Willis sees market mechanisms as key to climate transition

Finance Minister and Associate Climate Change Minister Nicola Willis says the government is committed to meeting New Zealand’s climate commitments and sees market mechanisms as the key to delivering emissions reductions.

Speaking at an Institute of Directors Chapter Zero New Zealand breakfast event in Auckland, Willis outlined a market-based approach to climate policy that will include “stabilising” the Emissions Trading Scheme (ETS) and cutting red tape that makes climate-friendly investments difficult.

It will also include reducing government subsidies for climate-friendly investments, she says.

The government had already announced plans to divert funds from the Government Investment in Decarbonising Industry (GIDI) fund, which uses ETS revenue to subsidise carbon-friendly business adaptations, in order to fund tax cuts.

“Our view is that profitable, private companies should be doing the climate transition and they should not always look to government for a subsidy to achieve it,” Willis says.

“We will be ensuring that ETS revenue is recycled in such a way that working people are supported by that additional revenue.”

Willis sees the government’s role as enabling business.  She urges business leaders to advise the government where regulatory settings inhibit projects that could deliver clean energy for the future. She says initiatives such as the government’s Fast Track Approvals Bill, intended to replace the Fast Track Consenting Act, will be used to accelerate the transition to a clean energy, low-carbon economy.

The Minister says the government expects businesses to take the lead on the transition to a low carbon economy and that finance for the climate transition will come from the private sector.

“The Crown has a role but, ultimately, it will be business that decides what to invest in and adopt,” she says.

She also expects business leaders to urgently factor climate risk into their business models, if they have not begun to do so already. Risk assessments should include the impact of more severe and frequent extreme weather events, changing consumer preferences and pressures on supply chains, she warns.

“The obvious example is Tesco, which has committed to net zero emissions from its supply chain by 2050, with obvious implications for New Zealand food producers.”

Willis did not address the government’s plans to remove the ban on oil and gas exploration or the announcement that that the government will establish an independent panel to review New Zealand’s methane reduction targets. The current targets were set with reference to advice from the Climate Change Commission, which recently suggested they be strengthened.

“We have serious statutory and legal obligations to listen to the Climate Change Commission and to properly consider its advice and recommendations and, as Ministers, we take that seriously,” Willis says.

“That doesn’t mean the Climate Change Commission is a deity. It doesn’t mean that everything it says, we have to accept.”

She said the government is heavily focused on the role of technology in reducing the carbon footprint of the agricultural sector and signalled there will be changes to regulations around genetic engineering.

 

Image credit: Smoke Photo + Video