• About this site|
• Site index|
• Contact us|
• Jobs

Scoping Report for an Environmental Assessment of the New Zealand Emissions Trading Scheme and Closely Related Measures

Executive Summary

1 Introduction

2 Methodology and Policy Scenarios

3 Changes and Environmental Effects by Sector

4 Effects by Environmental Resource

5 Possible Response Mechanisms

6 Further Investigation of Environmental Effects

7 Summary of Proposed Response Measures

8 References

Appendix 1: Excerpt from Project Brief: Scoping Report for an Environmental Assessment of the NZ ETS

Appendix 2: Policy Scenarios

Appendix 3: Acknowledgements

Appendix 4: Significance of Environmental Effects by Environmental Resource

2 Methodology and Policy Scenarios

2.1 General approach

2.1.1 Information and analysis

Given time and budget constraints, this report has been compiled utilising existing documents and reports, information gathered at a workshop of stakeholders and experts, additional discussions with other stakeholders and experts, and the project team’s expertise and existing knowledge. The project team analysed this information using a matrix approach, that is, considering the response of the main economic sectors to the ETS-plus and also considering how various natural and physical resources could be affected by changes in human activity prompted by the ETS-plus.

2.1.2 Meaning of “environment”

For the purposes of this scoping report, the term “environment” here has the same meaning as it does in the Resource Management Act 1991⁵ and the Environment Act 1986, except that the scope of the assessment will not include social, economic or cultural impacts of the ETS-plus. Government advises that these aspects are being considered through other mechanisms. However, the report does consider human health effects where these are directly caused by changes in the environment or by direct price effects.

The scoping study is a preliminary assessment of the domestic environmental effects of the ETS-plus policy package. Domestic environmental effects, and assessment thereof, fall into two distinct categories.

The first effect is the impact of the ETS-plus on domestic GHG emissions.

This relates in part to the effectiveness of the ETS-plus at achieving one of its intended objectives – Reducing New Zealand’s net emissions below business-as-usual levels (see Chapter 1). For the purposes of this report, the “business as usual” is defined as equivalent to the base case scenario (see section 2.3). If the ETS-plus clearly reduces gross emissions and enhances sinks in the long term, in comparison with the base case, its net emissions objective is met.⁶

The report also comments on the effect of the scheme on domestic emissions more generally. At issue here is the more general question of the extent to which the ETS-plus in its current form will contribute to absolute reductions in GHG emissions in the longer term.

Thus, this report:

1. comments on the extent to which GHG emissions are likely to be reduced both compared to the base case scenario, and in absolute terms
2. proposes possible high-level policy response measures to enhance domestic emission reductions.

The report makes no comment on the global implications of alternative approaches to emission reduction, nor does it comment on the implications of these for the ETS-plus or New Zealand generally. This subject, while important, is outside the terms of reference for the scoping study.

The report also examines at a high-level the effects of the ETS-plus on pressures on the environment (as defined above) within New Zealand. Thus, in addition to GHG emissions, effects on the environment are assessed under the following headings:

• Air Quality

• Biodiversity – Terrestrial

• Biosecurity

• Coastal and Marine

• Historic Heritage

• Human Health

• Land and Soil

• Landscape, Amenity and Natural Character

• Water Quantity

• Water Quality.

2.1.3 Descriptive framework

This scoping report is a qualitative assessment of the significance of possible environmental effects (both positive and adverse) arising from ETS-plus. In describing changes, the report adopts the language of the recent report Environment New Zealand 2007 (MFE, 2007a) in respect of “pressures” on the environment. The report therefore comments on how environmental pressures will change relative to the situation without ETS-plus. Except in the most general terms, this report cannot assess the quantitative impacts of ETS-plus in specific situations; rather where appropriate it notes the extent to which significant impacts are expected on the basis of existing information.

2.1.4 Uncertainty

The environmental effects that arise from implementation of the ETS-plus are subject to a number of significant sources of uncertainty, including:

• the stringency of international commitments post 2012 and hence the price of emission units (ie, carbon) on the international market that will be transmitted to New Zealand’s ETS

• the extent to which governments in other countries expose their industries to this price of carbon

• the price of oil, gas and other forms of energy, both renewable and fossil fuel-based

• the rate at which climate change occurs and how it affects New Zealand

• the emergence of new low-emission technologies and management practices in response to the ETS price signal

plus two factors that can be influenced more directly by the Government:

• the final design of the ETS-plus, for example the point of obligation for the agriculture sector

• the behavioural response of individuals and organisations to the ETS-plus policies.

Most of these factors are not “discoverable” through further research in advance of ETS implementation, which therefore constrains the nature of any environmental assessment, in particular the degree of detailed investigation that can usefully be undertaken. Nevertheless, a qualitative assessment can serve to identify likely directions of change and to highlight areas where there is significant potential for environmental effects, positive or negative, to arise as a result of the ETS-plus. Further investigation can also help to inform the final design of the ETS-plus.

Such an assessment can then point to a range of possible policy responses to avoid or minimise any unintended adverse consequences and/or maximise benefits, while also identifying where further investigation and monitoring would be useful for policy makers. That is the purpose of this scoping study.

In identifying the significant environmental effects that could arise from the ETS-plus and assessing their likely significance, the project team has relied upon its professional judgement and assessment of the information available from the range of stakeholder views and reference material to reach a qualitative view about a number of dimensions of uncertainty.

The sources of uncertainty outlined above give rise to uncertainty in the following attributes of potential environmental effects of the ETS-plus:

• whether a particular behavioural change will occur

• the rate at which the behavioural change will occur

• the magnitude of the behavioural change

• the direction of the behaviour change

• the relationship between the behavioural change and associated environmental effects, and the significance of those effects.

Each of these attributes has a probability component, ie, is more or less likely depending on the underlying drivers (ie, sources of uncertainty).

2.1.5 Terminology regarding probability relating to qualitative judgements

To describe different levels of probability, this report uses an approach generally similar to that used by the IPCC in its Fourth Assessment Report. In this report:

“It is expected that” means that there is strong probability, based on stakeholder views and reference material, that a behaviour change or environmental effect will occur – this is the highest level of probability attached to potential outcomes described in this report.

“It is likely that” means that a behaviour change or environmental effect is reasonably likely to occur. The outcome is considered much more likely than unlikely.

“It is possible that” means that it is reasonably plausible that a behaviour change or environmental effect will occur, but the probability is at the low end.

2.2 Project workshop

The project team (ie, the consultants) held a workshop on 25 January 2008 to gather information for this report. The workshop served as an information-gathering exercise for the consultants, to help them identify potential environmental effects across various sectors of the economy.

Those attending the workshop included 32 stakeholders (including Māori, business and environmental NGOs, as well as local government officials) and 16 officials from central government departments, in addition to the four project consultants and two observers from the office of the Parliamentary Commissioner for the Environment. A list of participants is provided in Appendix 3. The results of the workshop are summarised in a report available on the Ministry for the Environment’s website.⁷

Participants were invited to attend as individuals rather than representatives of their sectors or organisations – input was accepted as personal knowledge, views and information, rather than as an industry or organisation position.

Most of the workshop was conducted in small break-out groups that considered particular sectors of the economy, as follows:

• Stationary energy - Electricity supply and demand

• Transport - All transport modes

• Land Use - Pastoral agriculture (intensive and extensive) and forestry

• Industry - Chemicals, metals, agriculture and forestry processing, mining, seafood

• Waste - Solid waste

• Services - Tourism and other services

There is some overlap between sectors, eg, virtually all sectors are users of transport and stationary energy. These linkages are noted where they have significant environmental implications.

For each sector, the workshop collected information and views on the following three questions:⁸

1. How will activity in the sector change as a result of the ETS-plus?

For example, will output increase, decrease or be unaffected by the ETS-plus? Will there be fuel-switching or changes in other inputs or production practices? What information is available to answer this question, where are the gaps in information and how could we get a better understanding?

2. What will be the domestic environmental effects of the changes referred to in (1)?

Where are these effects likely to be concentrated and when are they likely to occur? What information is available to answer this question, where are the gaps and how could we fill these gaps?

3. What additional policy measures might be needed to capture any potential positive effects and minimise potential negative effects of the ETS-plus?

Response measures could well be outside of ETS-plus design, and could include such things as additional monitoring and assessment, national policy statements or environmental standards under the RMA or other statutes, additional funding for new or existing programmes, additional research, moral suasion, etc.

Information was also elicited from other individuals prior to and after the workshop to supplement the input obtained at the workshop. These people are also listed in Appendix 3.

2.3 Nature of analytical approach and conclusions

This report seeks to scope the possible environmental effects of ETS-plus. By its nature, the perspective it adopts is broad rather than deep. As a consequence a wide range of potential effects, both positive and adverse, have been identified.

The approach outlined in the questions for the workshop is also reflected in the overall document. The report first outlines the behaviour changes expected from households, businesses and other institutions. On the basis of these a range of potential environmental effects are identified. The report then makes a preliminary assessment as to the significance of effects.

Significance is a qualitative judgement based on the above factors, and information from a range of sources, including information on the existing state of the environmental resource in question. For this report, four broad and overlapping categories have been adopted:

• LOW – the expected change in environmental pressure is not significant. This judgement should be revisited during any review of the ETS but no additional response or further investigation is proposed at the present time.

• MODERATE – the expected change in environmental pressure is of some significance but is likely to be able to be managed through existing mechanisms. However the effectiveness of these existing response measures needs to be assessed and, where necessary, enhanced. Ongoing monitoring of environmental pressure is usually required and further investigation may be proposed.

• HIGH – the expected change in environmental pressure is highly significant in the near term. New response measures may be required to ameliorate adverse effects or reinforce positive changes or both. Further investigation may be proposed, either to better understand likely effects or to inform design of response measures.

• UNCERTAIN – there is insufficient information to even undertake a preliminary assessment of the significance of the effect in the near term and no suggestion that a precautionary approach is appropriate. Further investigation, rather than more active policy response measures, will be proposed.

Significance combines judgements about the size of immediate and longer-term impacts arising from the ETS-plus, the rate at which change will occur, the importance of early action, and the state of the relevant environmental qualities. The results of applying this categorisation are shown in detail in Appendix 4; the more significant effects are considered for possible policy responses in the latter part of this report.

For a small range of effects judged to be of moderate-high significance, response measures are proposed with some specificity. For most others, the report offers some general observations as to options for proceeding. This approach reflects the fact that this is a scoping report rather than an environmental assessment of the ETS-plus.

2.4 Adequacy of the RMA and other existing policies

This report identifies a number of potential adverse environmental effects, and a range of positive effects, that could arise as a result of the ETS and closely related measures. These effects range across a number of environmental resources in addition to the climate system: land and soil, freshwater, air quality, coastal and marine resources, biodiversity, landscape and natural character.

With only a few exceptions, these matters are intended to be managed by district and regional councils under the Resource Management Act 1991 (RMA). By identifying potential effects on these resources in Chapters 3 and 4, the report is not necessarily saying that the RMA is inadequate to manage these effects or that the effects will necessarily occur despite the RMA and its associated policies and methods.

The authors of this report are well aware of both the powers of the RMA and its limitations. We do not assume, just because the RMA provides the necessary authority for policies and measures to avoid, remedy or mitigate adverse effects on the environment, that this will be achieved. There is ample evidence that the plan-making process of the RMA is time-consuming and resource-intensive for local authorities, that local government has been inadequately supported by national guidance and direction, and that for these and other reasons RMA policies and methods cannot always keep pace with the rate of change (Ministry for the Environment, 2004; Walker et al, 2006; Young, 2007).

The failure of regional councils to manage adequately the adverse effects of dairy intensification over the past decade is perhaps the best example of this (PCE, 2004). In 2000, Environment Waikato initiated a process to address the threat to Lake Taupo from land use intensification; eight years later the plan awaits a hearing in the Environment Court and is not yet operative. The same council has been aware for several years of ongoing large-scale conversion of forestry to dairy farming in the upper Waikato River catchment and the consequent risks to the hydro lakes and lower catchment, but has yet to notify a proposed plan, or announce draft policies and measures, to manage these risks. The reports cited above (MfE, 2004; Walker et al, 2006) raise similar issues for the management of resources under the RMA across New Zealand generally.

This report therefore identifies the potential environmental effects, both positive and negative, that might arise as a result of behavioural changes prompted by the ETS and closely related measures. In considering the significance of these potential effects, the authors have considered the likely adequacy of existing policies and measures to manage the effects in a timely manner. Where existing measures are considered likely to be insufficient, the report proposes additional policy responses. These involve the use of national level RMA instruments or the provision of guidance and information to assist local government in its RMA role and thereby manage potential impacts more quickly and consistently than would otherwise happen.

The report takes a similar approach to other existing legislation and policies that are included in the base case scenario, eg, the Fisheries Act, Conservation Act, Forests Act, and the New Zealand Biodiversity Strategy. Where these are assessed at a high level to be adequate to manage potential adverse effects or to secure potential positive effects, no additional response measures are proposed. Where existing measures are considered likely to be insufficient, the report proposes additional policy responses.

[ Previous|Next