Climate action is an economic opportunity for New Zealand. Inherent in it are brand benefits for our exporters, reduced costs, higher paying jobs, alongside the obvious environmental benefits.
We need to seize it. We meaning Government and business. Just as our successful Covid response has required a team effort, so too does climate action.
And there is good cause to be optimistic.
The Commission's report sets out that acting now makes more economic sense than waiting, and that we can reduce emissions while continuing to grow the economy.
According to Commission modelling, if we stick with today's policies and settings, they will cost us an estimated 2.3 per cent of GDP by 2050.
But if we act now, and invest in a strong, inclusive, climate-friendly economy, the impact on GDP will be almost halved over that period, at around 1.2 per cent.
It is safer, smarter and cheaper to act now.
Climate change represents the greatest economic transformation in our lifetime, because it impacts every single industry sector.
Those businesses that adapt and embrace change will reap the benefits. Those businesses that don't, expose themselves to risk, cost increases, and will see their markets disappear.
We are seeing some incredible innovation in New Zealand, with companies rising to the challenge of climate change with world leading technology and ingenuity.
But we need to take that step up collectively in order to secure our future.
Our upcoming Emissions Reduction Plan will set out some steps the Government will take.
Businesses want certainty — we know that — that's why we'll set 15 years of final and indicative emissions budgets, following the Commission's advice.
These budgets will set the number of ETS (Emissions Trading Scheme) credits and be the frame by which we set policies to decarbonise.
The ETS cannot do it all on its own. That would require carbon prices that would hurt businesses and is why we need to set complementary policy to help with the transition.
For example, relying on the carbon price alone to drive EV (electric vehicle) uptake would require a carbon price of approximately $575/tonne in 2022 — representing an extra $1.30 on petrol prices compared to current levels.
So the Government will ensure policy supports the ETS to minimise the costs to business. And you can expect policies that send clear signals on phasing out carbon-heavy activities.
Climate change will require business to work differently too.
The Government knows this and that's why we recently increased funding for EECA's (Energy Efficiency & Conservation Authority) business support and advisory work; introduced the GIDI (Government Investment in Decardbonising Industry) fund — a $70 million fund allowing business and industries to access financial support to switch away from boilers run on coal and gas, to cleaner electricity and biomass options, and quadrupled funding for the Low Emission Vehicles Contestable Fund to help businesses switch to low emissions alternatives.
Of course the Government will continue to work alongside business but there are changes that can also be made immediately.
Every business can take steps to reduce emissions. Many are, to great effect.
All actions make a difference no matter how small. Consider how your staff travel — support the use of bikes and public transport.
Understand how increasing carbon prices may impact your business and seek advice on how to mitigate them.
Returning to the Climate Change Commission report, it was clear that action is required right across the economy.
There is so much to gain — new jobs and opportunities for Kiwi businesses, lower household energy bills, a more sustainable agriculture sector, less air pollution, an enviable global brand, warmer, drier homes, exciting new technologies, protection of native species and eco-systems, cost savings for businesses, and overall resilience.
Not changing is not an option.
And I think it's important to remember here that while we like to think we're world leading in many areas, climate change action is not one of them.
New Zealand — and that includes NZ businesses — risks becoming a laggard and that is not a reputation (or a reality) we can afford to attract.
So let me leave you with this; the government will continue to work hard on this and we need business to do the same.
There will be some challenges, some uncertainty, and some things we don't agree on but no action is simply not an option if we want to leave our children and grandchildren the country they deserve.
That too has not changed from last year.
• Published in the Herald's 2021 Sustainable Business report.
