NZIER senior economist Peter Clough says that with a climate emergency declared and a Climate Change Commission roadmap recently released, we need to be clear on what baselines we are using on our journey to zero carbon emissions by 2050.
An Insight article shows that there are big differences in greenhouse gas emissions depending on whether we look at the UN Greenhouse Gas Inventory, or production-based national accounts or consumption-based national accounts prepared by Statistics New Zealand.
For example, New Zealand’s consumption-based emissions are only about 70 per cent of its Inventory total, due to the high level of potent methane emissions embedded in agricultural exports.
But targeting farming for deep cuts would be costly to New Zealand’s economy and counter-productive for emission reduction if other countries increased their more emission-intensive livestock production.
"It matters whether emissions reduction policy is being driven by reporting protocols or planetary impact," says Peter. It is more efficient to seek emission reductions from activities that are worse emitters than comparable activities elsewhere, than targeting low emitting production.
In responding to the Climate Change Commission proposals, baselines need to be transparent to ensure environmental and economic outcomes are covered. This is especially true for tourism, an industry that is scarcely covered in the draft Climate Change Commission’s proposals.
Tourism has a modest share of the national emissions but it currently has distorted incentives.
International air travel emissions sit outside reporting requirements and are not attributed to any country. That emissions blind-spot is counter to the intent of the Zero Carbon Act.
The UN’s World Tourism Organisation and more importantly consumers will be looking for climate friendly travel options. International travel is likely to become more costly, in the near term due to recovery from COVID disruptions and in the longer term due to the need for lower emitting fuels.
So, when border restrictions are lifted there will be some rebalancing towards more domestic tourists and fewer international visitors holidaying in New Zealand. Europeans and North Americans seeking volcanoes and fantasy film backdrops may visit Iceland more and New Zealand less.
There is an opportunity with the Climate Change Commission’s final version to address gaps and redouble efforts to refine feasible pathways for emissions reduction and build a sustainable tourism industry in the reset, says NZIER.