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5 Possible Response Mechanisms

5.1 Introduction

A major issue in considering the information from Chapters 3 and 4 is the extent to which each possible effect and/or issue requires an immediate policy response. In some case, it will be more appropriate to study a possible effect in more detail or to monitor more closely, or to take no further action at all. The framework used to decide between these courses of action for each effect is set out in section .

Sections 5.3 through 5.10 discuss the more significant environmental effects that are expected to arise in each sector as a result of the ETS-plus, and propose response measures to address these effects.

In some cases possible responses are similar enough across sectors to constitute a set of generic actions to support the ETS-plus. Section 5.11 proposes generic response measures that are common to all or most of the effects and will help an emissions trading scheme to operate effectively.

5.2 Determining appropriate response mechanisms

5.2.1 Prioritising effects

The assessment undertaken for this report suggests that the ETS-plus will deliver significant environmental benefits in some areas compared with the base case. The assessment also suggests that there is some risk of unintended adverse effects. These may arise as a result of the scheme and the incentives it creates, or as a result of the way the scheme interacts with already existing policies and programmes.

The extent and degree of uncertainty regarding the potential environmental effects of the ETS-plus, and therefore the need for a policy response and/or further investigation of those effects, can be divided into four categories, as follows:

First, for some sectors and/or environmental resources, it is expected that there are not likely to be any significant adverse environmental effects, and any positive effects are not at risk. For these, no policy response is recommended, and further environmental assessment is not a priority.

Second, for some sectors and/or environmental resources, it is likely that there will be some adverse environmental effects, and these effects are likely to be relatively minor or localised and can be adequately managed within existing policies and measures. Any positive effects are not at significant risk. In this situation, any recommended response is likely to involve either enhancements to existing measures, or monitoring, and further environmental assessment is not a priority.

Third, for some sectors and/or environmental resources, it is likely that there is significant potential for major adverse environmental effects, and/or risk to potential positive effects. While the magnitude, timing and/or location of these effects might not be known with certainty, further environmental assessment will not always be the most appropriate policy response, not least because the answers will often depend on factors that cannot be discovered by further study – the future price of emission units, the availability and nature of new technology, and the future policies of other countries.

Rather, where there exists significant potential for major adverse environmental effects, this report recommends implementing policies as part of, or in conjunction with, the ETS so that the potential for adverse effects is avoided or at least minimised. In these cases, effort is generally better applied to policy design than more empirical research.

In some cases, however, a concurrent further investigation might also be appropriate or, more likely, monitoring for effects will be recommended in conjunction with new or enhanced policy responses, to evaluate the need for and adequacy of those responses.

Finally, there are some sectors and/or environmental resources where there exists a possibility of significant adverse effects that existing policies and measures might not be adequate to address, but where there is a large degree of uncertainty around either the likelihood or the magnitude of the effects (possibly even the direction of the effects), and/or concerning the adequacy of existing policies and measures. In such cases, further assessment of environmental effects is recommended where such assessment is deemed to have the potential to deliver policy-relevant information, in particular to enable the issue to be re-categorised into one of the other problem types outlined above.

5.2.2 Monitoring

Where there is a possibility of significant adverse effects but more in-depth environmental assessment seems unlikely to yield policy-relevant information, the appropriate response is to monitor the situation closely so that any problems can be detected early and a policy response devised as quickly as possible. Problems can and do arise unexpectedly, and if good monitoring data is not available, valuable time can be lost while parties debate the significance of limited and/or anecdotal evidence of a wider problem.

New Zealand should have an environmental monitoring network that is capable of identifying emerging environmental problems before they become serious. As the OECD Environmental Performance Review of New Zealand (2007) made clear, this is not currently the case. The recent report Environment New Zealand 2007 (Ministry for the Environment, 2007) provides a welcome start to a more systematic environmental monitoring system.

Many of the response measures identified in this report will assist in creating the information necessary for monitoring. However, development of a detailed approach to monitoring the environmental effects of ETS-plus is beyond the scope of this report. At a high level the following conclusions can be drawn:

  • monitoring needs to be integrated with the ETS timetable

  • monitoring needs to be transparent and credible

  • the effects identified in this report (and subsequent investigation) help to identify many elements for which monitoring is required.

In addition to monitoring, New Zealand needs to improve its modelling capability so that monitoring data can be utilised to forecast future trends, eg, in land use change and associated environmental impacts. Particular examples of this are cited in the discussion in the next chapter on information needs.

Associated with monitoring is the need for better information on land use change and soil integrity and the degree to which changes that are expected to occur before 2013, when agriculture enters the ETS-plus, are reversible.

The remainder of this chapter describes proposed possible policy responses to address the potential environmental effects identified in Chapters 3 and 4, starting with generic measures that would help to address possible effects across a range of sectors and environmental resources. Chapter 6 then describes where more detailed investigations and environmental assessment of particular issues would be most useful.

5.3 Energy supply and demand

5.3.1 Response measures for GHG emissions

Strengthen measures to enhance energy efficiency and demand side management in the energy sector, especially but not exclusively in relation to electricity.

Demand management and more efficient use of energy have the potential to reduce significantly the environmental pressures arising from increasing the supply of energy sources. This is true for renewable sources as well as for fossil fuels.

Energy efficiency and demand-side management are thus important in the short-term as a CO2 mitigation measure and in the longer term as means of reducing pressure on the environment from renewable energy supply. The existing and proposed measures in the NZEECS represent a positive and significant start. There is a strong environmental case for substantially greater levels of activity in the longer term as well as during the transition to lower carbon energy sources.

5.3.2 Response measures for freshwater, biodiversity, landscape and natural character

Introduction

The ETS-plus is expected to lead to increased demand for renewable sources of energy, especially for electricity generation. These changes are expected to increase pressures across different aspects of the environment including water quality and quantity, biodiversity and conservation values, landscape and amenity values and natural character.

The extent of increased pressure from large-scale projects depends on the pattern and rate of growth in demand, and hence on levels of demand side management, energy efficiency and smaller-scale distributed generation. The exact nature of potential impacts depends on the type of renewable energy, the scale of the project and the proposed location.

In broad terms, response measures can be divided into three categories:

  1. reducing the pressure arising from growth in demand for electricity
  2. considering the relative importance of further hydroelectric development in meeting New Zealand’s growing demand for energy
  3. ensuring that a coherent policy framework exists to consider proposed developments.

As has already been noted under the section on GHGs, increased attention to energy efficiency and demand-side management are important in the long run to reduce pressure from renewables and transmission infrastructure, as well as in the short-term to reduce GHGs.

Consider undertaking a strategic environmental assessment of the role of further hydroelectric generation in a sustainable energy system.

Hydroelectric development in particular has the potential to create significant irreversible effects, especially compared with generation options of a smaller physical scale. Some stakeholders have suggested giving priority to augmentation of existing power stations and prioritising low-impact developments on rivers that are already substantially modified. While the first suggestion appears straightforward, the second depends on the environmental values still associated with the river in question. Other stakeholders have suggested a complete ban on further hydroelectric development, while still others see it as an essential component of a sustainable energy system.

Along with biofuels, the future of hydroelectric development is an area where a more comprehensive strategic environmental assessment might be undertaken. Possible terms of reference for such a study are discussed further in the next chapter.

Enhancing the existing policy framework: additional water use for hydro generation

Provide guidance on the potential use of freshwater resources for hydroelectric generation via the Sustainable Water Programme of Action.

Hydro generation affects both water quality and water quantity. Any additional hydro generation will compete with other river uses such as irrigation, recreation, assimilation of discharges, and cultural and amenity needs, as well as the requirements for a base environmental flow for the river to maintain ecological health. All river systems, regardless of whether currently exploited for power or not, require robust allocation systems to enable efficient use while ensuring that minimum ecological health requirements are met.

The current Sustainable Water Programme of Action (SWPOA) provides a suitable RMA process as work is currently underway on scoping and drafting a National Policy Statement on managing increasing demands for water and pressures on water quality, together with a national environmental standard on setting environmental flows and levels. These instruments should ensure not only that minimum requirements are met, but also provide guidance to regional councils and other decision-makers on how to assess competing demands between hydroelectric development and users that prefer unmodified flow regimes.

Ensure that areas of high biodiversity value are identified across New Zealand as a matter of urgency.

This is discussed in relation to forestry but it is also important in relation to hydroelectric generation.

Enhancing the existing policy framework: forward planning for wind farms

Address forward planning for wind energy through generic and cross-sectoral measures.

Wind energy development is well-suited to the type of central leadership coupled with local dialogues advocated under cross-sectoral measures. As already noted the Parliamentary Commissioner for the Environment has suggested a similar approach to resource landscape, amenity and natural character conflicts in relation to wind. This approach may help reduce pressures on areas of particular sensitivity and provide a useful complement to the planning process.

Enhancing the existing policy framework: National Instruments under the RMA relevant to renewables

Expand the scope of the proposed NPS on renewable energy.

Officials have advised the authors that a renewable energy National Policy Statement under the RMA is likely to be released within 12 months. We have been given to understand that it will primarily focus on the benefits of renewable energy. In light of the findings of this study, the content might need to be broader, as this is likely to be the first significant public initiative on the environmental effects of renewables.

Such an NPS needs to provide a framework that recognises the adverse effects of renewable generation as well. Biodiversity impacts may be local, for example, but biodiversity is a recognised issue at national and international level.

An NPS should also address mechanisms for forward planning as well as consent -level considerations. It could for example help establish a framework for initiating some of the cross-sectoral measures discussed at the end of this chapter.

Develop a national instrument to guide identification, recording and protection of high value landscapes.

This is discussed in relation to forestry but is also clearly relevant to wind and hydro development. Such an instrument would provide a methodology and clear timeframe (eg, via a National Environmental Standard) for identifying high value landscapes. This work should be undertaken in parallel with the national mapping project described in Chapter 6.

Address wind and marine energy development in the review of the New Zealand Coastal Policy Statement.

Marine energy is likely to emerge as a competing use of coastal and marine space over the next decade. The review of the Coastal Policy Statement needs to consider this. There is also potential for wind farm development in the coastal marine area, and on land close to the coast.

5.3.3 Response measures for air quality and human health

Address air quality issues associated with domestic heating through improved co-ordination between central and local government.

Air quality is a key area where support and partnership between local and central government will help ensure that responses deliver the best long-term outcomes. A local response needs to incorporate the full range of considerations – for example impacts on energy demand (and hence other environmental impacts) of a switch from open fires to heat pumps. The appropriate technological and policy solution may vary from region to region and area to area. In locations where air quality is not under severe pressure, improving the efficiency of wood combustion may be appropriate. In locations where air quality pressures are acute, accelerated installation of heat-pump technology could be preferred.

Provide assistance to low-income households to minimise the effect of the ETS in exacerbating New Zealand’s “cold home” problem.

Further pressure on fuel prices from ETS-plus will exacerbate pressures on human health arising from the increased cost of home heating. The Government has already announced that it will provide some assistance for lower income households. Details of this are not available at the time of writing.

There is a strong case to be made for ensuring that health effects are addressed without removing the carbon price signal in fuel. There also appear to be real limits to the speed at which household energy efficiency retrofits can occur, and it is likely that the price of carbon will be reflected in energy costs before the bulk of the housing stock has been retrofitted.

One possible approach would be to provide direct financial assistance, in some form, to lower income households. However the direct health effects arise from colder and damper houses, and it is not clear how financial assistance will affect decisions by households faced with higher power costs and limited budgets. This is especially so if energy efficiency actions are to some extent supply-constrained and the assistance is not clearly and transparently related to energy costs. As already noted, fuel switching to wood from electricity, for example, may adversely affect indoor and outdoor air quality.

Response measures need to be well integrated with the overall ETS package so as to avoid any unintended consequences. Government may wish to consider measures such as progressive pricing, eg, providing a limited quantum of electricity at a reduced price, possibly via financial assistance to eligible households, and avoiding incentives to switch to wood fuel where doing so would cause undue health impacts.

An additional interaction between fuel cost and health is the possibility that significant increases in fuel costs will directly affect the public health sector, which currently uses a significant amount of coal. Transitional funding for less emission-intensive forms of heating is a possible response, and would have additional health benefits in the form of improved local air quality.

5.4 Transport

Because of the significance of the transport sector in New Zealand’s emissions profile, the complexity of factors affecting transport decisions, and the relative inelasticity of transport demand, addressing GHG emissions and other environmental effects of the ETS-plus requires an exceptional degree of integration between technical and policy responses. A 1998 Select Committee inquiry into the environmental effects of road transport made some relevant comments on this issue:

“A conceptual hierarchy underlies most thinking on reducing the environmental effects of road transport. This hierarchy can be summarised as:

  • reducing the need to travel
  • choosing a low impact means of travel
  • choosing a low impact propulsion system
  • improving the efficiency of propulsion.

“In general, the higher up this hierarchy one moves, the more broadly effects are addressed by a given measure. Travel reduction addresses land use, pollution and safety concerns. Low impact fuels and fuel efficient driving tend to address pollution from individual vehicles. These levels also have a different time dimension. Changes in a vehicle’s tuning can happen very quickly while changes in land use tend to occur over decades, though they can be surprisingly rapid.

“Successful approaches seek to use these levels in harmony and harness market forces to provide mutually supportive improvements. This points to a degree of caution over technical solutions to environmental problems. The OECD recently concluded that technical innovation will be most effective when located within a context of reducing travel demand. By contrast, a focus on reducing per vehicle emissions while increasing the need for vehicle use can mean most or all of the environmental gains are lost.”

Maximum benefits are achieved by working through this hierarchy in a systematic way and ensuring that actions at different levels are mutually reinforcing. Reductions in CO2 emissions from transport will require integration between price signals, regulation, public funding (including infrastructure investment decisions), education and social marketing, development and distribution of alternative technologies, and land-use planning. At present there is considerable scope to increase the alignment of these factors, and considerable evidence that this would deliver a range of medium to long-term benefits additional to reduced CO2 emissions.

In the transport sector, the ETS-plus has the potential to improve air quality over time relative to the base case as transport users respond to the ETS price signal. To capture significant potential benefits to air quality, however, will require making sure that users have an appropriate mix of low-emission transport choices available, and are aware of the significance of their decisions.

In light of this, the following response measures are proposed:

  1. Increase the focus on demand-side management activity and the provision of a wider range of transport choices as a means of reducing emissions over the medium term.
  2. Improve the overall coherence and alignment of existing transport sector policies with emission reduction objectives. In particular, ensure that –
    1. ETS price signals are reinforced by complementary measures relating to vehicle fuel efficiency; and
    2. patterns of land use and infrastructure investment support a move to a lower emissions future rather than locking in higher emissions over the medium term.

Some of the generic cross-sectoral response measures (see ) are relevant for transport. In particular, the positive effects of the ETS-plus with respect to transport can be enhanced through proactive local planning, supported by central and regional leadership, involving more community-based, multi-stakeholder forward planning within the context of long-term council and community plans and/or regional transport strategies.

One area in which considerable technology-driven benefits are potentially available for New Zealand is the widespread use of electric or hybrid vehicles (King, 2007). The potential benefits are seen to be greater for New Zealand than for many other countries because of the relatively greater availability of renewable energy. However, if adoption is widespread this would place additional pressure on renewable energy generation, with the potential adverse environmental effects discussed earlier. Recent modelling work by the Electricity Commission98 indicates that this demand would be considerable, especially if vehicles are not charged during off-peak hours. Disposal issues (especially batteries) and other infrastructure requirements are other environmental effects that would require further examination.

The most appropriate role for electric vehicles needs to be considered within the framework described above. This can help New Zealand avoid the trap of simply replacing GHG emissions with pressure on New Zealand’s domestic environment without addressing the overall level of energy use in transport. Issues relating to electric vehicles requiring further study are summarised in chapter 6.

5.5 Agriculture

Before 2013, when agriculture enters the ETS, there is expected to be ongoing growth in non-CO2 emissions, albeit potentially slower than over the last few years, due to slower deforestation and conversion of that land to dairying. The growth will be driven to a significant extent by the large increase in deforestation during 2007, as that land is brought into pastoral production during the next few years. The growth in intensive pastoral agriculture is likely to result in ongoing environmental pressures on waterways, groundwater, soil health and increased non-CO2 GHG emissions. The delay in the introduction of agriculture into the ETS until 2013 is likely to put some of the benefits of the ETS-plus at risk. This will constrain the ability of the ETS to reduce New Zealand’s net emissions from BAU and to lower New Zealand’s emissions trajectory. Clarity soon about the agreed point of obligation for agriculture and the means of transmitting that signal to farmers where the mitigation can take place will help incentivise mitigation action, however.

Completion of the work around the base case initiatives, particularly resolution of issues surrounding the effectiveness and environmental effects of nitrification inhibitors and measurement of their effect on emissions, their verification and ability to be counted internationally, will see greater uptake and thus reduction in the non-CO2 GHG emissions. The requirement, signalled by government, for entity-level measurement and reporting of GHG emissions in agriculture by 2011 will drive this work. The further development of OVERSEER as an emissions measurement and monitoring tool is also urgent in this context.

The full environmental effects of the use of nitrification inhibitors have yet to be determined, in particular their effects on the nitrogen cycle and on water quality, including on wetland functioning. It is important that the parallel work being funded by government on these issues is comprehensive and fills the gaps in knowledge, before nitrogen inhibitors are widely used.

Adequate resourcing for soil science research is also essential to better understand the effects of land use change on soil integrity in New Zealand and in particular the degree to which change is reversible.

An incentive could be provided for early voluntary action in the agriculture sector, eg, by rewarding the sector with emission units in 2013 for early reductions in emissions. This would encourage more widespread use of current nitrification inhibitors before 2013.

To address these potential effects, the following response measures should be considered:

  1. Investigate the potential long-term effects of nitrification inhibitors on the nitrogen cycle, terrestrial water quality, soil health and wetlands and identify any additional response measures required prior to widespread adoption of nitrification inhibitors.
  2. Provide adequate capacity for research programmes aimed at understanding the effects of land use change on soil integrity, to enable assessment of the reversibility of land use changes occurring prior to 2013 so as to capture the full benefits of the ETS-plus.
  3. Determine as soon as possible the ETS points of obligation for the agriculture sector, including how the price signal will be passed on to farmers.
  4. Investigate the risk that the benefits of the ETS-plus will not be realised due to the delay in agriculture entering the ETS. Determine the extent to which behaviour, emissions and adverse effects are likely to diverge from “optimal”, ie, from a situation in which future policy settings are known with certainty and fully factored into investment decisions, and consider policy options to reduce any such divergence.
  5. Improve understanding of the effect of different land ownership structures (eg, corporate vs individual vs multiple Maori) on land use change to better anticipate the environmental effects of ETS-plus.
  6. Monitor progress towards reversing biodiversity decline in New Zealand; this will require maintenance and updating of national databases, and measures of ecological processes that sustain indigenous species assemblages and ecosystem functions.
  7. Improve the quality of national data on significant vegetation cover, ecosystems and landscapes to enable rapid assessment of land use changes and pressures.
  8. Fill information gaps on land use change to enable adequate modelling to be undertaken.
  9. Monitor the effect of land use change on soil integrity.
  10. Monitor land use change as part of a specific monitoring programme associated with the ETS.
  11. An incentive could be provided for early voluntary action in the agriculture sector either by providing credits at 2013 for actions between 2008 and 2013 or forward looking allocation starting in 2013 for earlier action.

5.6 Forestry

The biggest effect of the ETS-plus in the forestry sector is the avoided deforestation which has a combined effect of avoiding GHG emissions from deforestation and also emissions from the dairying that would have gone onto that land. This is a significant positive effect. (Refer to the combined effect with conversion of land to intensive pastoral agriculture in 5.6 above.)

The other positive effect of the ETS-plus is the increased forest establishment of both exotic and indigenous forest from the ETS price signal and the Afforestation Grant Scheme (AGS). However, there is some uncertainty around the extent to which there is an inherent favouring of exotic species, due to their ability generally to sequester carbon more quickly. The spill-over effect of this could be that some areas where indigenous vegetation has regenerated since 1989 and comprises threatened ecosystems or habitats. This biodiversity could be at risk.

There are a number of environmental effects from the ETS-plus that are either likely or uncertain but which require specific attention. The ETS-plus is likely to cause some adverse biodiversity and landscape effects from increased exotic forest establishment. To adequately address this, the comprehensive mapping of areas with high biodiversity and landscape values is an urgent priority. (See also section for the nature of the mapping needed.)

In 2007, the Government issued a statement on national priorities for protecting rare and threatened indigenous biodiversity on private land (MFE and DoC, 2007). That statement provides information that can be used by local and central government agencies and landowners to coordinate their decisions and on the ground actions in relation to biodiversity.

Unfortunately, given the significant decline of some ecosystem types in recent years, the evidence is clear that the response through the RMA is inadequate to protect the remaining areas of high biodiversity. The statement of national priorities remains voluntary, and it is unlikely, by itself, to be sufficient to mitigate the risk to biodiversity values presented by the ETS-plus. Thus, further response measures are required.

To address this problem, the AGS could be modified to protect biodiversity and landscapes at risk, eg, by making these areas ineligible for grants. Similar provisions could be applied in the ETS. For these measures to be effective at the commencement of the ETS-plus, however, the mapping referred to above must be completed urgently.

In some areas increased afforestation is also likely to reduce water yields, but this is likely to be significant only at a local scale.

Apart from these potential negative environmental effects the overall effects of the ETS on the forestry environment are positive.

If pre-1990 indigenous forests were to be incorporated into the ETS, there is an expectation that they would receive additional allocation of units, though at a lesser rate than exotic forests reflecting the much lower deforestation rates of these forests currently.

If this were to happen, then as a matter of principle, incentives for retention of indigenous forests should be at the same level as disincentives for deforestation of indigenous forests, including regenerating indigenous vegetation.

The basis for allocating credits to pre-1990 indigenous forests, if this were to be done, could reflect a broader range of factors than just deforestation rates (including biodiversity, the benefits of pest management for example), and the value of doing so could be increased if New Zealand was required to use full carbon accounting in the future.

In light of the preceding discussion, the following response measures should be considered:

  1. Provide criteria in the AGS to ensure that areas of high biodiversity value, eg, significant post-1989 regeneration, are not planted in exotic forestry.
  2. Include in the ETS legislation provision to ensure that NZUs are not issued for planting of exotic forest on areas of high biodiversity value.
  3. Ensure that the biodiversity mapping is completed across New Zealand as a matter of urgency, and before the introduction of the AGS.
  4. Link the AGS to the forestry best practice code to reduce environmental effects at establishment and harvesting.
  5. Provide a methodology and time-frame, eg, via a national environmental standard under the RMA, to guide local authorities in protecting landscapes of high value.
  6. Undertake further work to establish how the ETS could be modified if full carbon accounting were required by a future international agreement.
  7. Undertake further environmental assessment if pre-1990 indigenous forests are included in the ETS.
  8. Undertake further environmental assessment if the ETS-plus is amended to create more flexibility for land use change.

5.7 Manufacturing and mining

No significant unintended environmental consequences of the ETS-plus have been identified from the manufacturing sector, and therefore no policy response measures are proposed. There are likely to be some local improvements in air quality as plants adjust their fuel mix away from coal, and possibly some reductions in other discharges eg, to water, if plants reduce output, but no additional policy measures are proposed to secure these. In fact, if plants reduce their output or close entirely, there are likely to be unintended adverse economic and social consequences that have a greater priority for policy response.

The same considerations apply to the mining sector, and no policy response measures are proposed.

Further investigation would be necessary if the Government wants quantitative estimates of likely reductions in greenhouse gas emissions from the industrial sector under the ETS-plus. Such a study should focus on the age of plant and equipment, when decisions are likely to be made on major maintenance and/or replacement, the likely effectiveness of free allocation of emission units at reducing leakage, and the cost and availability of lower-emission technology. The wood processing industry is currently collecting information on the first two points and could provide a useful pilot for a larger study.

5.8 Fishing and aquaculture

5.8.1 Fishing

There are not expected to be any significant unintended consequences, either positive or negative, of the ETS-plus package as a result of behavioural changes in the fishing industry, although some negative effects are possible and warrant monitoring. Some positive effects are expected, but are likely to be limited in extent and significance.

With regard to negative effects, the Ministry of Fisheries should watch for any significant shifts in fishing behaviour showing a stronger preference for inshore vs offshore fishing as fishers seek to reduce their fuel costs, and ensure that fisheries management tools are adequate to prevent localised depletion of fisheries. Scientists performing stock assessments should be aware of possible changes in fishing behaviour that might need to be adjusted for in stock models, eg, models based on catch per unit effort. Such shifts might already be occurring, of course, since fuel price increases that have occurred in the past two years are much larger than will result from the ETS, at least initially.

Similarly, the Government should monitor whether changes in fishing gear or strategies give rise to any change in fisheries interactions with protected species such as seabirds and marine mammals. Current monitoring procedures may well be adequate for this purpose, in which case it is only a matter of checking for any such changes.

On the positive side, given that bottom trawling is among the most energy-intensive of fishing methods, the ETS price signal on fuel is expected to increase the search for and use of other less harmful methods.

Apart from the monitoring noted above, no additional policy measures are proposed for the fishing sector.

5.8.2 Aquaculture

Given the energy-intensity of capture fisheries, there is expected to be an increased interest in aquaculture, especially from the larger fishing companies that are active in both. This could increase the pressure for allocation of coastal space, raising conflict with other coastal stakeholders. The Government is already seeking to resolve the tensions over near-shore space and to facilitate the expansion of aquaculture; no further policy measures have been suggested in that regard except to note the importance of central government leadership to overcome the inertia evident at the regional level.

5.9 Solid waste

The ETS-plus package is not expected to have significant unintended consequences in the solid waste sector, although there are some issues that warrant monitoring.

Increased conversion of waste material to energy could potentially cause increased air pollution, but the national air quality standards and regional plans are expected to be adequate to manage this possibility. This should be monitored and the effects assessed when the ETS is up for it regular review.

As noted in section 3.9, there is also the possibility that the increased cost of electricity could make reprocessing of recycled materials less viable, with the result that more of these materials could end up in landfills. From 2013, when the waste sector enters the ETS, this is likely to be less of an issue, because the emissions cost of landfill disposal is likely to offset the added cost of transporting and reprocessing recyclables.

Prior to 2013, the Government should monitor whether a problem with recyclables is emerging. If so, it could consider increasing the waste levy and/or using some of the levy revenues to subsidise recycling, provided this does not increase global emissions.

5.10 Tourism and services

No sector-specific response measures are proposed for the tourism sector or other service industries. To the extent that measures might help to secure positive effects of the ETS-plus in these sectors or mitigate adverse effects, they are addressed in the Energy Demand and Transport sections above.

5.11 Generic and cross-sectoral measures

5.11.1 Introduction

Climate change is a long-term and pervasive new feature of today’s world, and the ETS-plus is designed to bring about behavioural shifts that will over time create major changes in our society.

Business and consumer behaviour is determined by non-price factors as well as prices, and is shaped to a considerable extent by infrastructure and socio-cultural norms. As a result, a number of cross-sectoral and generic initiatives are likely to be necessary to help ensure that opportunities for positive environmental outcomes are maximised and negative environmental outcomes reduced. The specific sectoral response measures described previously are critical. But they are not likely to be sufficient in themselves to achieve the objectives of the ETS-plus without adverse environmental effects. The suggested cross-sectoral measures help to address this gap.

In essence, the overall responsiveness, engagement and motivation of individuals, communities and owner-operated businesses will depend in large measure on:

  1. the options people have available, which is influenced strongly by local infrastructure and available technology and management systems
  2. how the ETS-plus and associated price changes are perceived and understood; an inability to determine which choices are the “right ones”, for example, may well reduce motivation.

The suggested generic measures comprise modifications and enhancements to the overall approach to environmental management that could enhance and focus the way society responds to the emissions price signal arising from the ETS-plus. They would also help ensure the ETS-plus delivers on its goal of environmental integrity, and least-cost transition.

5.11.2 Areas requiring cross-sectoral and generic response measures

Two suggestions have emerged from this scoping study that would assist in addressing these issues:

  • enhanced central government guidance on how to plan locally (including but not limited to RMA planning) in relation to the changes that are likely to flow from the ETS and from climate change itself

  • an enhanced focus on the non-price drivers of the behavioural response to the cost and price changes resulting from the ETS – in particular, the need for social marketing and information to support the price responses and thus guide behaviour.

The following statements are a few examples of stakeholder comments that underpin this second point:

  • climate change needs a generic social marketing response as well as a generic economic instrument

  • if all households perceive is rising energy or dairy prices they are much more likely to simply become annoyed about rising prices, and look for someone to blame

  • people will want to see companies “doing their share” if prices have to rise; the credibility of environmental claims will become increasingly important.

5.11.3 Potential cross-sectoral and generic response measures

The following cross-sectoral response is suggested:

Proactive local planning and dialogue, supported by central and regional leadership, to help deal with potential resource conflicts and environmental effects, and engage with communities over the response to climate change.

This would include:

1. An explicit and structured partnership between central and local government around the use of the Resource Management Act

The suggestion here is to establish engagement processes and systems with local government with an explicit focus on the ETS and climate change. This would focus on supporting local government in making decisions that avoid, remedy and mitigate the environmental effects identified in this scoping report, and would extend beyond national instruments, and the existing processes of dialogue. Central government could demonstrate facilitative leadership in assisting local authorities to deal with the longer-term changes that may come about as a result of the ETS-plus.

Examples of the type of issues that could be addressed include:

  • guidance material on likely environmental effects of the ETS-plus and how to manage them proactively through RMA, including improved planning for land use change (both urban and rural)

  • guidance for sectors on best practice and case studies for local government to manage effects from the ETS-plus and climate change generally

  • increased use of national instruments to provide methodologies and frameworks for assessment

  • increased national information gathering to assist in decision-making (eg, the biodiversity survey and the proposed landscape survey)

  • encouraging greater use of existing provisions in RMA by councils to provide greater certainty and clarity and strengthened compliance of existing plan provisions.

    2. More community-based, multi-stakeholder forward planning, within the context of long-term council and community plans under the Local Government Act

Many stakeholders at the workshop and in discussion afterwards, felt that greater community dialogue and collaborative planning could add value in a range of areas identified in this report. Such approaches at a local level were thought important in creating a ‘climate of possibility’ in relation to major issues.100,101 This cannot be created through a top-down approach alone; it requires an ongoing level of engagement and dialogue at the local level.

In a recent discussion of the effects of commercial-scale wind farms on communities, the Parliamentary Commissioner for the Environment recommended a combination of greater strategic leadership and improved community dialogue (PCE, 2006). The authors of this scoping report have concluded that this general approach could be expected to assist the implementation of the ETS-plus.

Rather than involve consultation on specific issues, this approach envisages a range of topics being considered together on an ongoing basis. Examples could include:

  • improving energy efficiency at a local level

  • appropriate scale and siting of renewable electricity generation

  • assessing the extent of concerns over local air quality and the impact of alternative fuels

  • identifying how best to encourage climate-supportive transport choices

  • expanding the work of local voluntary groups such as Climate Reduction Action Groups.

3. Improve the level of information available to individuals, businesses and others making decisions/choices to reduce the climate impact of their lifestyle, and respond to the price and cost signals arising from the ETS

Improvements are needed to the information that will enable people to make climate friendly choices that suit their needs. Examples of the type of issues that could be addressed include:

  • national standards on life-cycle analysis to enable consumer protection agencies to have a clearer idea of the merits of green claims

  • better guidance for the advertising industry about the types of initiatives that can legitimately be considered climate-friendly

  • engaging with business leadership to enable increased business leadership and provide greater clarity about what actually constitutes climate-friendly practices.

98 See http://www.electricitycommission.govt.nz/opdev/modelling/EVs/index.html

100 Some discussion of one approach to such dialogues can be found at:
http://www.ecologic.org.nz/?id=80&page=Conf+presentations under “Collaborative Governance”.

101 The rural sector has experience in such group dialogues to address issues facing farmers, eg, adapting to climate change in Eastern New Zealand, Earthwise Consulting Ltd (2005) and through farmer focus groups and field days through which experience is shared.

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