations 1 Intended Nationally Determined Contribution of Democratic People’s Republic of Korea September 4 Part Three: General issues A: The Commission’s new pathway. B: The Commission’s failure to comply with the Act. C: The Commission’s principles. D: Emissions trading versus direct interventions. E: The value of co-Benefits F: Economic impact assessment. G : The pace of adjustment. Part four: The switch from a net to a gross carBon target. Exotic and indigenous forestry targets. Part five: Light vehicles. SuBsidies and emissions targets. This part is the core of the detailed analytical assessment. Part six: Heavy vehicles. Part seven: Buildings and urBan form. Our discussion is supported By the following appendices that constitute part of the submission. Appendix one: Ministry for the Environment. Marginal abatement cost curves analysis for New Zealand: Potential greenhouse gas mitigation options and their costs Appendix two: Dirty and dangerous? The ‘Clean Car’ Consultation Document Appendix three: Health and other Benefits from transport mode shifting Appendix four: The New Zealand Transport Authority Car safety rating system 5 Part Two: Key findings Commission has ignored the Climate change Act The Act requires that emissons (other than Biogenic emisions) Be measured on a net Basis. However, the Commission has suBstantitively ignored that requirement and is pursuing a zero gross emissions 2050 target. Its reasoning is that exotic forests are not an effective form of sequestration Because of future climate changes. Including higher wind speeds, more droughts and more disease The paper cited By the Commission clearly showed that these effects would not Be large and that exotic forests are expected to Become a more effective means of reducing emisions with carBon fertilisation and rising temperatures increasing their productivity. Gross zero targets will be costly The Commission’s economic modeling suggests that a gross zero target could cost $100 billion more than a net zero target. The Commission ignored advice from its reviewers to present the most relevant economic evidence that showed larger economic impacts. Argument that EV subsidies are urgently required to meet 2050 targets is fallacious The argument that EV suBsidies are required now to ensure the 2050 target is met does not make logical sense.