Economic analysis to support the development of the Zero Carbon Bill shows the importance of economic innovation and of planting trees, Minister for Climate Change James Shaw says.
Five technical reports, released today, together set out possible economic pathways for the transition to a net zero emissions economy.
“The economic modeling shows that we can reduce emissions at the same time as growing the economy, jobs, and per-household incomes.
“On the other hand, we know if the world doesn’t act to stop climate change then there will be huge costs from more droughts, storms, fires, and sea level rise,” said Mr Shaw.
“The sooner we take action, the easier it will be.
“Delaying action, however, will mean more difficult choices and higher costs in the future.
“The economic analysis also shows that taking action on climate change is likely to have other benefits like better health, water quality, reduced traffic congestion, and more innovative businesses.
“Our challenge is to get a lot of trees in the ground and support Kiwi businesses to come up with new solutions and better ways of doing things.
“I think that, as a country, we’re up for that challenge.
“It’s clear from this technical analysis that in order to reach our climate change goals the Government will need to support Kiwi businesses to innovate – which we’re already doing through things like the billion dollar R&D tax credit announced in Budget 2018.
“More innovation across our economy is a key part of the long term fix, but planting the right mix of native and exotic trees is also one of the easiest, quickest, and most cost-effective things we can do to help achieve our climate change goals.
“The Government’s billion trees programme is a critical part of off-setting emissions over the next decade, and the economic modeling suggests we will need to keep planting after that.
“The technical evidence also suggests that a credible long-term target will provide valuable signals for businesses to adapt and innovate; as long as we keep some flexibility to respond to unexpected events over the next three decades, and this is at the heart of why the Zero Carbon Act is a good idea for the economy,” James Shaw says.
Detailed economic modeling by NZIER and Vivid Economics presents a broad range of results depending on different scenarios.
“It’s clear from the modeling that a net zero target is achievable and that the economy can keep growing.
“Modeling the whole economy 30 years into the future is a huge challenge and, while we’ve asked the economists to keep working to sharpen their findings, we wanted to publish what they’d done so far so people could see it.
“We are mindful that some of the modeling shows there could be a disproportionate impact on lower income households, unless there are strong and effective policies in place to avoid these costs.
“The Government is ready to support those households to raise their incomes and quality of life; as we showed with our Families Package and Winter Energy Payment,” says Mr Shaw.
Relevant documents are available on the Ministry for the Environment’s website at: