Budgeting for 2 Degrees - Submission to the MFE on NZ's Post-2020 Contribution
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Budgeting for 2 Degrees
Submission to the MFE on NZ's Post-2020 Contribution
Kate Meyer, B.Eng; David Merry, M.A, B.Sc
We are pleased to have this opportunity to make a submission on New Zealand's contribution for
COP21. New Zealand's priority in setting its contribution should be to maximise its effectiveness in
negotiating for a global deal limiting warming to 2˚C. Unless it offers reductions in the order of 80%
by 2030, we do not think it will be able to push for such a deal with any credibility. This may seem
like a very large commitment. But the costs associated with such a reduction are low compared to
the costs of failing to secure a deal limiting warming.
COP21 is an unusually important round of negotiations. There is a broad agreement that global
warming should be limited to 2˚C. While we would prefer the limit to be lower than this, the
existence of a widely-agreed on target will help focus efforts and determine whether the meeting
has been a success or failure.
However, we have serious concerns about whether an agreement will be made that will enable
global warming to remain below 2˚C. As per the Discussion Document, in order to stay below 2˚C
warming we must limit global emissions to a maximum of 2900 billion tonnes CO2-e. If all countries
submit targets similar to those submitted by the United States and the EU for 2030, then in 2030
we will already have used the entire budget and committed our planet to more than 2˚C warming.
Failure to limit warming to 2˚C is extremely likely to result in a catastrophic scenario. Predictions of
events caused by warming greater than this include major sea-level rise, global food security risk,
and increase the frequency and intensity of major weather events. These events are likely to result
in mass displacement of people and high levels of conflict and unrest.
That's on the assumption that we do not meet any tipping points which vastly accelerate climate
change. A tipping point is an event caused by global warming that itself leads to more global
warming. For example, climate change could lead to the sudden collapse of the Amazon rainforest.
The Amazon rainforest is a very important carbon sink, and its loss would likely cause an additional
3 degrees of warming. The current trajectory is of 3-4 degrees of warming by the end of the
century. This means that reaching a tipping point such as the Amazon rainforest could mean
warming of more like 6-7˚C. At 7 degrees of warming, substantial areas of the earth will become
uninhabitable. (Sherwood and Huber, 2010)
To calculate an appropriate contribution for NZ, we have used a construct we call a national carbon
budget. A carbon budget is the amount of greenhouse gases a nation can emit, consistent with
global warming of less than 2˚C, i.e. within the 2900 billion tonne limit referred to above. It is
derived by dividing the remaining global emissions by the world's population, and multiplying this
by the population of the nation. Using generous assumptions, we calculate New Zealand's carbon
budget at 0.58 billion tons of CO2-e from the beginning of 2012. If New Zealand is to stay within
this budget, it must reduce emissions by at least 20% by 2020, 80% by 2030 and 90% by 2050
compared to 1990 levels.
It is unlikely that developed countries such as NZ will secure a better deal than the proposed
carbon budget in a global agreement which limits warming to 2˚C. As such we feel that it is in NZs
interest to push for such a deal, to encourage large nations such as China, India, the USA and EU
to commit to the same. The benefits to all New Zealanders of gaining such a global commitment
vastly outweigh the costs of achieving these goals ourselves.
Our answers to the questions in the report reflect this overarching approach. As we detail below,
we believe that New Zealand should adopt the goal that best enables it to negotiate for a deal that
1
will actually limit warming below 2˚C; we do not think the nature of our economy or emissions
should impact our targets; we see the costs of emissions as small in comparison to the value of an
international agreement; we think that a number of benefits will accrue to New Zealand from
reducing emissions, and we think that New Zealand's emphasis should be on immediate action.
Question One – Do you agree with the above objectives for our
contribution? What is most important to you?
We disagree with the objectives. We think New Zealand should set its contribution at a level that
will allow it to remain within its national carbon budget.1 This is the most effective way New
Zealand can pursue a global deal limiting warming to 2˚C, and COP21 may be the last chance to
secure such a deal. A contribution consistent with staying within New Zealand's limits will send a
clear and strong signal about what New Zealand sees as being acceptable by others. It will also
put New Zealand in a strong position to propose deep emission cuts from other nations, and to
credibly critique arguments in defence of lesser cuts to emissions.
Sending a Clear and Strong Signal
We think it is vital that New Zealand clearly and strongly signal what it sees as being an
appropriate level of emissions reductions. The best way it can do this is by committing itself to
making such reductions. The signal is particularly important because commitments submitted by
other nations thus far are too low to offer a realistic hope of limiting warming to 2 degrees.
The EU has, among wealthy nations, committed to the highest levels of emissions reductions,
aiming to reduce emissions by 40% of 1990 levels by 2030 and 60-75% of these levels by 2050.
These levels of emissions are widely seen as being very ambitious. If, however, the EU emits at
these rates, they will have exhausted their share of the remaining carbon budget no later than
2027. The EU is clearly depending on other nations to use less than their remaining carbon budget
to make room for the EU emissions. It is unclear which nations they expect to do this, given that no
nations, wealthy or otherwise, are likely to put forward contributions which reflect emissions less
than their national carbon budget. Although some influential parties in the EU are arguing that the
EU goals are too low, this judgment is far from widely shared.2
The United States now acknowledges that climate change is happening, and has committed to
making emissions reductions of 20% below 2005 levels by 2020 and 83% by 2050. On these
commitments, it will already have exhausted its share of the carbon budget by 2020. Again, the
United States is either assuming that other nations are going to use less than their share of the
remaining carbon budget, or ignoring the science on climate change. Unlike in the EU and NZ,
where there is thankfully broad agreement across the political spectrum that some reductions to
emissions levels need to be made, the US government is already seen by many of its citizens and
politicians to be doing too much to mitigate climate change.3
If New Zealand commits to reducing its emissions by 80% by 2030, it will send a strong signal that
the EU and US commitments are not high enough. This signal is likely to be picked up by
international media, which will alter the perception of the EU and US commitments by EU and US
citizens. We will not feel well represented by New Zealand at the climate negotiations if it does not
clearly signal that the EU and US emissions are too low. While New Zealand's emissions make up
only a small portion of global emissions, we have the potential to influence countries such as the
EU and US which control a considerable portion. COP21 is our last chance to try to persuade them
1
For the calculation of NZ's carbon budget, please see Appendix 1
2
For example, the central-left SPD in Germany is calling for a 40% reduction in emissions by 2020, see
http://www.spdfraktion.de/themen/spd-fraktion-h%C3%A4lt-am-klimaziel-f%C3%Bcr-2020-fest. But other
central-left parties are less ambitious. The UK Labour party, for example, did not leading up to the recent
UK election advocate for clear emissions targets: UK Labour Party Manifesto:
http://www.labour.org.uk/page/-/BritainCanBeBetter-TheLabourPartyManifesto2015.pdf.
3
See e.g GOP opposition to Obama's relatively modest climate policy
http://www.nytimes.com/2015/04/01/us/obama-to-offer-major-blueprint-on-climate-change.html.
2to limit the damage caused by their emissions to 2˚C.
New Zealand's Negotiating Position
Committing to reduce emissions in such a way as to stay within its carbon budget will best place
New Zealand to encourage other countries to do the same. Many countries have demonstrated
that they are unwilling to undertake serious cuts to emissions if other, similar countries do not do
so. The US administration refused, for example, during the Copenhagen negotiations to commit to
reducing its emissions if developing countries, and particularly China, did not make similar
commitments.4 Similarly, the EU made it clear that it was willing to offer emissions reductions of up
to 30% by 2020 if other wealthy nations were willing to do the same.5 New Zealand can best
encourage other countries to get realistic by doing so itself.
Making a high commitment will enable New Zealand will further encourage others to do the same
as doing so embodies a commitment to face up to the difficult political decisions that have to be
taken in order to control global warming. Making such a commitment conveys the attitude and
places us in a position to argue that such measures are both necessary and feasible. Being well-
placed to make such arguments is likely to be very useful in a negotiation where the primary
objective is getting other nations to commit to higher levels of emissions reductions. Doing so will
mean that New Zealand's contribution to the negotiations is a positive one, making a global
agreement more likely.
The most important thing to us that New Zealand represent us well at COP21. For us, this amounts
to doing everything it can to help parties come to an agreement that limits warming to less than
2˚C. A commitment to staying within its carbon budget is, we think, a big step towards defining its
role at COP21 as a positive one. Although we recognize that New Zealand is a small country with
limited political clout, it is our representative, and we are relying on it to represent our interests in
these negotiations as best as it can.
Question 2: What do you think the nature of New Zealand's emissions and
economy means for the target we should set?
The nature of NZ’s emissions should not impact our target. Every country faces unique challenges
when attempting to reduce emissions. Almost all will have significant economic implications.
Imagine we were a nation whose economy relied heavily on oil. Would we argue that although the
science demonstrates clearly that we cannot afford continue to burn through our oil reserves that
we would continue to extract and burn fossil fuels due to our economy? Would we accept this
argument from another nation at the COP21 negotiations?
The IPCC has defined a clear path (Representative Concentration Pathway (RCP)2.6) which we
need to follow if we are to have a reasonable chance of staying below 2˚C warming. The
Discussion Document refers to this target, stating that globally we must emit no more than 2,900
billion tCO2-e to have a chance of remaining below 2˚C.
In 2011 we had already emitted 2/3rds of this budget, or 1,933 billion tCO2-e. This leaves a global
budget for post 2011 emissions of 967 billion tCO2-e. In 2010 global annual emissions were 49
billion tCO2-e (UNEP, 2012). At this rate it would take only 20 years to exhaust the planet’s
emissions budget and condemn all future citizens to a cataclysmically changed climate.
It is neither reasonable nor productive for any country to come to the COP21 negotiations with
targets that are not in keeping with the IPCC RCP2.6 pathway. New Zealand should lead by
example, setting short and long term targets which are in-line with RCP2.6 and work backwards to
determine how these relate to our 1990 emissions.
4
See e.g http://www.telegraph.co.uk/news/earth/copenhagen-climate-change-confe/6516634/US-refuses-to-
budge-over-climate-change-deal.html
5
http://unfccc.int/meetings/copenhagen_dec_2009/items/5264.php
3The nature of NZ’s emissions profile can then be used to enhance our negotiation standpoint and
convince other nations that they must also set targets inline with RCP2.6 regardless of their own
emissions profiles.
What does RCP2.6 mean for NZ emission targets?
The graph below shows the proposed global emissions pathway for RCP2.6. According to the Fifth
Assessment Report, approximately half the models which contribute to this pathway show
emissions just above zero by 2100, and half show net emission reductions by this time (Stocker et
al., 2013). On this basis we propose that NZ, and all nations agree to develop an emissions
reduction plan which follows this path with a target of net zero emissions by 2100.
Figure 1: CO2 emission pathways. IPCC 5th Assessment Report TS.19
It is likely to be very difficult to agree an allocation of the remaining CO2-e budget through any
means other than a proportional allocation based on population. A proportional allocation will allow
developing countries with currently very low per capita emissions some space to increase their
emissions before setting themselves on a path to zero emissions by 2100, and require the highest
per capita emitters to make reductions as quickly as possible. As NZ makes up 0.06% of the
global population, our carbon budget is 0.58 billion tons CO2-e from 2011. The diagram below
shows a proposed emissions reduction pathway for NZ emissions which roughly follows the shape
of the RCP2.6 pathway above without exceeding this budget.
4To follow this emissions trajectory, NZ would need to commit to the following reduction targets with
respect to 1990 emission levels:
2020: 20%
2030: 80%
2050: 90%
These targets are consistent with Deputy Director of the Tyndall Centre for Climate Change
Research, Kevin Anderson’s (Anderson and Bows, 2013), recommendations that developed
countries will need to commit to 80% reductions by 2030 if we are to have a chance of remaining
below 2˚C warming.
Alternative accounting methodology for national emissions
There may be cause to propose an alternative national emissions calculation methodology as part
of the COP21 negotiations. Currently a country is responsible for the emissions released by the
activity rather than the consumption of that country. This methodology advantages countries who
are net importers and places countries such as NZ who are net exporters at a disadvantage. If we
are to argue for per capita allocation of the global emissions budget from which to set national
targets, we could also present a case for emissions reporting to be based on national consumption
rather than production. This would help share the burden of our emission reductions with nations
who share the benefits of these.
Emissions reductions opportunities NZ
The 2020 target proposed above is in line with the proposed NZ targets for COP21 negotiations;
however we wish to address the proposed mechanisms to achieve this.
While it is likely that emissions trading will form an element of global emission reductions, the
external trading of emissions should not form a major element of NZs reduction strategies. There
5are two key problems with emissions trading:
1. Previous emissions trading schemes have not included a global cap. If we are to reduce
global emissions there must be a cap on global emissions as well as national emissions.
2. The long term target for emissions reductions based on RCP2.6 is very challenging. If NZ
relies heavily on making reductions through trading then we will find ourselves falling behind other
nations in our ability to meet our targets down the track, when other nations need their emissions
quota for their own emissions and the cost of offsetting becomes high.
The following sections outline some opportunities which could be considered in the development of
a strategy for emission reductions. These are by no means comprehensive. Substantial analysis of
different opportunities will be required to determine the best way to reduce our emissions both in
the short term and in the long term.
Agriculture
Almost 50% of NZ emissions come from the agriculture industry. It will not be possible to make
reductions in the order of magnitude of 80% and 90% without addressing these.
Global emphasis on emissions reductions has been predominantly regarding the burning of fossil
fuels. However, the last few years has seen increasing pressure on agriculture. The livestock
sector produces 18% of global greenhouse gas emissions, more than the world’s entire fleet of
cars, ships, trains, buses, planes and trucks (FAO, 2006). We anticipate that the pressure on
reducing emissions from agriculture will continue to grow, particularly for the meat and dairy
sectors.
We believe that NZ should look to further diversify both our economy and our land use with respect
to agriculture. The world is already shifting away from non-renewable resources which require high
pressures and temperatures (and therefore high energy) in their manufacture. We anticipate an
increase in demand for natural, renewable products.
NZ has some many unique and high quality native timbers, such as Kauri and Rimu which are
likely to be of increasing value as non-renewable resources are replaced by natural products.
Although these trees are very slow growing, the short term costs of developing native plantations
could be offset by the emission reductions these would provide.
There may be opportunities for mixed use land which combines low density forestry with low
density agriculture. With appropriate trees and forestry management, this would have
environmental benefits which go above and beyond emission reductions. Tree roots help to reduce
sedimentation, protecting local waterways and reducing the risk of desertification. They would help
to enrich the soil, dropping plant matter which decomposes as natural fertilizer reducing our
reliance on chemical fertilisers. They would also provide shelter, both to livestock and to other
species, encouraging greater biodiversity.
The global demand for edible crops will continue to grow. We should consider converting some
land from livestock to cropland which has far fewer emissions per calorie of food. We should
explore opportunities to use crop waste in biofuel to enhance the economic viability of this option.
The diversification of our land use will not only reduce our emissions, but also make NZ more
resilient to the impacts of climate change. We must consider not only how to reduce our impacts
but also how we will manage increased droughts and heavy rains, higher intensity storms, and
other severe weather events all of which are predicted for the following decades – even if we are
successful in capping global warming at 2˚C. An economy tied heavily to agriculture is one that is
very vulnerable to these impacts. As such alternative economic activity should also be considered.
As global targets for emission reductions become more difficult there will be an ever increasing
demand for innovative, low carbon technologies and products. NZ should look to invest more in
research and development in this area to keep us at the cutting edge of global advancements.
Investment should be allocated on a competitive basis to those projects with the most chance of
making mitigation easier in order to best play to the strengths of the NZ research community.
6Energy
At 22% of our emissions, energy emission reductions will need to from a substantial part of our
overall emission reduction strategy. This should form a two pronged approach:
1. “Greening” the electricity supply
2. Reducing the electricity demand.
In 2013 fossil fuel sources still made up 25% of our electricity supply. In order to encourage other
countries to stop burning fossil fuels, NZ should commit to achieving a 100% renewable energy
supply by 2030 and to leaving remaining fossil fuels in the ground.
A large proportion of our electricity comes from hydro power which makes us vulnerable to energy
shortages during droughts. This vulnerability should be managed through a combination of wind
and solar, neither of which have been tapped to their full potential. By ensuring NZs electricity
supply is diverse, we reduce vulnerabilities from weather variations.
To reduce NZs energy emissions considerable efforts should be made towards reducing our per
capita electricity consumption. A baseline of electricity must be easily available for all New
Zealanders to ensure basic needs for heating, cooling, lighting and refrigeration are met. However,
electricity has a high environmental cost. Even renewable energy which has high levels of
embodied energy in turbines, solar panels and dams. The cost of electricity for luxury items such
as spa pools and high tech entertainment systems should reflect true environmental costs.
NZ has very inefficient housing meaning that a lot of energy is wasted in heating and cooling
buildings. There have been efforts over the last 10 years to improve this but there is still a long way
to go to bring NZs building stock up to a high environmental standard.
A significant amount of energy is wasted through poor behaviour (leaving lights on in empty rooms,
running appliances unnecessarily etc). Campaigns against wasting water have proven very
effective and should be considered to reduce energy waste.
Transport
According to New Zealand’s Greenhouse Gas Inventory 1990-2013 (MOE, 2015), New Zealand
has one of the highest rates of car ownership in the OECD. Further, we have a relatively old (and
therefore emission intensive) vehicle fleet. The majority of our freight is via emission-intensive
trucks, rather than by train or coastal shipping. In short, New Zealand’s domestic transport
emissions per capita are high when compared with many other Annex 1 countries.
It is easy to lay the blame for transport’s emissions intensity down to our low population density.
However the population densities of our cities which house the vast majority of NZs population can
be managed. NZ should define a “green belt” for each city to limit sprawl. We should identify
locations for “Activity Hubs” outside of the city centres. These should act as mini-centres with office
space and public amenities (cafes and restaurants, parks, shops, schools, childcare, healthcare).
Each Activity Hub should be well connected through public transport. Strategic regulations to
building regulations should be coupled with incentives which encourage New Zealanders to build
around these hubs and along public transport corridors to and from these and the city.
NZ should be looking to encourage a shift from private vehicles to public transport, cycling, and
walking as a top priority to reduce the number of cars on the roads. This will have on-flow benefits
to public health and the economy. A secondary approach should include the transition from fossil
fuel to electric vehicles. This is a particularly effective emissions reduction strategy for NZ where
our electricity is predominantly renewable.
Intercity transport and connections to major airports should be via high speed electric rail. An
upgraded rail system would allow reductions in emissions due to freight, as well as due to road and
air transportation. As an island nation it is also worth considering shipping freight as an alternative
to trucks.
7Question Three – What level of cost is appropriate for New Zealand to reduce
its greenhouse gas emissions? For example, what would be a reasonable
reduction in annual household consumption?
Making a commitment to stay within our national carbon budget as previously outlined is the best
way to get an agreement limiting global warming. Such an agreement is extremely valuable,
because global warming will have enormous costs to New Zealand. While costs of reductions of
the extent we are recommending may seem high, when compared to the costs of adapting to the
consequences of more than 2˚C warming the costs are trivial.
Policy makers typically want a precise estimate of the value of keeping emissions reductions low,
preferably in monetary terms. The advantage of such a value is that it can be compared to the cost
of carrying out emissions reductions, and a system for working out when the costs of reducing
emissions exceeds the benefit of reducing global warming arises.6
The problem with this approach is that current economic models offer estimates of levels of
damage that are far lower than those suggested by the science. As a result, in the economic
models catastrophic levels of global warming appear deceivingly harmless.7 Producing policy
advice on the basis of these models is therefore likely to lead to seriously downplaying the risks of
climate change, a legacy that any advisory group will have to live with.
The case stands even more heavily in favour of making emissions reductions when we consider
the impact on human happiness. Changes to New Zealand's consumption of the magnitude of
even the highest estimates mentioned in the discussion document are unlikely to have a tangible
effect on human happiness at all. Many of the impacts of climate change will cause enormous
misery, both globally and in New Zealand. We believe that policy should be informed by a broader
view of well-being than merely an economic one, and that when such a view is taken, the
economic costs of mitigation makes a poor argument against immediate and large emissions
reductions.
Economic Models seriously underestimate Cost
In July 2014, the Executive Office of the President of the United States issued a report evaluating
the cost of delaying action on climate change. (Executive Office, 2014) The report came to many
conclusions that we in principle agree with: the cost of delaying action is high, and delaying action
on climate change is irrational. The authors of the report rightly emphasize the risk of missing
stabilization targets. But, and this is where we part ways with the authors of this report, they
provide precise estimates of the costs of missing the targets to climate change: 0.9% of global
G.D.P if we stabilise at 3 degrees instead of 2, and 2.1% if we stabilise at 4˚C instead of 2˚C.
These costs are, in an absolute sense, enormous, and in order to support their assessment of the
importance of hitting climate change goals, the authors of the report put a cash value on the lower
cost: 0.9% of the GDP of the United States comes out at 150 billion dollars. To further dramatize
this number, we could point out that 0.9% of the Gross World Product is around 750 billion dollars.
That is approximately the value of Apple and Google combined. And this would have to be paid out
every year.
However, the number does not correspond with the talk of “dangerous” climate change above 2˚C,
or with the call from developing countries for “1.5 to stay alive”. 0.9% of WDP is challenging, but,
with GWP growing at 3.5%, this value would suggest that economic conditions would continue to
improve even with climate change at 4 degrees. This message is dangerously reassuring to those
of us who have been rather alarmed by scientists telling the media that we are facing an existential
crisis.
6
This is for example the approach taken by (Nordhaus, 2008)
7
For a good description of this see Stern 2013. I will give the essence of Stern's argument below, but I don't
think I can recommend the paper strongly enough. It explains the experience that you may have had if in
trying to come to terms with climate change from a policy perspective, where the economic models are
surprisingly reassuring given what we're hearing from scientists.
8It turns out that the Executive Office made a bad mistake in calculating these costs. The mistake in
question was using Nordhaus' DICE model.8 So far as economic models of the costs of climate
change go, Nordhaus' DICE model is very good. The problem is that the costs of climate change
are very hard to model, and that the difficulties involved in modeling the costs lead to vast
underestimation.
In 2013, Nicholas Stern published an article detailing the causes of this underestimation. His first
argument is that the scientific models of climate change on which the economic models are based,
leave out important factors, including: “thawing of permafrost and release of methane; collapse of
land-based polar ice sheets”; “release of sea-bed methane”. They also underestimate important
factors, including rain-forest collapse. These models subsequently inform impact models, which
have their own limitations. Many of the most important impacts of climate change, such as non-
linear impacts of temperature on crop-yields, are left out of these models for reasons of tractability.
Most strikingly, the models do not take into account likely levels of human migration and the
resulting conflicts. Since these enormous consequences are not in the impact models, they do not
get accounted for in the economic models, leading to serious underestimation of costs at the
outset. Since we do not possess better impact models than we possess, we are not in a position to
state how great the underestimation is. Suffice it to say, however, that many of the most costly
factors have been omitted.
Stern goes on to outline how the economic models build in their own extra layers of
underestimation of impact. The most striking extra layer is that the economic models usually
assume exogenous sources of growth. What that means is that they do not take into account the
impact of climate change on stocks of capital. Given that climate change is likely to make areas of
land uninhabitable, rising sea levels will submerge parts of major cities, areas currently available
for crop use will become unusable, this probably leads to a massive underestimation of the costs of
even what was built into the impact models. The economic models are therefore a wildly optimistic
costing of a wildly optimistic list of damages resulting from a wildly optimistic assumption about
what the global climate will actually be like. To illustrate this optimism, Stern cites Ackerman,
Stanton and Bueno, who extrapolated an earlier version of Nordhaus' model to 19 degrees
warming. At 19 degrees, Nordhaus' model predicts GDP will be halved, when in fact human
extinction becomes probable at around 12 degrees warming. (Nordhaus, 2013)
Given the multiple layers of underestimation built into the best available economic models, we
argue that New Zealand should not use them to inform policy advice. But this makes the question
of the value of a globally binding agreement to limit climate change impossible to accurately
estimate, and for this reason a precise value cannot be given to a reasonable level of costs for
New Zealand to bear.
What we can say, however, is that exceeding 2 degrees warming is extremely risky. Anything that
can be said about what a 3 or 4 degree world is necessarily speculative, because we have never
experienced it. Nevertheless, the best informed speculation is extremely negative. A report
commissioned by the World Bank in 2012 concludes that “a world in which warming reaches 4
degrees Celsius above per-industrial levels would be one of unprecedented heat waves, severe
drought, and major floods in many regions, with serious impacts on human systems, ecosystems,
and associated services.” We estimate the value of an agreement that prevents such a world as
being extremely high to New Zealand, certainly far greater than the costs outlined in the Discussion
Document.
Happiness, Climate Change, and Mitigation
We have already argued that the benefits to NZ of a global deal to keep climate change under 2˚C
are likely to outweigh, in purely financial terms, the costs of the levels of emissions reductions we
must pledge if we are to effectively advocate for such a deal, rather than hindering it. This analysis
falls even more heavily in favour of heavy reductions if we consider the impact on happiness.
8
As found in (Nordhaus, 2013)
9A study in New Zealand in 2012 investigated the relationship between income levels and
happiness. What we find striking about the study is not that it repeated the finding that
improvement to happiness diminishes beyond a certain economic point, but that the overall impact
income had on happiness was very slight. Participants in the study were asked “in general how
happy or unhappy were you”. A score of 2 corresponded to an answer of “neither happy nor
unhappy”, 3 corresponded to an answer of “happy”, and 4 corresponded to “very happy”.
Participants on the lower quartile of income, around $35,000 per annum, had an average score of
3.2. Participants with $200,000 per annum had an average score of 3.4. Even the very lowest
earners on the graph had a score of over 3. These differences are very small: participants at every
income level reported being happy on average, and at no income level did participants come close
to reporting being on average very happy. Further, to achieve a noticeable difference in scores, a
change in income in the thousands or tens of thousands was required. This finding was in line with
international research.9
The level of difference in household consumption reported in the Discussion Document between
10% emissions reductions by 2030 and 40% emissions reductions by 20% was $500 per annum.
Although income is not the same thing as consumption, $500 per annum, in light of the results of
this study, is unlikely to have any impact on happiness.
In contrast, the impacts of high levels of global warming are likely to include increased conflict,
displacement of people, more frequent natural disasters, flooding, and so on. New Zealand is
particularly at risk of increased flooding and forest fires, and loss of coastal lands which are of
enormous emotional significance to many people. These events will involve tangible and
considerable suffering. Happiness research suggests that even people not directly affected by
substantial disasters experience drops in happiness similar in scale to those of moving from the
lowest quintile of income to the highest, simply as a result of the media coverage of these events.10
We care about the happiness of New Zealanders first and foremost. We think that it's clear,
however, that the benefits of an agreement limiting global warming to less than 2˚C will vastly
outweigh the costs of emissions reductions both in terms of wealth and in terms of happiness.
Reducing emissions is unlikely to reduce happiness to a noticeable extent, even if the financial
costs of emissions reductions turn out to be far larger than what the Discussion Document
suggests. Both the financial costs and the costs in terms of happiness of failing to address climate
change will be very large. Thus New Zealand should accept even very high costs for emissions
reductions.
Question 4: Of these opportunities which do you think are the most likely
to occur, or be most important for New Zealand?
All of the opportunities listed in the Discussion Document should occur with a strong emissions
reductions strategy. All are very important for NZ. It is important to consider that many of these
opportunities will also bring about economic gains, for example the cost savings to NZ healthcare
due to improved air quality from. Other benefits to consider include:
Reduced economic risks from diversifying our economy away from the livestock industry
which is heavily reliant on weather and therefore vulnerable to climate change impacts
Reduced environmental vulnerability due to increased forestry which leads to improved
biodiversity, soil quality and water quality.
Improved health and social connectivity due to increases in walking and cycling
Improved health due to better insulated homes
Improved economic well-being due to lower heating and cooling costs in homes
Economic advantages from tourism due to our continued ability to market NZ as a “green”
nation based on our leadership in environmental concerns
9
Sengupta et al. 2012
10
Kimball et al., 2006
10Question 5: How should NZ take into account future uncertainties of
technologies and costs when setting its target
There will always be uncertainties when setting future targets, particularly in this case when we are
considering several decades into the future. Unfortunately we are in a position that does not allow
us to delay action in the hope that technology will provide an easier answer down the track.
Global and national emissions data lags by several years. The emissions budget referred to in the
Discussion Document is calculated as emissions remaining after 2011. This means that over 3
years of emissions have already occurred and must be accounted for when considering our
ongoing targets. Based on NZs 2013 greenhouse gas emissions report, we anticipate that by the
beginning of 2016 we will already have consumed over 30% of the NZ allocation of 0.58 billion
tCO2-e. Globally we will have consumed 20% of the budget by this time. For each additional year of
inaction we reduce our long term budget for NZ by approximately 0.054 billion tCO2-e.
The targets we have proposed allow for gradually diminishing reductions in emissions, i.e.
approximately 10% per annum for the rest of this decade, 7% per annum for the following decade,
and then 5% per annum until the middle of the century. As our net emissions reduce, it will be
increasingly difficult to make further reductions and as such it is critical that we allow for this in our
targets.
To demonstrate the urgency of the reductions, we can take the example of delaying major
reductions until 2025 in the hopes that improvements to efficiency will allow for easier reductions.
Let us say that we reduced the annual reductions to (for example) 5% per annum from now until
2025. In 2025 we will have used 97% of our remaining emissions budget in a single decade. This
would mean that the technology improvements would need to be great enough to achieve a 95%
annual reduction from 2025 - 2026 to remain on the IPCC pathway. It is extraordinarily unlikely that
technology advancements will be rapid enough to justify any delays in emission reductions.
The best way to allow for improvements in technology is to regularly review and update our
strategies that enable us to remain on the IPCC pathway and hit our emissions reductions targets.
Conclusion
To summarise, we believe NZ should propose a global agreement which limits warming to 2˚C. We
anticipate that the least challenging targets for NZ in keeping with such an agreement will be to
commit to a national carbon budget based on a proportional allocation of remaining permissible
emissions.
We do not think the nature of our economy or emissions should impact our targets. We see the
costs of emissions as small in comparison to the value of an international agreement We think that
a number of benefits will accrue to New Zealand from reducing emissions, and we think that New
Zealand's emphasis should be on immediate action.
We hope our proposal will meet with serious consideration.
Appendix One
Calculating New Zealand's carbon budget:
A. World population: 7,246,419,000 (US Census Bureau, 2015)
B. NZ population: 4,591,054 (Statistics NZ, 2015)
C. NZ population / world population: (A/B) 0.0006
D. Maximum global emissions for 2 degrees warming: 966.67 gigatonnes of CO2 equivalent
11(MFE 2015).11
E. NZ's carbon budget: (C * D) = .58 gigatonnes of CO2 equivalent
References
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11
We used the numbers cited by the MFE in preparing this document, but since they refer to 2011,
they are certainly a little optimistic.
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