10 big ideas from the Productivity Commission for reaching our carbon goals

To reach carbon neutrality by 2050 may require carbon to cost $250 a tonne - 10 times what it does today. Photo / Bloomberg

1. Boiled down, New Zealand can reach net-zero carbon emissions by 2050 from driving hard on two simple goals:

a) convert the transport fleet to electricity quickly, followed by industrial heat; and

b) plant trees at a rate not seen since the early 1990s, and keep on doing so for years to come.

2. Don't get hung up on reducing methane emissions from cows and sheep. While it's a powerfully warming gas, methane is short-lived and, as yet, there are only limited fixes for the way animals digest food. Agricultural greenhouse gases have to come into the emissions trading scheme, but the aim should be to stabilise rather than reduce methane and focus on reducing nitrous oxide emissions from farming.

3. Stop making Fonterra take milk it doesn't want to process. Current regulations require the dairy co-op to take any milk it's offered. With industrial heat for food processing one of the biggest users of gas and coal in the manufacturing sector, the current rules are pushing up carbon emissions for activity that Fonterra doesn't even want to undertake.

4. Don't make foreign investors, in forestry, process wood here. What New Zealand needs is more trees, and fast. That requires more investors. Putting roadblocks in their way will make the carbon targets harder to reach. This is already accepted. The recommendation was removed from the draft report yesterday ahead of its release this morning after advice from the Treasury on forestry treatment under new ownership rules.

5. Introduce "freebates" for electric vehicles to encourage people to replace their petrol and diesel cars. Keep an eye on hydrogen as a fuel for trucking.

6. Ban clunkers. Impose stringent, exhaust emissions standards for all cars coming into the country, especially used cars. New Zealand is behind most of the developed world by having no standards and risks becoming a "dumping ground" for old cars.

7. Keep fossil fuels in the electricity system. Really. Even as the electricity system moves towards 100 per cent renewable, there will still be a small place for gas (or coal, if we run out of gas) to meet demand when the hydro lakes are empty and the wind doesn't blow. The alternative is much more expensive electricity.

8. Don't try to pick winners as electricity generation and storage technology improves and becomes more affordable. The commission expects solar power, batteries and localised renewable generation to grow, but would rather see that happen by ensuring electricity market regulation gives consumers control, rather than subsidising outcomes in an area where costs, technology and opportunity are evolving rapidly and unpredictably.

9. Don't make poor people subsidise emissions-reducing technologies wealthier people can afford (see 8).

10. Reorient the national science and innovation system to a driving focus on low emissions technologies. To reach carbon neutrality by 2050 may require carbon to cost $250 a tonne — 10 times what it does today. That will drive commercial opportunities as consumers and industry try to avoid that cost and there will be demand for the products that allow them to do so.