Russel Norman

The Green Growth Advisory Group report

by Russel Norman

Over the weekend, the Government released the report of the Green Growth Advisory Group (GGAG). The GGAG is appointed by the Government and headed by Phil O’Reilly from Business NZ.

The report is a timid acknowledgement of the growing global and domestic green economy and the opportunities and risks that creates for New Zealand. As such we have welcomed it. Here are a few thoughts about the full report:

1. The report recognises that our ‘clean green’ brand is essential to our economy and that any damage to that brand will damage our economy — damage in terms of market access and the premiums received for our exports. It points to risks to the brand from water pollution, waste management, and greenhouse emissions where we are performing poorly.

2. The report acknowledges that some of our traditional exports have very high carbon emissions per dollar, or high carbon intensity. And that is a major problem.

3. The report recommends government procurement to put a greater emphasis on sustainability. The government procures about $30 billion of goods and services a year so greening this enterprise would be transformational for the economy.

4. The report recommends that the ‘innovation system’ (i.e. science, research & development etc.) should also be greened up by the Government introducing sustainability criteria into the work of CRIs, universities, and policy providers.

5. It wants greater support for small and medium-sized enterprises embracing green economic opportunities.

Missing in action
1. The really big missing element in this report is the cleantech sector. This has been identified globally as the critical fast-growing green sector. The report even has a graph of carbon intensity by sector that shows our traditional sectors such as meat, dairy, and the Government’s favoured sector, minerals, have a high greenhouse intensity while another mysterious sector called ‘Other’ has low greenhouse intensity. ‘Other’ of course includes cleantech and high value manufacturing but the report doesn’t dwell on this very significant finding. NZ Trade & Enterprise have identified cleantech industries as having huge potential but not so the GGAG.

2. The consideration of green pricing mechanisms was explicitly forbidden in the Terms of Reference of the GGAG, so they couldn’t make recommendations about the huge subsidies found in the ETS or the glaring lack of a price on the commercial use of water.

1. The extensive section on mining is quite odd in the report. It recommends that we need a conversation about the benefits and costs of mining to see if we can find a national consensus. This is fair enough so far as it goes, but it ignores the huge environmental risks with some of the Government’s favourite projects like deep sea drilling. When Nick Smith was asked what this recommendation meant, he said that it meant that people needed to be educated about the benefits of mining. National have turned a ‘conversation’ into ‘re-education’ effectively saying, “Mining is always good, and if you don’t think so now you will think so after Straterra and National have educated you”.

2. The biodiversity offsets section is another surprising addition and a sop to the mining sector. Offsets have traditionally worked like this: There are two pieces of high biodiversity real estate — one on conservation land and one on private land. A mining company says if you let us destroy the biodiversity on the conservation land then we will offset this loss by giving to the conservation estate the biodiversity on our private land leaving the net biodiversity changes on the conservation land about the same. However, from the point of view of the environment, at the end of the day there is only one piece of high biodiversity land remaining where originally there were two. And that is somehow good for the environment?

The Government’s economic agenda is at complete odds with the direction of this report. National are subsidising intensive agriculture, through irrigation and ETS subsidies and low water quality standards; mining, through mapping information paid by Government, very low royalties, and light environmental protections with little liability for miners; road freight, through free use and extensive investment in new motorways. Yet intensive agriculture, mining, and road freight have very high greenhouse and environmental footprints. The report specifically says it doesn’t think we should pick cleantech as a winner but has nothing to say about the Government picking intensive agriculture, mining, and road freight as winners instead.

Conceptual gaps
And the big conceptual lacuna is how to match GDP growth with reductions in our economy’s environmental footprint. Because growth is a religion for National (and Labour), it is not possible in this report to have a rational discussion about the ability to decouple GDP growth from increases in resource use and pollution production.