The social implications of decarbonising the New Zealand economy.

• Author: Chapman, Ralph

Abstract

There is strong evidence that the mean surface temperature of the Earth has risen significantly since 1900. Recent evidence suggests that, if warming of more than 2[degrees]C (above pre-industrial levels) is to be avoided, then the emissions of greenhouse gases by developed countries, like New Zealand, may need to fall by up to 70% by 2030 and 90% by 2050. Achieving such a rapid decarbonisation will require major changes in energy generation, transport fuels and behaviour, land use and urban design, underpinned by modifications to national policy frameworks, and changes in social attitudes and behaviour. This paper outlines the case for rapid decarbonisation, assesses the implications for New Zealand's economy and society, discusses the required policy changes and the likely economic and distributional impacts of such changes, and explores institutional factors influencing policy development and implementation. The paper draws on recent international and domestic studies of the likely economic and distributional impacts of policy measures to mitigate climate change. It also refers to some survey evidence concerning public attitudes towards climate change and the willingness of citizens to change their behaviour and support policy measures to reduce emissions.

INTRODUCTION

Climate change poses one of the great challenges for humanity in the 21st century. The magnitude of this challenge has been highlighted by the Stern Review Report: The Economics of Climate Change (Stern 2006) and the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC 2007). According to the "Summary for Policymakers" prepared by Working Group I of the IPCC:

Most of the observed increase in globally averaged temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations (p.10) ... Discernible human influences now extend to other aspects of climate, including ocean warming, continental-average temperatures, temperature extremes and wind patterns (p.10) ... For the next two decades a warming of about 0.2[degrees]C per decade is projected (p.12) ... Continued greenhouse gas emissions at or above current rates would cause further warming and induce many changes in the global climate system during the 21st century that would very likely (2) be larger than those observed during the 20th century (p.13) ... Both past and future anthropogenic carbon dioxide emissions will contribute to warming and sea level rise for more than a millennium, due to the timescales required for removal of this gas from the atmosphere. (p. 17) As the Stern Review argues, human-induced global warming has the potential to generate very serious, large-scale and irreversible impacts. If the worst of these impacts are to be avoided, or at least minimised, urgent action is required to reduce greenhouse gas emissions. In effect, it will be necessary to decarbonise the global economy, and to do so as rapidly as possible. This will require fundamental and lasting changes in, amongst other things, the sources of energy, modes of transport and the nature of transport fuels, the management of land resources, and urban design. Such changes, and the policies required to achieve them, will have significant and wide-ranging economic and social impacts--including impacts on income distribution, attitudes and behaviour. Quite apart from this, if the assessment of the IPCC is correct, then, irrespective of the policies pursued by the international community over the coming decades, further significant global warming is very likely to occur during the 21st century and this will, in turn, have a range of ecological, social and economic impacts--mostly negative.

The primary purpose of this paper is to consider some of the likely social implications of decarbonising the New Zealand economy. In so doing, we deliberately adopt a broad view of the meaning of "social"--in effect, we are concerned with the human consequences of the measures taken to mitigate climate change, including economic, distributional, regional, sectoral, health-related and other impacts. We also adopt a loose definition of "decarbonisation" as including the reduction of greenhouse gas emissions from the agricultural sector. In order to provide a context for such a discussion, the paper begins by outlining in more detail why decarbonisation is required and why such action is urgent. Having considered the case for decarbonisation, we outline the current global and New Zealand policy contexts. Following this, we develop a framework for considering the social implications of rapid decarbonisation, and then begin the task of applying this framework to New Zealand. Given space constraints, we focus on one example, adjustment in New Zealand's transport and urban systems. Finally, we consider some of the issues requiring further research.

The paper draws on recent international and domestic studies of the likely economic and distributional impacts of policy measures to mitigate climate change. It also explores some available survey evidence concerning public attitudes towards climate change and the willingness of citizens to change their behaviour and support policy measures to reduce emissions.

It is important to note what this paper does not address. First, we do not examine the complex issue of how climate change will impact on New Zealand (whether directly or indirectly via its impact on other countries). In any case, we argue, below, that the largest impacts on New Zealand in the next decade or so will flow from domestic mitigation initiatives. But it is worth observing that there is a growing literature on the impacts of climate change on New Zealand and other countries (e.g. see Chapman et al. 2006, Stern 2006) and the matter will be fully explored in the forthcoming report of Working Group 2 of the IPCC (to be released in April 2007). We note in passing that there are important impacts from climate change abroad that could impinge on New Zealand, through channels such as global security impacts or immigration flows. The British Foreign Secretary remarked recently that climate change is a "threat we face ... to the most basic conditions underpinning our global society" (Beckett 2006).

Second, this paper does not examine the social implications of New Zealand failing to take effective measures to reduce emissions over the medium-to-longer term. Any failure to participate in widely supported international efforts (and thus, in effect, to "free ride" at the expense of other countries) could well prompt retaliatory action, for instance via trade and other sanctions (Stiglitz 2006). This could be very damaging to the New Zealand economy. Moreover, if New Zealand continued to invest in carbon-intensive infrastructure for several more decades and was then forced by the international community to decarbonise at a very rapid pace, there would be inevitable and potentially significant economic losses. Finally, we do not address the topic of adaptation to climate change. All countries will need to adapt to varying extents over the coming century; such adaptation will in many cases be costly, difficult and socially disruptive, and may in turn create ripple effects for the world economy and for New Zealand.

THE CASE FOR RAPID DECARBONISATION

Globally, greenhouse gas emissions from the burning of fossil fuels, land-use changes and other human activities have been rising for more than a century (although the annual rate of increase has fluctuated considerably). As a result, the concentration of C[O.sub.2] in the atmosphere reached 380 parts per million (ppm) in 2006, or around 35% above pre-industrial levels. If the other five greenhouse gases covered by the Kyoto Protocol are taken into account (i.e. C[H.sub.4], [N.sub.2]O, S[F.sub.6], HFCs and PFCs), it is estimated that the concentration of C[O.sub.2] equivalent (C[O.sub.2]e) in the atmosphere is presently around 430 ppm (Stern 2006:201). This is nearly 50% higher than pre-industrial levels. On a plausible business-as-usual scenario, the Stern Review (p.202) estimates that the concentration of C[O.sub.2]e will reach 550 ppm by 2035, and much higher levels later in the century. (3)

There is some uncertainty over the implications of increasing greenhouse gas concentrations in the atmosphere on the global mean surface temperature. However, most estimates suggest that a sustained doubling of C[O.sub.2] concentrations from preindustrial levels (to around 550 ppm) can be expected (other things being equal) to generate an increase in the global mean surface temperature of approximately 3[degrees]C at equilibrium, with a likely range of between 2[degrees]C and 4.5[degrees]C (IPCC 2007:9). According to the IPCC, warming of less than 1.5[degrees]C "is very unlikely", while warming beyond 4.5[degrees]C "cannot be excluded".

Table 1 outlines an indicative range of likelihoods of exceeding a certain increase in temperature, at equilibrium, for a series of stabilisation levels measured in C[O.sub.2]e. The "maximum" and "minimum" columns provide the maximum and minimum chance of exceeding a particular temperature increase, based on 11 recent studies (see Meinshausen 2006). The results reported for the "Hadley Centre" in Table I are based on Murphy et al. (2004), while the results of the "IPCC TAR 2001" (IPCC, Third Assessment Report 2001) are based on Wigley and Raper (2001). Note that the individual values are approximate only.

As shown in Table 1, the higher the stabilisation level in terms of C[O.sub.2]e, the higher the increase in temperature that is likely. Further, even if Herculean efforts were to result in C[O.sub.2]e concentrations being stabilised at 450 ppm--which is only about 20 ppm above current levels--there is a strong likelihood that the global mean surface temperature will increase by more than 2[degrees]C (i.e. above pre-industrial levels), a reasonably good chance...