Phil O'Reilly: NZ needs to pace itself over climate change negotiations

Wind farms are helping New Zealand to reduce greenhouse gas emissions. Photo / Mark Mitchell

It's foolish to rush into further commitments on cutting carbon emissions, writes Phil O'Reilly

New Zealand can hardly be accused of shirking its responsibilities to reduce greenhouse gas emissions. We are the only non-EU country in the world to have implemented a comprehensive Emissions Trading Scheme. More trees are being planted and we're also increasing wind, geothermal, hydro and tidal energy resources in a bid to meet our emissions reduction targets.

In the aftermath of Cancun, and the lead-up to the next UN Framework Convention on Climate Change (COP 17) in Durban this November, it's an opportune time to ask what New Zealand needs to be focusing on.

Cancun was a step forward in that most parties moved on from the ill-will generated at Copenhagen. But there is a lot more to be done.

Despite us doing "our bit", there still remains an enormous amount of uncertainty around international negotiations to reduce emissions. There's increasing concern about a disconnect between international and domestic policy occurring in New Zealand as a result.

It would be foolish to rush into any further commitments when there's no definite roadmap on what the rest of the world is going to do. Let's not forget we're a small country, heavily dependent on international trade.

As we move towards December 2012 and the end of the Kyoto protocol, its effectiveness and relevance are questionable.

Set in 1997, the protocol legally committed 37 industrialised countries and the European Community to reduce greenhouse gas emissions by an average of 5 per cent against 1990 levels, over the five-year period 2008-2012.

Not all countries are confident they will meet their Kyoto targets by December next year, despite being legally obligated to do so. So the effect of this "legally binding" agreement is questionable. The fact is, countries are doing what they want.

Those who think New Zealand should already be signing up for a second Kyoto agreement, or increasing our reduction targets, need to stop and ask why.

Timeliness, relevance and perspective are key here. It is way too early to be committing to uncertainty.

Given the lack of success of the original Kyoto protocol there is not much confidence there will be a second one. I would argue there shouldn't be, at least not in the same form.

Even if all the countries involved did meet their Kyoto targets, it would still be ineffective because it only covers 30 per cent of world emissions. It doesn't cover the US and China, together responsible for about 40 per cent of global emissions.

In fact, Japan, Canada and Russia have already stated they would not sign up to another Kyoto five-year period, which would reduce its coverage to just 16 per cent of global emissions.

As we move towards the climate change meeting in Durban this November and beyond, effort should be focused on getting developed and developing countries talking about a common emission reduction framework.

At present, developed countries believe developing countries should be taking on more obligations to reduce emissions. Developing countries believe the developed countries should re-sign the original Kyoto protocol. Simply re-signing an outdated, inadequate and ineffective agreement would not be helpful.

While "developing" countries such as India and China are rapidly becoming "developed" countries, likewise their emissions profiles are changing.

What's needed is a completely new type of global agreement - a progressive framework that includes all of the world's major emitters.

We have the makings of a new framework with the Monitoring, Reporting and Verification (MRV), led by New Zealand's Tim Groser, and green growth and technology funds. These are all issues on which business has a significant amount to contribute.

It's also vital our negotiators continue to ensure the rest of the world understands the unique challenges New Zealand faces with our unusual emissions profile. This is important in promoting fair comparability of effort - for example, if New Zealand were to commit to reduce emissions by 10 per cent from 1990, other countries would require much less effort to do the same.

Another key consideration is that the world has changed since 1997. In the absence of clear and unified leadership by the governments of the world, there has emerged a new driver of change - the consumer.

Consumer demand for businesses to account for their emissions and business practices is rapidly becoming just as powerful, if not more powerful, than any emissions trading scheme or international agreement. Our Government's Green Growth Advisory Group shows recognition of this broader shift.

Most green growth around the world is business responding to consumer demand, bringing about change by creating a new, more sustainable world. This is being helped by imaginative and enabling government policy.

Businesses are increasingly stepping up, developing and commercialising low carbon goods and services. But business needs predictable, long-term signals.

It needs to work harder to understand what drives consumers' purchasing decisions and how best to nurture demand for low-carbon choices.

The London branch of NZ Trade & Enterprise has commissioned research into what is driving market demand and how New Zealand companies can best respond.

It highlights five core issues of concern to businesses and consumers - carbon, water, packaging, waste and ethics. It shows how companies around the world are gaining business value from a sustainability approach.

The challenge is immense and there are no quick and easy answers. Reducing global emissions is an on-going process that's changing all the time. New Zealand needs to pace itself.

Phil O'Reilly is chief executive of Business New Zealand.