Transitioning to a low-emissions future: the government response to the Productivity Commission’s Low Emissions Economy report

Emission reduction Climate change mitigation sustainable economics Emissions trading Energy industries New Zealand

In 2017 the Minister for Climate Change, the Minister of Finance, and the Minister of Economic Development requested the Productivity Commission ‘identify options for how New Zealand could reduce its greenhouse gas emissions through a transition towards a lower emissions future, while at the same time continuing to grow incomes and wellbeing’.

The Productivity Commission released its final report in August 2018. This was a thorough inquiry process that supports the transition to a clean, green and carbon neutral New Zealand. Its conclusions included 174 findings and 77 recommendations.

The overall finding is an essential message for New Zealand – the transition to a low emissions economy is achievable, but will be challenging. Effort is required across many areas. Stable and credible climate policy is essential for long-term change.

The Productivity Commission recognised that in order to transition to a low emissions economy it would be important to:

  • establish a comprehensive and durable legal and institutional framework
  • reform the New Zealand Emissions Trading Scheme (NZ ETS) and apply some sort of pricing to methane
  • avoid locking in emissions by supporting smart lower emissions choices in our investments in long term assets such as infrastructure, buildings, our vehicle fleet, and in planning our urban areas
  • invest in research and development now to allow for the innovative and creative solutions that are needed to create and deploy new and existing technologies in a way that can also improve the economy and national wellbeing
  • alongside emissions pricing, act now on low-cost abatement options. The Productivity Commission recognised opportunities for this in sectors such as transport and process heat.

This report is a response to the Productivity Commission Report. Of the 77 recommendations, the Government agree with, or agree to investigate the majority. Much of the work needed for a successful transition is already underway, though early progress and ongoing commitment is essential. The Government will continue to drive momentum on this whole of economy climate change work programme through the Climate Chief Executive’s Board. This Board, made up of CEs from the Ministry for the Environment, the Treasury, Ministry of Transport, Ministry of Business, Innovation and Employment, Ministry for Primary Industries, the Energy, Efficiency and Conservation Authority, and the Ministry for Foreign Affairs and Trade have committed to monitoring and driving the progress of each agreed recommendation in this response and reporting developments to the Minister for Climate Change.

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