The two main effects of NZ’s new emissions target – unknown, could be exorbitant high cost and yet negligible climate benefit

On 5 April I wrote to Dr Nick Smith, New Zealand’s Minister for Climate Change Issues, asking what will be the expected economic cost and temperature reduction benefit from the Government’s new emissions reduction target.  The new target:  to reduce emissions to 50% of 1990 levels by 2050.

Here is my email with the two questions:

Dear  … …  [Dr Smith’s secretary]

I recently read a news item in ‘Energy News’ about the ETS target, ie: to reduce emissions to 50% of 1990 level by 2050.  Would you mind passing on a couple of cost/benefit questions to Dr Smith.

What will be the cost of this to our economy?  And if the reductions were achieved, what would the temperature reduction be?

I have now received his reply and among other things Dr Smith said in regard to the economic cost of the reductions, that the 40 year period makes it very difficult to accurately predict the cost and that if our trade competitors were not taking similar action the economic cost to New Zealand could be exorbitant.

My summary – the cost is unknown but would be very large.

In regards to temperature change Dr Smith mentioned a two degree ‘safety’ limit that some people think provides some assurance against climate impacts if don’t go over it.  He also mentions that if the world globally cut emissions by at least 50% by 2050, there is a 50% chance we might not exceed the two degree ‘safety’ limit.  According to the figures in his letter New Zealand contributes to 0.2 per cent toward global emissions.  So our 0.2% ‘share’ of the 2 degree reduction is 0.004 degrees.  That’s 4 one thousandths of a degree.  So, if we did achieve the 50 per cent cut by 2050, we have a 50 per cent chance of reducing the temperature in 2050 by 4 one thousandths of a degree.  Dr Smith uses the word ‘negligible’ to describe this.  How appropriate.  And further, he says if we act alone, “It would be irresponsible to expose New Zealand to large economic costs for no environmental gain.”

My summary – the temperature reduction would be negligible, not even measurable by the best instrumentation, and completely lost in natural variations.

However, Dr Smith finishes his letter with this, ”I  am certain that the 2050 emissions reduction target reflects the best balance between New Zealand’s environmental responsibilities and economic needs”.   I disagree.  This target does not reflect balance.   It is a huge economic cost with neither benefit to New Zealanders nor the environment.

There are other points that Dr Smith made, not directly related to my two questions that need further discussion.  So I guess I need to write back.  Rest assured, when I’ve done that, I’ll post that letter here too.

Here is Dr Smith’s complete reply so you can check the context and my interpretation.

Thank you for your email of 5 April 2011 about the 2050 emissions reduction target.

The 2050 emissions reduction target is relevant to the Government’s response to climate change as it is a commitment to transition to a low carbon economy over the longer term.  The target, which follows the current Kyoto Protocol approach, is on the basis of net emissions in the future, relative to gross emissions in 1990.  This target is ambitious yet credible and will provide certainty over the long‑term direction of climate change policy.  This will allow taxpayers, business, industries and farmers to plan and invest accordingly.

The 40 year time period makes it very difficult to accurately predict the costs of the 2050 emissions reduction target to the economy.  The 2050 target is an aspirational target set to work with a range of other emissions reduction measures to cut New Zealand’s overall emissions over time.

Scientists believe that if we limit global warming to a two degree limit it will provide some assurance that we can avoid many of the dangerous climate impacts.  There is around a 50 per cent chance of staying below this two degree limit if global emissions peak in the next ten years and we reduce global emissions by at least 50 per cent by 2050.  The Government has also put a range of climate change policies in place, which will help to support the reductions of emissions achieved through the New Zealand Emissions Trading Scheme.

The Government also believes that as climate change is an international environmental issue, successful mitigation depends on acting in concert with other countries.  New Zealand only contributes approximately 0.2 per cent of global greenhouse gas emissions.  Acting alone, the environmental benefit of emissions reductions by New Zealand would be negligible.  Furthermore, the economic costs to New Zealand could be exorbitant if trade competitors were not taking similar action.  It would be irresponsible to expose New Zealand to large economic costs for no environmental gain.

In accordance with this view, the New Zealand Government is an active and constructive participant in international negotiations under the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol.  The agreements made in the UNFCCC negotiations in Cancun in December 2010 were a significant step forward.  The Government will continue to negotiate for a workable, comprehensive and legally binding successor agreement to the Kyoto Protocol in 2011.

I am certain that the 2050 emissions reduction target reflects the best balance between New Zealand’s environmental responsibilities and economic needs.