Man in the hot seat

Few people have had to understand more points of view and arguments from politicians, businesses, farmers, and civil society over the last 18 months on how to reduce greenhouse gas emissions than the Chair of the Interim Climate Change Committee.

Formed in April 2018 as a precursor to the Climate Change Commission, the Committee has already provided independent evidence and analysis to the Government on renewable electricity generation and agriculture.

The Committee’s interim Chair Dr David Prentice, spoke to MEttle on the two questions the Committee was asked by the Government to answer. And the questions were big ones: how to reduce emissions from both electricity generation and agriculture.

THE ELECTRICITY QUESTION

“The exact question the Government asked was how New Zealand can transition to 100% renewable electricity generation in a normal hydrological year by 2035,” says David Prentice.

“But though the transition to 100% is a laudable goal, when the Committee met for the first time in April 2018, we felt that to limit ourselves to merely answering that question explicitly would not do the work justice. This is because if you look at the overall picture of emissions in New Zealand, only around 5% come from the electricity sector. Breaking down the remainder of the emissions, approximately 48% come from agriculture, about 20% come from transport, approximately 8% come from process heat, and another 19% come from other sources.

“We also knew that New Zealand was already at around 80 to 85% renewable electricity and was set to get to around 92 to 93% by 2035. So, we broadened the scope of the question. We looked at what needs to be done to substantially increase the renewable generation capacity that is available, so we can fast- track the electrification of our transport fleet and process heat.”

“You can get to 100% renewable electricity, but the problem we have in New Zealand is when there is a dry winter period. Because we have 85% renewable electricity primarily from the hydro dams in the South Island, it is not uncommon for the lake levels to get low during the three months over the winter period – and that’s when New Zealand currently relies on gas or coal.

“You can get to 100% renewable electricity, but the problem we have in New Zealand is when there is a dry winter period.”

EMISSIONS IN NZ

5%

ELECTRICITY

48%

AGRICULTURE

20%

TRANSPORT

8%

PROCESS HEAT

19%

OTHER

We know that wind and solar farms will eventually replace coal and gas, and so we will make it to the high nineties. However, the difficulty of getting those final few percentage points to deal with a dry winter period is a challenge.

“One way to do it successfully is by significantly over-building wind and solar, but this means there will be excess capacity on wind and solar farms that isn’t being used for most of the year. Unfortunately, this causes the cost of electricity to spike, and the marginal cost of carbon goes well above $1,000. Plus, you don’t have the same security of supply. So, it can be done, but it’s exceedingly expensive, and it comes at a risk of security of supply, and it’s not where the low-hanging fruit is.”

“It’s about where you get the biggest bang for your buck in terms of reducing greenhouse gas emissions.”

The Committee looked closely at other ways to hit the broader goal, Prentice says, because at the end of the day this isn’t just about renewable electricity.

“It’s about where you can get the biggest bang for your buck in terms of reducing greenhouse gas emissions. We believe we can do that in the transport sector, by getting more electric vehicles on the road, and more combustion engines off the road. And we will only get more electric vehicles on the road if there is sufficient electricity to charge them.

“Currently, there are a number of consented wind sites and if construction goes ahead, then wind generation capacity will almost triple,” says David. “The challenge then is how we get electricity from wind farms into an electrical network to where we actually need it, and how do we develop an effective network of charging points around the country? There’s a massive piece of work that still needs to be considered on transmission, distribution and charging points and the consenting process that underpins it. And this is something the new Climate Commission will need to factor in.”

AGRICULTURE: A CONTROVERSIAL TOPIC

Moving onto the challenging topic of reducing agricultural emissions – and David admits that there remains a lot of controversy around emissions from agriculture – he says that the question given to the Committee for this sector was effectively around how we can bring agriculture into the Emissions Trading Scheme (ETS). This is because agriculture is the only sector with significant amounts of greenhouse gas emissions (namely, of methane and nitrous oxide) not currently covered by the ETS.

“There have been various attempts over the last 10 to 20 years to address agriculture emissions, and it remains a hugely controversial question, and a very different problem to transport. While we have technology solutions to decarbonise the transport sector, those types of solutions don’t exist for agriculture. While there are ways that farmers can reduce emissions by changing on-farm practices, using these methods will only deliver reductions in the order of 5 to 10%. More can be achieved by diversifying land uses, for example transitioning to horticulture or forestry, but, there’s no ‘silver bullet’ solution right now to enable decarbonised livestock farming. Nevertheless, the reductions currently possible are still valuable and should be pursued.”

“While we have technology solutions to decarbonise the transport sector, those types of solutions don’t exist for agriculture.”

However, David notes that the dialogue on the topic has changed from 10 years ago.

“Most farmers that we talked to recognise the fact that we have to do something. They also said, ‘you know what? We’ve already been doing a huge amount over the last 20 years’. And that’s true. It’s important to acknowledge that farmers have already decreased their emissions intensity by approximately 1% per year over the past 20 years. They’ve been doing an incredible job. But they also recognise that they need to do more. But there are no one-stop-shop, large-scale solutions.”

“Farmers have been doing an incredible job. But they also recognise that they need to do more.”

In a nutshell, the big breakthrough came through the work the Committee did, and the engagement they developed through working with the sector, which meant they ended up recommending in their report that a price-based mechanism for livestock emissions should be brought in at farm level.

“It’s critically important that this happens at farm level,” David says, “so individual farmers have the ability to change and adapt, and it doesn’t just feel like a tax that has been imposed on them. This will be the most effective way to drive behavioural change and provide an incentive for farmers to reduce on-farm emissions by changing their practices.”

This change can only be brought in by 2025, he adds, because of the amount of work that needs to be done to get there. And importantly, there is broad agreement from the agriculture sector to work towards emissions pricing by 2025.

SO, WHAT INNOVATIONS HAPPEN NEXT?

“The big debate is over what needs to happen between now and then,” David says.

“You have to consider the efficiency gains over the last 20 years. Farmers are continually looking to drive efficiency on their farms. It has been part and parcel of farming for eons. Through these gains, they have managed to reduce greenhouse gas emissions intensity on the farm by 1% per year, and that is forecast to continue at that level for some years into the future, so emissions intensity will continue to improve.”

Given the opportunities that currently exist to reduce in-paddock emissions, and New Zealand farmers’ proven ability to innovate and improve as demonstrated by the work they have already done over the last 20 years, David says that the 10% emissions reduction by the 2030 target is achievable.

“That reduction is the equivalent of 1% per year, which is in line with current efficiency improvements and a stable national herd. There seems to be general acceptance from the agricultural community that this is achievable. And between now and 2030, we expect quite material innovations to come to the market, so that by 2030, there might be more low emissions feed options such as modified ryegrass, methane inhibitors and other things that will enable further reductions to happen.”

But  wouldn’t  these  innovations  require  the  Government to need to allow modified grasses to be used in New Zealand, for example, which they don’t now?

“This is definitely something that would need to be considered by the Government. Modified ryegrass has shown potential in modelling and it is currently in trials overseas. It would be worth looking at as we should think carefully about all options.”

TARGETS WILL CHANGE

On that basis, and that he believes that things will change along the way, David chooses to remain optimistic about achieving the targets in the Zero Carbon Act.

“I prefer to think that humans will find a way. Innovation and research will play a considerable part going forward. My view has always been that the most critical thing in the Zero Carbon Act isn’t necessarily the level of the target, which will be reviewed and could be changed if need be, depending on our understanding of the science, global action on climate change, and what new opportunities come with technology.

“The most critical thing in the Zero Carbon Act isn’t necessarily the level of the target, which will be reviewed and could be changed if need be…”

“The most important thing now is to get bilateral support, so it doesn’t become another political football kicked down the road. It needs to allow businesses to have a degree of surety and transparency going forward, so that they can start to invest in making changes within their businesses. Without that, progress will continue to be a challenge.”

So, what can New Zealand businesses do to take the next step on this journey to reduce their emissions?

“The one thing I would say is: understand what your emissions are. It sounds so trite and so obvious, but it is incredible how many businesses aren’t doing it. If you don’t have an idea of what you are emitting as a business, and through your supply chain and customers, how can you put in place a strategy, targets and actions to prove that you are moving downwards? Get your house in order and get your emissions down.”

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