“The idea is to accelerate the climate finance conversation in New Zealand," co-founder Dr David Hall says, "and to find ways to share and disseminate ideas which already have traction overseas, especially in Europe and North America, often in the sustainable development context."
What he means is this: they are trying to work out how to pay for the transition to a sustainable future. That’s what the former Otago student and now Auckland-based researcher Hall is hoping his "novel financial instruments" will help achieve.
It is an effort dedicated to change. Appropriately enough, since the lab was launched in February, everything has changed. That same month the first case of Covid-19 was confirmed in New Zealand. The following month, the country entered Level 4 lockdown. Streets emptied of cars, families explored their neighbourhood on foot and bicycle, listening to the birds.
The lockdown did a job but it came at a price.
In response the Government has rolled out an unprecedented $50 billion economic stimulus package that Finance Minister Grant Robinson anticipates will return employment to pre-Covid-19 levels within two years. Of that, $13.1 billion has gone on wage subsidies, while another $14 billion was set aside for the second wave - that now looms. The rest has gone on creating jobs, stimulating the economy and resilience.
So, as always, the crisis offers opportunity.
Certainly, Prof Jonathan Boston, a longtime public policy adviser based at Victoria University of Wellington, thinks so.
"This [recovery package] provides an opportunity for investing for the long run as well as the short run and that kind of opportunity doesn’t arise very often. It may not arise again in our lifetimes," Boston says.
The National Climate Change Risk Assessment for Aotearoa New Zealand, released earlier this month, identified 10 areas "that require urgent action within the next six years". They include action to avoid major impacts on coastal ecosystems, extreme risks to the economy, extreme risks to drinking water supplies and damage to buildings caused by severe weather events and sea-level rise.
There is more. Prof Boston — whose research focuses on how societies can take a longer-term view — says it’s essential the economic recovery addresses the other pressing ecological crises, such as soil loss, nitrification of waterways and biodiversity loss.
"There are a whole variety of issues that we are failing to address," he says.
"I think what people fail to understand is that if you don’t take action promptly then you run the risk of intensifying the seriousness of the problem, of crossing particular thresholds or tipping points such that some impacts become irreversible," he says.
Very similar advice has been offered to the Government by the Climate Change Commission, which was set up just last year under the Zero Carbon Act to guide the country’s progress towards our CO2-cutting Paris Agreement targets. As the Government prepared to roll out its recovery Budget, commission chairman Dr Rod Carr wrote to Robertson and Climate Change Minister James Shaw urging them to "put a climate change lens" across its spending.
The pandemic arrived about 12 months too soon for the commission, as it is due to provide its first detailed package of advice on decarbonising the economy in May next year.
Nevertheless, it seized the opportunity provided by the recovery spending to suggest six principles for that, including bringing forward transformational climate change investments and changing how we measure the success of the economy.
Following the Budget announcements it followed up with another letter, endorsing the extra spending on home insulation and commitment to building more state houses, nature-based jobs, and the hundreds of millions for rail across tracks, trains and ferries — while urging KiwiRail to move to low-emissions energy. But it again counselled more of a future-focus, arguing if future generations were to pay for spending now, it should at least help address the problems we know those generations will face.
It can appear a tall order for one Covid recovery package, that has other immediate needs to meet. And indeed the New Zealand Productivity Commission has noted that an estimated 1%-3% of gross domestic product (GDP) a year will likely need to go on the transition to a low-emissions economy, which it frames as an investment rather than a cost. The country’s GDP is about $200 billion, so 3% would be $6 billion annually — a mix of private and public.
It brings Dr Hall’s work back into focus, wrestling with the "how" of financing the required reduction in the country’s carbon emissions.
Like many of those considering New Zealand’s response to climate change, tailpipe emissions are an early focus for his lab.
"The sooner we get on top of our transport emissions, the better," he says.
Transport accounts for more than 40% of the country’s fossil fuel emissions, light vehicles responsible for almost 60% of that.
Replacing fossil-fuel powered cars with electric vehicles (EVs) is one solution, he says, as well as electrifying light rail and public bus transport.
It’s a strategy he is working on as part of an advisory group to the Auckland Climate Action Plan.
Auckland Transport, the city’s public transport provider, aims to swap all 1300 of its diesel-powered buses for fully electric ones by 2040.
Hall’s hope is the lab will find ways to finance such projects, so they can be done sooner.
The Productivity Commission’s Low-Emissions Economy report found that "electrification across the economy", will be essential for a low-carbon future.
Like Hall it sees transport as a priority, while also putting a ring around process heat.
About 15% of the country’s carbon emissions come from fossil fuels used in industrial process heating, the commission found. Making change there is not straightforward, because of the long lifespan and upfront costs of process heating plants.
However, there are ways in which big-ticket publicly funded infrastructure can help. Electrifying transport and industrial heat will both require more renewable generation, and the Government has already signalled spending there by putting $30 million towards investigating renewable energy projects, including a pumped-hydro scheme at Lake Onslow, in Central Otago.
Internationally, those sorts of projects have been identified as helping to replace the jobs in traditionally fossil-fuel focused work.
Jobs are a key consideration in the Covid recovery and another area where a sustainable focus can tick more than one box at a time.
Resource efficiency is going to be important in a future where global supply chains could be impacted by the likes of climate change, she says. People will need new skills to reuse materials and design sustainability into goods and services, so resources aren’t lost to waste.
"That’s more of a circular economy, which is really starting to take shape overseas," Walton, of the University of Otago’s Department of Management, says.
"So rather than have a take, make, waste economy, how do we move towards keeping those resources in that loop, in that circle, so we are not just throwing away."
The concrete examples are already out there, Walton says, for example ecostore’s effort to have its bottles returned by customers so the materials are not lost.
"It will be around that industrial ecology level of different industries working together, or different organisations, looking at their waste streams and seeing what works across them," she says.
If there’s a chance to move that forward, it should be taken.
"With the Government putting so much money into various industries, to me that’s an opportune time to be going, right, let’s get New Zealand ready for 2030, 2040, not 2021."
The Covid recovery package does include $18 million to advance plans to cut plastic waste.
Closer to home, the warming up and drying out of the nation’s housing stock with energy efficient measures — applauded by the Climate Change Commission’s Rod Carr — is also expected to provide a range of benefits, including work.
The New Zealand Green Building Council says 120,000 houses could be upgraded across the country to stimulate the economy, cut carbon emissions, improve health outcomes and create 1300 jobs for four years.
Dunedin Mayor Aaron Hawkins also wants the Government to provide more warm, dry affordable housing, and in the right place.
"We made it quite clear early on to the Government that we wanted them to be thinking about housing and infrastructure," Hawkins says.
Some of the Government’s stimulus package should also go on strengthening communities, he says.
Among the 10 areas of significant risk identified in the the National Climate Change Risk Assessment are to social cohesion and displacement, alongside exacerbating existing inequities.
The Dunedin City Council has been working with place-based communities across the city, including in North East Valley, South Dunedin, Waitati and Caversham, to help them build resilience.
"We know that the better connected your communities are, the more able they will be to come through particularly extreme weather events," Hawkins says. "That kind of work is very resource hungry, and people hungry."
The Pa to Plate enterprise, started in 2018, currently works with Taitokerau marae communities in the Bay of Islands region, growing food in marae gardens, the University of Otago Centre for Sustainability researcher says.
Women play a central role growing and preserving the food, Prof Kawharu says, but it’s a whole whanau affair, and she’s keen to involve the next generation.
"It’s them we want to focus our efforts on because it’s them who will inherit this kind of idea and continue it in the future."
There’s widespread agreement that equity needs to be designed into the Covid reset. Without care, interventions in the economy could exacerbate inequalities. That’s particularly important given the risk climate change will, in coming years, aggravate disparities — disadvantaged groups bearing the brunt.
For many, the answer is good jobs.
Prof Boston says green-oriented jobs have an edge there, as they are likely to last longer.
"If you are very much focused on economic recovery with environmental sustainability at the heart then you are going to be investing in skills and attributes and capabilities and knowledge that will hopefully be more enduring and more economically beneficial in the end because they will have that greater longevity of value."
Beyond their contribution to the Covid recovery, green jobs will also address the harm that climate change is already causing, and that is expected to intensify with time.
It has been calculated that climate change caused nearly $840 million worth of drought and flood damage in New Zealand between 2007 and 2017.
There is money in the Covid stimulus package to directly address that, with $260 allocated to an infrastructure climate resilience package, including the likes of flood protection works.
And the $1.3 billion Jobs for Nature programme, which the Government predicts will create up to 11,000 jobs over four years, will also enhance resilience in the landscape. It is expected to bring long-term ecosystem benefits by restoring wetlands, enhancing predator control and contributing to riparian planting.
"That kind of work is labour intensive, there’s no way around it," Hall says. "You actually do need a bunch of people out there, so it was always going to be a really sensible move for economic stimulus."
Hall says we can view the Government’s stimulus package in two ways.
"There’s negative screening where you do no harm, you exclude those kinds of investments that are bad in a sense and that increase exposure to risk and so on."
The Government’s done OK there, he says. There’s not much spending that should have been screened out.
However, so far it’s been a little light in terms terms of a positive screen, identifying and funding transformational projects, he says. The likes of the Jobs for Nature programme and boosts for trade training have been good, but there could have been more.
The Government’s response to Covid has shown us that a lot of things that we had been told were impossible, it turns out are not, he says.
"They just lacked the political will to make them possible."
For example, during the lockdown the homeless were housed.
"So it is possible to do these things, it’s just that governments at all levels haven’t been prepared to invest in that support or invest in the infrastructure required."
For Dr Hall, a father of two under-fives, lockdown also changed his outlook.
"Like many people, I felt that life and the world and the economy was just steamrolling away at a slightly terrifying pace and then suddenly it just froze and we had all of this time."
Including time for children.
"Which was just really wonderful and there is still a lingering effect."
The Energy Efficiency and Conservation Authority, better known as EECA, hopes another element of that time will linger.
If a fifth of those who usually travel to work by car, choose to work from home at least one day a week, we could avoid 84,000 tonnes of CO2 emmissions a year, it calculates.
There’s another 65,000 tonnes that could be reduced if business travellers between Auckland and Wellington meet online instead, and get home early.
It seems some of the transition we need comes with hardly a price tag attached at all.
Getty Images
Financing forests
Auckland-based Climate Innovation Labs uses sustainable finance instruments, developed overseas, to generate support for the sustainable forestry sector here.
NATIVE FOREST BOND SCHEME (AND ENVIRONMENTAL INPUT BONDS)
The primary outcome of this scheme is to increase continuous native forest cover on erosion prone land, benefiting biodiversity, sequestering carbon and minimising soil loss. The scheme spreads the risk of working in steep marginal land across multiple parties.
CONTINUOUS COVER FORESTRY FUND
Clear-felling increases soil erosion and the risk of slips, but other harvesting approaches can carry extra cost. This scheme accesses the specialist skills and equipment to keep land in continuous forest cover.
NATURAL CLIMATE SOLUTIONS EXCHANGE
Natural climate solutions sequesters carbon and benefits biodiversity by creating or restoring forests and wetlands. Supply comes from those doing restoration projects, while demand comes from developers who need to meet Resource Management Act conditions.
Taken from Scaling Climate Finance: Forest Finance Instruments, A Working Paper published by The Climate Innovation Lab. Hosted by Mohio Research.
- Additional reporting Tom McKinlay
