Climate change is gaining enormous momentum in the media – it is no longer exclusive to the domain of scientists, tree huggers, and weather forecasters but has become genuine conversation topic for dinner parties, business meetings and beyond. Even the G7 agenda for 2007 gives significant attention to global warming management and its economic implications.
In February, the Intergovernmental Panel on Climate Change issued an updated report with predictions by pre-eminent scientists on the impacts of global warming. The baseline scenario predicted in the report indicates an unacceptably high risk of adverse long-term climate change effects.
Whether one sits in the “believer” or “sceptic” camp about the validity of the science, there is no doubt governments worldwide are addressing the need for action.
In developed countries, limits on emissions are now virtually inevitable and emissions trading systems have emerged in both regulated and voluntary formats.
The key for New Zealand is not only ensuring we meet our obligations, but also making sure we seize the opportunities that will arise. How do we ensure New Zealand is competitive place to do business and that existing businesses do not relocate offshore? How do we facilitate and assist New Zealand businesses turning defensive strategy into positive and successful outcome?
Although New Zealand ratified the Kyoto Protocol in 2002, there is still little apparent agreement on policy direction and regulation on climate change. The legislation that should have enabled the easy transfer of emission units via national registry was stalled for almost 18 months, finally becoming law last November. As result, the registry is not expected to be operational until later this year. The Government has signalled emissions trading as the long-term answer, but interim measures remain unclear.
It is imperative that calls for multi-party consensus on climate change policy direction be heeded. This agreement is essential to provide businesses, local bodies and other organisations with certainty as they consider and implement their long-term investment strategies. Businesses may then begin to invest in new technologies or acquire credits to offset an adverse emissions position without fearing possible post-election policy reversal.
The Government released five policy papers for public consultation in December 2006. The proposed policy approach is two-tiered – one set of measures for the period through until 2012 and one for post-2012. The first phase targets the electricity and stationary supply energy sectors. From 2012 the second phase will see climate change initiatives apply broadly across key sectors of the economy, including agriculture.
Nothing is set in stone yet and the Government’s willingness to go through consultation process must be commended. Letting businesses and the wider community provide feedback on the changes and the likely impact of the policies is important, as is making sure there is balanced and staged approach to policy development and implementation.
Submissions do not close until 30 March. strong mix of business and environmental factors was signalled in the draft policies and businesses need to make their views known as part of the consultation process. Rather than being defensive, there are some positives businesses could embrace. The likely future strategy could provide many with the opportunity for technological advancement in moving to new types of carbon-aware businesses and business models.
New Zealand’s next moves are critical. We must try and make sure they are the right ones or we will be left behind. We must not get too cute with our approach, but rather adopt policy direction which is clearly understood in the global arena. New Zealand has history of purist international policy formation (the international tax rules are good example) which has not necessarily made us an easy place in the world to do business with or from.
Unlike Australia, New Zealand has formally ratified the Kyoto Protocol. This places international obligations on us that our Australian counterparts do not have. However, it also provides us with unique opportunities – but only if we seize them now.
To be winner when the full global momentum spotlights uninvited onto our green (or not so green) image, we need to grasp the opportunities now. Organisations need to gear up their expertise, understand their carbon footprint and look at how they can develop, transfer and export their knowledge. The Government needs to act in decisive but balanced way and urgently support New Zealand businesses in taking advantage of this brief window of opportunity.
Global economies are pushing for reform in this area, and it is snowball that New Zealand cannot avoid. There are signs that organisations who take the lead may secure valuable advantages as early adopters – with benefits not only for the environment but for their businesses as well.
Julia Hoare leads the Climate Change Services team at PricewaterhouseCoopers in New Zealand. This article represents her views, not necessarily those of the firm.
