Poor Kiwis face worst, and best, of climate change

New Zealand’s poorest will be most affected by the transition to a zero carbon economy, but will reap the most benefits of climate change action long-term.

Climate Change Minister James Shaw yesterday launched a six-week public consultation on the Zero Carbon Bill as part of an effort to lock in ambitious carbon cuts and discourage what Shaw calls “reductions in ambition” in response to short-term events (such as the softening in climate efforts after the 2008 Global Financial Crisis).

The consultation document proposes three possible replacements for New Zealand’s current target of a 50 percent reduction below 1990 levels by 2050 - the most ambitious reducing all emissions to net zero by 2050, the other two either having no goal for reducing methane or “stabilising” methane at a yet-to-be decided level.

As part of its research into the economic impacts of the three scenarios, the Government commissioned two models - with vastly different results.

To meet net zero emissions, the estimated cost of annual emissions ranged from NZIER’s calculation of between $272 to $845 per tonne of carbon dioxide equivalent, to Vivid Economics’ estimate of between $76 and $100 per tonne.

Climate Change Minister James Shaw said running the same assumptions through different models helped avoid “straight-jacketing yourself”, but it wasn't clear why the estimates were so different.

What was clear, however, was that the effects of domestic climate action would be much harder on lower-income Kiwis, largely because of price hikes on the things they are most likely to spend money on.

In fact, results suggested those in our lowest 20 percent income bracket could be more than twice as affected.

Shaw tells Newsroom there are two ways to look at it.

“We know that low-income families disproportionately feel the effects of climate change … so droughts and floods and storms and so on.

“Then in the transition - and this is really where the value of the modelling exercise comes in - it suggests there will be increased costs in some domains and therefore you should develop policy solutions that avoid those costs.”

For example, the NZIER model suggested low-income families would disproportionately feel the impact of petrol price rises. However, by 2050 we want to be driving electric vehicles, “so you won’t be paying anything for petrol because you won’t be buying petrol”. What that means though, Shaw says, is that it’s important to have a proactive policy in place to ease that transition. And it’s something the Government - and future governments - need to pay close attention to.

The discussion document itself says the Government has a “number of tools” to help offset the impact. Asked what those tools would look like, Shaw points to income support: “The $5.5 billion families package that we released before Christmas was designed to support low-income families to ensure they’ve got the resources to get by …”

The $13.5 billion going towards rapid transit - light rail, public transport and cycling and walking in our cities - would also benefit those on lower incomes the most, he says.

“Any reduction in congestion and lowering of transport costs strongly benefits low-income families who are disproportionately disadvantaged by congestion and high transport costs.”

In the same vein, policies like the insulation scheme and the rental warrant of fitness would help offset the pain of climate change-related price increases, he says.

“There is no one lever, there are lots of levers to pull.”

Read more: Zero carbon plan weighs softer targets for farms

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