Climate Change Leadership Forum minutes and actions arising for the Forum meeting on 4 December 2007

1. Recording of meeting minutes and actions

Action:

The Minutes shall be recorded as high level summaries. Meeting minutes and papers produced from Cluster Groups or provided to the Forum shall be publicly released and placed on the Climate Change website, lagged by one meeting in a non-attributable fashion, unless otherwise agreed.

2. Update on the legislative process

“New Zealand Emissions Trading Scheme: Government’s Response to Feedback from Engagement”[Refer to: “New Zealand Emissions Trading Scheme: Government’s Response to Feedback from Engagement” Author: ETG] is a reflection of the ‘big’ issues raised during the engagement process and is designed to look at all sectors.

The government identified 3 key areas where it would like further discussion:

  1. Pre 1990 forests- options for better targeting of pre allocation;
  2. Phase out;
  3. Unit of trade.

The Bill is in 2 parts:

  1. Emissions Trading;
  2. Renewable preference- in line with the government announcing a moratorium for renewable energy.

The Bill and background material is available electronically. The Bill will go to Select Committee before Christmas, with submissions likely to close at the end of February 2008 and the Select Committee sitting mid 2008.

The Group requested to know what parts of the framework were to be completed in 2008. Officials outlined that the 3 issues raised by the government (as above) will be completed in 2008. In addition there will be regulation development, plus work by various Technical Advisory Groups (TAG’s).

Issues were also raised regarding the ‘openness’ of the select committee process, how the legislation is handling future industry allocation and what will happen if the government goes into ‘unit deficit’- the last is dependant on whether phase out is confirmed.

3. Report back on actions from the previous Forum meeting- 8 November 07

The PCE has been contacted by Hugh Logan, and Terms of Reference have been drafted.

This requires further work, and emphasis needs to be placed on secondary knock-on effects e.g. biodiversity. The group suggested engaging with external consultants.

Concerns were raised over the very narrow time frame with which to achieve both quantitative and qualitative analysis and take into account both specific and broad issues.

Action:

Environmental assessment:

Relevant members agreed to clarify the Terms of Reference already prepared by Gary Taylor [Refer to: “Draft Terms of Reference: Strategic Environmental Assessment of the New Zealand Emissions Trading Scheme” Author: Gary Taylor].

Agreed to develop an iterative assessment process in the form of a report. The report is to identify priority areas and identify how these could be addressed hierarchically.

Agreed to further define the PCE’s role as peer reviewer.  Stephen Tindall has invited the PCE to be an external reviewer for the environmental assessment. The Comissioner (Jan Wright) has accepted this invitation.

Members to report back to the Forum at the next meeting on: the best approach, resourcing and funding, timelines etc. 

Voluntary monitoring and reporting:

As per the action from the meeting on 8th November 2007, relevant members are to provide a list of firms who are willing to do voluntary monitoring. They will report back to the Forum.

WTO rules and Australia and Japan

Report back on these action items from the meeting on 8th November 2007, has been deferred till the New Year when officials from MFAT are able to attend the Forum meeting to discuss.

Officials are engaging with Australia and Japan, with bilaterals arranged to take place in Bali. A report on any progress will be delivered at the next Forum meeting

4. Pre-1990 Forests

The current proposal is to allocate units to land owners on a pro-rata basis. Some group members suggested the proposed approach is not very appropriate because it doesn’t address either suitability of land for conversions, or the situation of owners with limited land use options.

It was suggested that New Zealand, with Australia and developing countries need to take a leadership role in deforestation and forestry issues internationally in future negotiations. 

Action:

3 options for progressing this issue were discussed [Refer to: “Forest Sector Participation in NZ ETS: Alternative Policy Submission” Author: Edwin Jansen, “Outstanding Pre 1990 Forest Issues” Author: ETG, “Pre-1990 Forests and the ETS- A Solution?” Author: Peter D. Clark]. The relevant parties will discuss and agree a process for addressing this issue. They will report back on progress at the next Forum meeting.

Officials will, as part of this work, further investigate the fiscal implications and emissions profiles of the proposed policies. The report back to at the next meeting is to include realistic post Kyoto Protocol scenarios that maximise positive environmental outcomes.

5. Economic analysis

Members of the group felt that more analysis is needed to effectively map the scale of effects the ETS will have on different sectors. In particular it was felt that more analysis is needed on a sectorial basis in order to reduce the assumptions made and therefore create more accurate models. 

There was discussion as to how long/how much it would cost to do further micro-level analysis in specific sectors.

The group highlighted that economic assessments need to be married together with social and environmental assessments, to enhance co-benefits, impacts and opportunities for achieving long-term sustainability.

More information and abatement options needs to be accessible to sectors who believe they are at risk, however analysis needs to be specific and priorities need to be set if timeframes are to be meet.

Action:

Economic modeling

Further work on adjustment costs is desirable. The economic modeling work will be led by Cluster B with input from the Emissions Trading Group. Cluster Group B will also work with sectors to develop stories on leakage and stranded assets. To report back to the Forum.

Mitigation potential

The ETG to summarise available analysis and report back at the next Forum meeting. In the medium term the ETG is to develop an evaluation framework for ETS.

MAF to report back on the level of data it has and on the work of the PEAK group.

6. Business assistance  

Questions were raised over how many units will be freely allocated and the opportunity costs that arise from this. What are the real costs for consumers, households, workers and communities?

The motivations and agendas of different sectors require consideration when developing the appropriate form of free allocation.

Action:

As part of the economic analysis modeling above, Cluster Group B and the ETG is to attempt to better assess possible adjustment costs, along with costs of leakage and regrets (including adjustment costs for communities and workers). This will allow a better assessment of the need for policies to help in the transition of these groups.

Further to this, cluster B will attempt to define outputs - to allow an intensity-based allocation approach - within an overall cap - to be considered.  Cluster Group B is also to attempt to identify other sectors for whom stranded assets is an issue, other than forestry and fisheries.

7. Framework for International Negotiations [Refer to: “A Conceptual Framework to Assist Decision Making on International Climate Change Policy” Author: Ben Gleisner]

The policies of other countries, and the decisions and actions stemming from international commitments will impact on New Zealand, and in particular, how the cost of the impacts of climate change/adaptation/mitigation etc will be spread across the country. 

International decisions will drive costs and benefits, and have second order trade effects.

Action:

This will be an agenda item for the next Forum meeting and will include a ‘post Bali’ debrief and a look at a framework for any future negotiations.

8. Stewardship of New Zealand

It was noted that even assuming the ETS is successfully implemented in New Zealand, this will not prevent New Zealand being impacted by the effects of climate change. The ETS must be looked at as one tool to tackle climate change, not an ‘all in one’ solution. Internationally New Zealand need to focus on mitigation, however, domestically we must focus on adaptation.       

Action:

The opportunities climate change presents and how New Zealand can link with Australia will be discussed at the next Forum meeting.

9. Voluntary monitoring and reporting

There is work being put in to providing support for voluntary actions for monitoring and reporting, however there needs to be consistency with the future rules of ETS.

There will be a draft proposal circulated to the group.

10. Update on the New Zealand Transport strategy

A discussion paper to update the current New Zealand transport strategy will be launched next week.

The key headings will focus on economic development, safety, access/mobility, health and the environment.

The transport strategy was finalised against the energy strategy and the ETS, which therefore gives it a strong environmental focus, however the environment will certainly not be the only focus.

The paper outlines a number of targets, which are specific and measurable; this is seen as a positive step for increasing accountability.

11. Technical Advisory Group (TAG)

Submissions have been called for on Terms of Reference and membership.

Questions were raised over the relationship between the TAG and the Leadership Forum. The idea is that the TAG will be able to report back to the Forum on a regular basis.