Productivity Commission tasked with looking at low carbon economy

The Productivity Commission's next big investigation will be how the country can make the most from transitioning to a low carbon economy. 

Climate Change Minister Paula Bennett and Finance Minister Steven Joyce today asked the government's productivity researcher to review how New Zealand can maximise the opportunities and minimise the costs and risks of moving to a low-carbon economy. The commission is scheduled to report back by the end of June next year and is complementing existing work as the government pursues a goal of meeting a 30 percent reduction in carbon emissions from 2005 levels by 2030. 

"This next step in our climate change work programme will enable us to properly assess the economic trade-offs that we'll need to make to meet our ambitious 2030 Paris Agreement target," Bennett said in a statement. "In the long-term - 2030 and beyond - New Zealand will likely need to further reduce its domestic emissions in addition to the use of forestry offsets and international emissions reduction units, although these will continue to remain an important part of the country's climate change response for meeting our targets." 

Last year, Bennett signalled the government was considering ways to encourage more forestry planting as a key plank in lifting carbon credit supply for the emissions trading scheme. Plantation owners faced major uncertainty earlier this decade when carbon prices plunged to below 50 cents a tonne when major emitters were allowed to buy low-quality credits from former Soviet bloc countries to offset their emissions. Policy changes, including a ban on using such credits, have seen the price of carbon rise, with New Zealand Units trading today at $17.30 a tonne. 

Joyce said New Zealand's domestic response to climate change will be shaped by the nation's position as "a small, globally connected and trade-dependent country" and that the commission was well-placed to "dispassionately assess" what makes the most economic sense in lowering emissions. 

"We look forward to the final report and recommendations for how New Zealand should manage a transition to a lower net emissions economy, while still maintaining and improving the incomes and prosperity of New Zealanders," he said. 

The review's terms of reference weren't immediately available. 

(BusinessDesk)