Emission control

Emission control

What the Zero Carbon Act means for business

One of the most significant pieces of new legislation introduced last year was the Climate Change Response (Zero Carbon) Amendment Act 2019, more commonly referred to as the ‘Zero Carbon Act’.

The legislation outlines the government’s targets over the next 30 years (by the year 2050) of net greenhouse gas emissions of zero and to reduce methane emissions by up to 47%.

According to the Ministry for the Environment, the Act ‘provides a framework by which New Zealand can develop and implement clear and stable climate change policies that:

  • Contribute to the global effort under the Paris Agreement to limit the global average
    temperature increase to 1.5°C above pre-industrial levels, and
  • Allow New Zealand to prepare for, and adapt to, the effects of climate change.’

Key points

Under the Act, the government has committed to:

  • Set a new domestic greenhouse gas emissions target for New Zealand to reduce net emissions of all greenhouse gases (except biogenic methane) to zero by 2050 and reduce emissions of biogenic methane to 24–47% below 2017 levels by 2050, including to 10% below 2017 levels by 2030
  • Establish a system of emissions budgets to act as stepping stones towards the long-term target
  • Develop and implement policies for climate change adaptation and mitigation, and
  • Establish a new, independent Climate Change Commission to provide expert advice and monitoring to help keep successive governments on track to meet long-term goals.

The Act was modelled on the 2008 Climate Change Act in the UK, which helped reduce that country’s greenhouse gas emissions by more than 44% compared with 1990 levels. The ambitious new targets mean that New Zealand cannot maintain the current levels of CO2 emissions. Nor is it enough to offset our emissions by planting millions of trees, which has largely been the way New Zealand governments have dealt with the issue in the past. Instead, we will need to make some massive cuts to our carbon usage over the next 10 to 20 years.

Implications for business

Reporting obligations have been imposed on local authorities, and public service and government-controlled organisations. However, the government is currently considering feedback from consultation in relation to companies and climate-related financial risks.

With moves to restart the economy post-COVID, there is the opportunity to seriously rethink our options as a nation. While the path forward may be uncertain, the climate message remains clear: ‘We have to change.’ Importantly, the new emissions targets will need to be factored into any future decisions around strategy, infrastructure, systems and investments.

It is worthwhile for businesses (and all of us, really) to consider how we can reduce our emissions because, at some point, we will all be encouraged to look at how we consume resources and to make some changes.

Be proactive

Before the government starts issuing directives, organisations can choose to be proactive and take a critical look at how they run their businesses. Businesses need to understand their carbon footprint and use that knowledge to help them identify areas for improvement and innovation.

‘Carbon hotspots’ could include supply chains (if you are buying raw materials from overseas, is there a way you can do that more efficiently?), distribution, the sustainability of your business premises including air conditioning, electricity usage and so on, staff travel requirements including how you commute to work and domestic/international flights.

It is probably one of the few times in our collective history when all businesses will be forced to seriously consider every aspect of their existence.

There are decisions that can be made in a business, irrespective of beliefs and politics, that can have positive impacts. Being environmentally-friendly doesn’t always have to cost financially. It could be good for the bottom line to consider how you do things. Yes, there will be costs involved, but the Zero Carbon Act also creates opportunities for innovation.

Pre-COVID, many businesses were already taking positive steps to make changes and get ahead of the curve by introducing initiatives such as electric vehicle sharing, charging networks and renewable energy options.

The Zero Carbon Act in the new normal

The spread of COVID has impacted every person around the globe. As New Zealand grapples with the aftermath of lockdown, we are faced with new economic, social and cultural realities.

From an environmental perspective, during lockdown there were many positive stories of clearer waters, mountains once obscured by pollution were visible and motorways were almost empty. Consumer spending plummeted, leading to less household waste. It was also reported that nitrogen dioxide pollution levels dramatically decreased across Europe.

These improvements are contrasted by carbon dioxide levels in the atmosphere at near record levels. At home, we have also seen less-than-favourable changes in street-side recycling as local authorities struggle to adequately process materials domestically.

The environment will also be impacted by the reduction in the cost of petroleum, which foreshadows cheaper plastics. Depending on demand, this may not bode well for the environment as plastic and gas are becoming more competitive against renewable energy and products. At present, the true impact of cheaper plastic and gas on the environment is uncertain; however, we are clearly seeing signs of how drastically the environment can change for the better, or perhaps worse.

As governments around the world pump trillions of dollars into their economies in an attempt to reduce the severe hardship on their citizens and ‘restart’ economies, many policy-makers and business owners will be faced with having to make unprecedented decisions that will significantly impact the environment.

Stimulus packages offered

In a 7 April 2020 letter to the Climate Change Minister, Dr Rod Carr (Chair of the Climate Change Commission) offered assistance as the government introduced various stimulus packages to kickstart the economy. In particular, the Commission suggested looking at the stimulus packages through a ‘climate change lens.’ Dr Carr offered six principles to help the government maintain its legislative goals:

  1. Consider how stimulus investments can deliver long-term climate benefits
  2. Bring forward transformational climate change investments that need to happen anyway
  3. Prepare our workforce for the jobs of tomorrow
  4. Work in partnership with iwi and work with the commercial sector to encourage private environmental development
  5. Maintain incentives to reduce emissions and adapt to climate change, and
  6. Change how we measure the success of economic recovery.

Dr Carr’s letter suggests the benefits of implementing the principles will pay dividends now and in the future. Such benefits included clean energy and energy efficiency, improved transport systems, sustainable land use, resilient infrastructure, an empowered workforce, accelerated innovation and improved wellbeing.

In many instances, these principles can be layered over the decisions made by business owners. Unfortunately, businesses and decision-makers may be forced to choose between options that are not environmentally desirable, but less expensive, and those that are more costly but benefit our goals under the Zero Carbon Act and that ultimately address climate change. The difficulty with this situation is that a decision that eases the economic burden now may just be a patch on another problem that needs to be readdressed in the near future.

Irrespective of COVID’s pervasive impact on our lives, the Zero Carbon Act means New Zealand businesses have to dig deeper and assist in transitioning New Zealand to a carbon-zero economy by 2050. While the costs of the virus across business and society are crippling, it may be a timely opportunity to create and shape a more environmentally-conscious future.

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this article. Views expressed are those of individual authors, and do not necessarily reflect the view of this firm. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.  Copyright, NZ LAW Limited, 2019. Editor: Adrienne Olsen. E-mail: adrienne@adroite.co.nz. Ph: 029 286 3650 or 04 496 5513.