Climate Change

Straterra acknowledges the global imperative of reducing carbon emissions but believes New Zealand must act in concert with global progress so that we retain our competitiveness and avoid carbon leakage.

The Paris Agreement has set a target of global emissions of net zero by 2050 and the New Zealand government has proposed a target for New Zealand in line with this.  There are a number of conditions that need to be met for this approach to get traction including global progress in reducing emissions.

We support the establishment of a climate commission which would provide independent, expert advice to government on issues around climate change.  It should have independent experts to ensure robust debate and decision making.  The Chair of the Commission should be a businessperson.

In principle, we support the Emissions Trading Scheme and a carbon price as a tool to meet the government’s Paris commitments to reduce emissions, subject to specific conditions. These conditions include a means of identifying and mitigating any adverse impacts on the competitiveness of, particularly, New Zealand’s energy intensive and trade exposed (EITE) businesses. 

Without access to global markets for CO2, the market for CO2 in New Zealand needs to be managed through free allocation mechanism and price caps in order that environmental and economic objectives are appropriately balanced.

Currently only 15% of global emissions are subject to any carbon price, and energy-related greenhouse gas emissions are continuing to increase globally.  This significantly limits the extent to which a carbon price in New Zealand can be used to drive emissions down – subject to sector, and sometimes company specific, assessment of the impact of increased costs on, particularly, the energy-intensive, trade-exposed (EITE) sectors.

We argue that there is no global or New Zealand benefit if costs are imposed on New Zealand emitters that are not matched by our trade partners and trade competitors.

A high CO2 price may reduce New Zealand emissions, and increase forest planting, but will lead to carbon leakage – with investment lost and energy intensive industries moving to those countries[1] without similar imposts achieving little or nothing for an overall reduction in global emissions. New Zealand is a very efficient producer of many energy intensive products that we export and any loss of investment, economic activity and jobs in these sectors would typically be a negative global contribution.

Because climate change is a global issue, an international market covering the majority of global emissions is needed but we accept this is not achievable at this time.  An international market would enable countries and sectors that can emit more efficiently than others to do so. That is the purpose of a global emissions trading scheme.  This would deliver a fair playing field for New Zealand energy users, and would be a more efficient way to reduce global emissions.

We support the New Zealand government placing a high priority on working with other countries to developing a robust and credible international carbon market.

Coal contributes has the highest carbon content of any fossil fuel - and is more emissions intensive per unit of industrial output than any other energy source but it represents less than 5% of New Zealand emissions (compared with roughly 40% from livestock and 20% from transport). 

Around the world, more work is being done to improve the environmental impacts of coal use as very cost-effective process heat in industrial processes, for example:

  • improving boiler efficiency

  • improving the efficiency of coal-fired power stations

  • exploring alternatives to the use of coal in steel-making

  • ongoing R & D into carbon capture and storage.

Straterra has also produced an information resource that can be found at www.letstalkaboutcoal.co.nz/