Climate Change

Covid-19 stimulus is climate’s ‘Last Chance Saloon’

As governments around the world prepare to spend billions of dollars to stimulate their economies, climate activists see these investments as the last chance for big spending on climate change, Marc Daalder reports

"We're out of time."

That's the alarm that Climate Change Minister James Shaw has been raising for anyone who will listen.

"What is it the [Intergovernmental Panel on Climate Change] says? You've got to halve your carbon emissions, at least, by 2030. So you've got 10 years," he told Newsroom.

"If you look at the history in New Zealand, and around the world, you generally have an economic crisis about every 10 years. Although nothing, obviously, on the scale of this one. But 10 years ago we had the GFC and the Christchurch earthquake, 10 years before that we had bird flu, the Asian downturn at the end of the '90s, popping the dotcom bubble. We end up on this cycle and then we're out of time. We really are at the Last Chance Saloon."

Around the world, climate activists have come to see the fiscal response to Covid-19 as the climate's last hope. If governments don't gear their stimulus packages towards decarbonising economies and investing in a sustainable future, these activists say, the next opportunity they'll have will be too late.

This dire prognosis has prompted a flurry of activity as organisations like Greenpeace New Zealand cobble together draft stimulus packages to respond to the crisis. Shaw says he is personally agitating for a climate-friendly stimulus package.

Last chance ... and a big risk

"In my lifetime, there hasn't been a moment like this where we've seen governments putting billions of dollars on the table for new infrastructure," Amanda Larsson, Greenpeace New Zealand's climate and energy campaigner, told Newsroom.

"This is our once-in-a-generation opportunity to reset."

Larsson points to the reaction to the global financial crisis as an example of the risks that the situation poses.

"The only corollary that I can point to in my generation is 2008, during the financial crisis. At that time we saw things going in the wrong direction with money going to society's wealthiest and austerity measures being put in place, not so much here in New Zealand but elsewhere. Also money flowing disproportionately to oil, gas and coal production," she said.

Similarly, Shaw believes there's a danger that governments and industries could reinvest in a business-as-usual scenario or even double down on dirty investments.

"Quite understandably people generally say, look we just want things to go back to the way they were before the crisis," he said.

"So then what we do is we restore things to the way they were. It takes maybe three years before people start feeling confident, then you get a few years of growth and people go, 'Yeah we should probably pay some attention to the environment.' And then the cycle repeats because there's a new crisis. We can't do that again this time."

Rupert Carlyon, managing director of the ethical KiwiSaver fund kōura, shares these worries.

"The bigger risk is that the money gets spent on standard bits and pieces and doesn't really have a green tinge to it. I think that's a likely scenario," he said.

"But actually, I also see a very likely scenario where things like cleaning up waterways, other carbon initiatives, get put on the backburner and they say that the economic climate isn't quite right for this stuff, companies can't handle any more regulatory burden, so we're just going to delay all this stuff for a number of years. Rather than using it as a way to improve and get ourselves better suited to climate change, it actually ends up being a massive delaying factor."

A similarly large opportunity

The scale of the risk is equally reflected by the scale of the opportunity that this crisis represents.

Growth in global emissions slowed in 2019, prompting hope among some activists that the turn of the decade would also be a turning point for the world's carbon emissions, which need to begin to rapidly fall. Now, with hundreds of billions of dollars poised to be spent by governments around the world, there's a real chance to make that happen.

"There's a huge amount of risk that we look to start rolling back regulation to make it easier for business," Carlyon said.

"But done properly, if thought through, we should look to be combining the two. We should be looking to say, 'Well actually, this stimulus is meant to create jobs. We've imposed costs on some businesses by adding regulation, why don't we support these businesses by creating jobs and then funding some of those jobs to accelerate that change that we want to happen?'"

Shaw and Larsson both see the Government's upcoming stimulus as an opportunity to affect radical change.

"Grant Robertson's been talking about this as a nation-building project and what we're saying is we need to ensure that the nation we're building is one that fixes the problems we have today and sets us up well to deal with future challenges," Larsson told Newsroom.

"Now that we're in a bit of a reset phase, we have an opportunity to create good, green jobs, designing the infrastructure we need to live well and to get around. It would be foolish not to take that opportunity.

"There's the two birds - or maybe more than two birds - with one stone, kind of approach. We have these long-term challenges that we needed to deal with anyway and we are about to spend tens of billions of dollars rebuilding the economy. Why wouldn't you? In fact, it doesn't make any sense not to," Shaw said.

Lockdown not needed

This is Shaw's central thesis: that you can make progress on the climate without cutting economic growth. It doesn't require a complete economic shutdown in the way that Covid-19 does.

"This is not the way that we wanted to reduce emissions. You have hundreds of thousands of New Zealanders who are idling at home, who are at great risk of losing the vast majority of their income over the course of the coming months," he said.

"The consequences in terms of people's mental health and wellbeing, the cost to family relationships, domestic and sexual violence, the longer-term consequences of having to pay back the tens of billions of dollars that we're borrowing to deal with this, all of those things are reasons why you wouldn't take a decision to deal with the climate crisis by inducing the sort of economic crash that we're currently having.

"Our whole response [to climate change] that this Government has had has been to say this is a crisis and we need to use the length of time that is available to us to bend the [emissions] curve and then very dramatically start to bring down greenhouse gas emissions. But to essentially decouple economic development from pollution, which is possible.

"It has been demonstrated by 16 to 20 countries across the world who over the previous 10 years have seen their economies grow but their emissions shrink in total terms. The most dramatic of these was actually the UK, who saw a 40 percent reduction in their emissions at the same time they had the fastest-growing economy in the G20. That's how we actually want to do it."

What sustainable investment looks like

What would this look like? Larsson has plenty of ideas.

"What we want to see is specifically taking the opportunity to build the clean infrastructure we need to reduce our impact on the climate," she said.

"We want to see priority given to public transport, cycling, electric vehicle charging, renewable energy, electrifying rail lines and improving commuter rail between hubs. That's in contrast to the kinds of projects we don't want to see like new motorways or airport expansions or big irrigation schemes for industrial agriculture."

In other words, a dream that's a far cry from the Government's last big spend, an infrastructure investment announced in January, which put $5.3 billion towards roads and disappointed climate activists.

Greenpeace's Green Covid Response plan goes into more detail, proposing a rollout of insulation for the 600,000 under-insulated homes in the country, resurrecting and "supercharging" the Government's late feebate scheme, fast-tracking the decarbonisation of the state sector and the creation of a "conservation corps" of new jobs within the Department of Conservation for a mass pest eradication and tree-planting programme.

Shaw sees opportunities for green investment in almost every sector, including energy, transport, housing, the nexus of these three, water, waste, education and health. These are all "places I think make sense to use the short-term availability of very large amounts of capital to resolve long-term challenges, including historical underinvestment," he said.

Shaw sees three time horizons on which to operate. There's the immediate-term, "the crisis management that we're in at the moment. That's things like wage subsidies and insolvency reform. Then you've got, in the medium-term, things that are primarily oriented around employment. Some of those things will be things that don't necessarily have long lifespans."

"We can do a lot of work on the conservation estate with things like wilding pine control. There's a programme that NZTA have had which is planting the sides of motorways with native bush, which actually lowers the ongoing maintenance cost of those motorways by about 30 percent. You can soak up a lot of unemployment with those kinds of programmes and then you can scale them back as needed."

Then there's the long-term, the projects that reshape the economy and society. "Your longer term is, for the sake of argument, 12 to 24 months. It is very much built around industries and your large-scale programmes which really should be oriented around those long-term challenges like climate change," Shaw said.

Why wouldn't you?

"If you look at the climate change portfolio, for example, we know that we're going to need to expand electricity generation in the country by about 70 percent above the current baseline. Hundred percent of that is going to have to be renewable and we're going to have to take the remaining fossil fuels out of the existing mix. You're looking at about an 80 percent new generation profile."

These projects will be needed for the country to continue to grow and for New Zealand to reduce emissions. If the Government is looking for somewhere to spend billions of dollars, why not here, Shaw asks.

"Some of that will come from the distributed grid, which we're going to have to move towards, particularly to cope with EV-charging infrastructure. But we're also going to have to do some of the larger, utility-scale hub-and-spoke stuff. We know that that's got to happen anyway, why wouldn't you make now the time to provide some long-term predictability and start building that?" he asked.

"Replacing our three waters infrastructure is something that's got to happen anyway. Why wouldn't you make now the time to start that programme, given the scale of investment that we're about to put in? Transport: yes, there's going to be some roads built, but why wouldn't you make sure that motorways are fully future-proofed in terms of EV-charging infrastructure, bus rapid lanes, those sort of things where they make sense? In terms of our urban environments, where the vast majority of New Zealanders live, why wouldn't you make now the time to invest significantly in light rail, walking and cycling and other active modes as well?

"We know that that stuff's got to happen anyway. It just makes no sense to me not to do those things."

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