January 2019 - Reality bites: our Just Transition
In April 2018 our Prime Minister Jacinda Ardern announced the Coalition Government’s intention to transition New Zealand to a net zero-carbon economy by 2050, pushing our country to the front of the queue of nations looking to address climate change.
Much of the media commentary looked at the failure of the Government to follow due process around the ban on future offshore oil and gas permits, the lack of consultation with industry or iwi, the damage that failure had on our reputation as a stable investment destination and speculation on the impact of the policy on Taranaki’s economy.
But little has been written about what a net carbon zero 2050 Aotearoa will actually look like.
New Zealand produces around 80 million tonnes of carbon annually and our forestry sector absorbs around 20 million tonnes, leaving a balance of 60 million tonnes to be dealt with.
According to Motu Economics the average Kiwi household is responsible for about 20 tonnes of carbon a year. This comprises things like petrol or diesel, natural gas and also the process emissions involved in creating the products we consume like food and other goods.
So picture the challenge ahead for Kiwis to achieve net carbon zero in 31 years.
What we are talking about is a fundamental change in the way we power our economy. A shift that will drive a massive reduction in our use of high energy density fuels like coal, oil, petrol, diesel and gas and convert most of that demand to electricity, requiring tens of billions of dollars of new electricity generation and major technological breakthroughs in energy storage.
Consider every petrol or diesel powered vehicle or machine you own and that in 30 years time its equivalent will likely need to be electrical with some of the heavier vehicles and machines powered by hydrogen. That’s everything from cars to trucks to weed eaters, lawnmowers, earthmoving equipment to boats.
Tourism and farming are our biggest export earners and think about just how we will pull the carbon out of airlines, tractors or fertilisers and don’t even mention the cow farts.
The change, known as the Just Transition, being signalled by our Government will be as significant as the change we have seen in our digital economy over the past 20 years.
And if we are to go anywhere close to meeting the 2050 target without the need to close industry, ration energy, face blackouts or swallow massive increases in household electricity bills we will need to plan and invest early.
2019 will be the defining year for the Coalition Government as everybody watches to see whether they are prepared to match the talk with the money critical to making things happen.
2050 seems a long way off but, in terms of reinventing an economy, is a tight timeframe and Taranaki, as the anchor of New Zealand’s current energy infrastructure, will be ground zero for the Just Transition.
It will require every bit of our innovative, can-do attitude and Government investments on a scale not seen for decades for New Zealand to hit this target while still being an affordable and attractive place to live.
Building a Lifestyle Capital.
Mayor Neil Holdom.
Funding our future
But growth and development comes at a cost and we have a limited number of options:
- Do nothing new (or less and watch assets and infrastructure fail)
- Borrow to fund new developments (our children pay)
- Increase rates to fund new developments (we pay)
- Develop new revenue streams to help fund new developments.
Historically NPDC has elected to go with options two and three but we are looking to add option four as a long term strategy to grow community wealth and keep downward pressure on rate growth.
NPDC has large tracts of land and we are considering recycling a small percentage of that land to generate additional revenue. Half of the proceeds of any land developments help fund large capital projects which could include a coastal walkway extension from Bell Block to Waitara, water infrastructure, an aquatic centre redevelopment, a multi sports stadium or other big ticket items which we believe ratepayers will struggle to fund alone.
The other half of the proceeds would be reinvested by acquiring land in areas of the district where houses will be required in a decade or so, growing NPDC’s overall land holdings suitable for development, in tandem with ensuring the revenue generated from the sale of public land is perpetually reinvested to create a new wealth fund for future generations.
Many councils are at or close to their debt limits and simply don't have any options but NPDC does and we are looking to have these conversations now, as opposed to simply breaking the bad news in a decade.
We are committed to ensuring annual rate increases do not exceed 5 per cent whilst ensuring we do not run down our assets, that our taps do not run dry, that we do not reduce services and that we continue to invest in quality facilities and growing our economy.
So as a community we have to make some tough decisions. NPDC has been examining many options and one of these is the future of the council land which is currently leased to the Fitzroy Golf Club.
The course forms a fantastic green belt separating the coast from the suburb and the first thing to make clear is we want to ensure that we keep a wide green belt around the walkway and coast forever.
We have indicated to the club that NPDC supports its long term future on site, potentially at a reduced nine holes. The club does get a lot of casual players through which means more than just the 250 members enjoy the exclusive use of this land. Maybe 3,000 people a year.
But there are 80,000 people in our district and 34,600 rateable properties. We do not believe our ratepayers can handle double digit rate rises. So we have started a conversation about options, about funding the future of our district and about creating wealth. And to do that some people will get upset and some people may have to give something up. These are big serious conversations and it is time to start having them.
We are looking long term and asking the hard questions. How do we find a balance between rates, revenue, growth, services and the ability of our ratepayers to fund it all. We invite you to join this conversation.
Building a Lifestyle Capital.
Mayor Neil Holdom.