Carbon market update

Wednesday 8 May 2019

Carbon Match Weekly Update - Today sees the introduction into Parliament of the Climate Change Response (Zero Carbon) Amendment Bill, Prime Minister Jacinda Arden announced this morning.

The bill, once passed, will enshrine in law long term carbon reduction targets, and require successive Governments to set five yearly emissions budgets as “stepping stones” along the way to them. It will also see the creation of an Independent Climate Change Commission and require Governments to produce plans on adaptation to the effects of climate change and extreme weather events.

The ICCC will provide expert advice to Government on climate change mitigation and adaptation and also monitor and review progress.

The Bill currently has the support of all three parties in Government, with the National party reported to have engaged constructively, but reserving judgement at this stage.

Along the winding road to delivery of today’s Bill, one of the trickiest aspects has been the treatment of Agriculture, a key sector accounting for around half of the country’s gross emissions.

Members of the Labour Party have previously cited the fact that over the Paris 2021-2030 period, if left unchecked, agriculture looked set to receive and use perhaps as much as 70% of that budget at no cost. Yet as the previous Parliamentary Commission for the Environment Jan Wright found, for agriculture, there is “no silver bullet”.

Today’s bill doesn’t specifically deal with the treatment of agriculture in the NZ Emissions Trading Scheme - rather it sets a framework and sets new long term targets as follows:
• reduce gross emissions of biogenic methane within the range of 24% to 47% below 2017 levels by 2050, with an interim requirement to reduce emissions to 10% below 2017 levels by 2030.
• reduce net emissions of all other greenhouse gases to zero by 2050.

On being questioned on whether this represented a softening of approach this morning on National Radio, Minister James Shaw said that the important thing is that the Bill will catalyse “a collective effort across all sectors of the economy”

“The point behind all of this is that you have an overall goal for what each sector of the economy needs to do in order to potentially stay within 1.5 degrees of warming.” These targets are intended to reflect and be consistent with the central range of global scenarios in the Intergovernmental Panel on Climate Change (IPCC) special report on staying within 1.5° Celsius of warming, as set out under the Paris Agreement.

The Bill's treatment of biogenic methane ostensibly recognises its much shorter lived nature. PM Jacinda Ardern said that “Agriculture is incredibly important to New Zealand, but it also needs to be part of the solution. That is why we have listened to the science and also heard the industry and created a specific target for biogenic methane. The split gases approach we’ve agreed on is consistent with that commitment.

The Bill sets a target for 10 per cent reduction in biological methane emissions by 2030, and aims for a provisional reduction ranging from 24 per cent to 47 per cent by 2050. That provisional range will be subject to review by the independent Climate Change Commission in 2024, to take account of changes in scientific knowledge and other developments.”

Proposed changes to the ETS are expected to follow in another bill, expected to be introduced within the next couple of months.

NZUs today - bid $25.35, offered $25.50 on Carbon Match - every weekday from 1-5pm.

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