Date posted: 15/03/2021 5 min read

Why are we playing catch-up on carbon reduction?

As major economies set ambitious targets to cut carbon emissions, are Australia and New Zealand moving fast enough?

In Brief

  • More than 60 countries are aiming for ‘net zero’ greenhouse gases by 2050.
  • Australia and New Zealand have the OECD’s highest and fifth highest per capita emissions.
  • New Zealand’s ‘Zero Carbon Act’ has set a less demanding target for methane produced from livestock farming.

When he made his victory speech as President-elect in November 2020, Joe Biden stated the US would aim for ‘net zero’ greenhouse gases by 2050, matching goals of the European Union and some other large emitters, including the UK, Canada, Japan and South Korea.

More than 60 countries now share this target. Some of them, including Austria, Finland, Iceland, Sweden and Uruguay, want to get there sooner. And China – surprising to many – has announced it will be ‘carbon neutral’ by 2060.

So what about us?

Australia and New Zealand have very high per capita emissions (the OECD’s highest and fifth highest respectively, far above China’s level). New Zealand has committed to carbon neutrality. But in Australia, while each of the state and territory governments has announced a 2050 ‘net zero’ target, the federal government has not.

Moving towards ‘net zero’

New Zealand’s ‘Zero Carbon Act’, unanimously passed by parliament in late 2019, commits the nation to playing its part in holding global heating to 1.5°C above pre-industrial levels, and to cutting its own carbon dioxide and other greenhouse gas emissions to ‘net zero’ by 2050.

But there’s a flaw. Livestock farming produces large amounts of methane, a greenhouse gas far more potent but shorter lived than carbon dioxide. A less demanding target has been set for this.

Importantly, the Act creates a Climate Change Commission, which advises on carbon emission budgets – stepping stones for the journey to net zero. The New Zealand government will consider and adopt three consecutive five-year budgets, with shrinking carbon limits, through to 2035.

The timing is deliberate: these budgets, and others to follow, will be locked in beyond successive parliamentary terms, so will be harder for future governments to change.

The other big step forward is a reform of the Emissions Trading Scheme, New Zealand’s main emissions reduction tool. This incentivises carbon reductions, as well as tree planting to capture carbon. Again, though, there’s an exemption for farming.

New Zealand’s momentum should continue, helped by growing public and business support and with cross-party backing on climate issues. The government has declared a climate emergency and promised a carbon-neutral public sector by 2025.

The post-COVID plan

So, what’s next? In New Zealand and elsewhere, it is vital that the post-COVID-19 rebuild has a strong climate focus. Without this, the next generation pays twice: for the rebuild debts and for the lost opportunities to address the climate challenge.

It does seem possible that a sense of ambition and inclusion, which grew stronger through the pandemic, will help drive climate policy in New Zealand. People are starting to respect and learn from a Māori world view – a longer view of a world in which everything is connected, and there are no externalities.

In September 2020, NZ Climate Change Minister James Shaw announced that a climate-related financial disclosure regime was being developed. It is designed to highlight the financial risks associated with climate change and ensure that climate is at the heart of decision-making.

The reporting framework will apply to publicly listed companies and large insurers, banks and asset managers, and will have flow-on effects for many smaller enterprises and property owners.

It is strongly supported by many of the businesses to be regulated. Other countries are working towards this, but New Zealand may be the first to make it mandatory. Policy plans include adaptation as well as mitigation. The first National Climate Change Risk Assessment was released in August 2020, showing how communities, ecosystems, businesses and infrastructure will be affected, and highlighting urgent risks.

An expert panel has recommended a Managed Retreat and Climate Change Adaptation Act to give authorities more legal muscle and it seems likely to be implemented. This will help central and local governments address climate impacts, including sea level rise and situations where properties are no longer safe to live and work on.

How businesses are stepping up

Many New Zealand businesses are seeing risks and opportunities in climate issues. Two major business groups, the Sustainable Business Council and the Climate Leaders Coalition, have sent the NZ government a 26-item carbon-cutting wish list to get New Zealand to net-zero emissions faster.

The groups represent 150 leading companies, responsible for about a third of New Zealand’s GDP and 60% of its emissions.

Their briefing to the government highlights areas with the greatest potential carbon savings: road transport through congestion charges and electrification; process heat and a faster phase-out of coal; and agriculture, the source of almost half the country’s emissions. It is ambitious, constructive, and is likely to be considered very seriously.

Increasingly, businesses are seeing that climate change is not just an environmental issue, it’s an ‘everything’ issue. It’s about finance, competitiveness, insurance and ethics, as well as biodiversity, food production, health and future wellbeing. Many business leaders have come to understand the urgency of climate issues by listening to their children.

Why Australia and NZ need to do more

But are we doing enough? Global heating is now just above 1°C, on average. The symptoms of this climatic change – ice-melt, fires, species loss, droughts and storms – are obvious, and are being felt sooner than many scientists predicted.

To limit heating to 1.5°C, a temperature beyond which the risks will accelerate, carbon emissions need to be at least halved by 2030 – a cut of about 8% a year, starting now.

“To limit heating to 1.5°C, carbon emissions need to be at least halved by 2030 – a cut of about 8% a year, starting now.”

That makes New Zealand’s commitment under the Paris Agreement (carbon emissions 30% below 2005 levels by 2030) seem too slow – it should be revisited. And its 2050 goal of ‘net zero except for methane’ looks inadequate.

Australia’s response, a commitment to cut emissions by just 26% by 2030, and with no 2050 ‘net zero’ goal, will surely be seen as falling short.

To slow the impacts, to show we’re pulling our weight, to keep up with countries we trade and work with, Australia and New Zealand need to go further, faster. There will be costs, of course. But the costs of delay would be far greater.

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