Reducing emissions: no longer a moral decision but a financial one

Up till now reducing petrol and diesel consumption has been framed as an optional choice. At a personal level, people see riding a bike or catching a bus as something good they can do if they are feeling generous, but they trade that off against things like convenience and comfort and often it loses out.

Likewise at a policy level, decision-makers see investing in public transport and cycleways as one option that they can choose if they think their constituents will stomach it, but they trade that off against the opposition they know they’ll face, and again often it loses out.

I think this framing is beginning to change, and that’s a good thing.

From my observation, pretty much no one in the general public of New Zealand understands the Emissions Trading Scheme. Among other things, this scheme includes a legally binding cap on emissions for the country which, in combination with coal, gas, agriculture and forestry, essentially limits how much petrol and diesel we can burn as a country. Up till recently the cap has been higher than our consumption, so the scheme had little impact. But every year the cap sinks a little, and it’s now getting to the point where it’s sinking lower than our consumption. As this happens the big fuel retailers are limited in how much fuel they can sell to the public.

The scheme isn’t perfect and there is a lot of intense debate over various aspects, like how binding the cap really is and how vulnerable it is to political interference. But the scheme is in place right now and, given it has cross-party support, I can’t see it going anywhere.

Legally we have to reduce our greenhouse gas emissions, and it’s going to happen in part by fuel companies being restricted in how much petrol and diesel they are allowed to sell to the public each year. As the amount of fuel they are allowed to sell shrinks, you’d naturally expect that they’ll increase the cost of it. Basic supply and demand.

When fuel prices rise, people try to reduce their consumption. We’ve already started seeing this with the whole Ukraine situation. For some this is easy, others not so much. People can take a variety of actions, some examples might be:

• Not travelling so much, e.g. working from home more, online shopping, combining multiple trips into one, shifting houses, jobs or schools.
• Switching some trips to walking, cycling or public transport, e.g. making the kids walk to school instead of dropping them at the gate.
• Changing cars to something that burns less fuel, e.g. swapping the V8 Holden for a 300V Tesla.

We are going to see this more and more in coming years.

Personally I think this is better way of framing it. It’ll certainly make my job easier. This new framework takes the morality out of it and makes it a purely financial decision. This means that people who don’t see themselves as particularly “green” can still get behind it, unlike the old framing. Trying to convince people to take action on climate change when they really just don’t care about it is exhausting and generally unsuccessful. I won’t miss that.

Another separate but related question that I’ve been hearing more often lately is “Why even include cycleways and public transport in this discussion – can’t our response just be that everyone swaps their petrol car for an electric one?”

This has been explained by many others (e.g. here (https://talkwellington.org.nz/2021/are-evs-going-to-save-us/)). The very short answer is that this won’t happen because electric cars are too expensive for the rapid shift we need. At the moment the vast majority of people can’t afford them and, even if prices drop, which they may well not, by the time the entire vehicle fleet has been replaced, it will be too late to meet any of our obligations anyway. Government subsidies can speed things up a little, but even Grant Robertson doesn’t have enough money to buy everyone a Tesla.

E.g. he recently announced $569m for EV subsidies. This is a massive amount of money in the context of transport spending. But if you break it down, it’s enough to buy about 7,000 x $80,000 Tesla’s, which would replace about 0.1% of the current vehicle fleet (which is around 4.5 million strong).

So rather than a 1-for-1 swap of petrol cars for electric cars, my guess is that there will be a reduction in the number of cars in NZ, perhaps back to what it used to be 30 years ago when cars were more expensive.

Richer homes will be able to do a simple one-for-one swap of petrol cars for electric. But the bulk of New Zealand in middle-income homes might reduce from 2 or 3 petrol cars to 1 electric, combined with switching some trips to walking/cycling/public transport. For lower-income people running an old petrol-powered dunger, the options for an electric equivalent are limited. They may find that the only affordable option is to switch all their trips to walking, cycling and public transport, complemented with the occasional rental car or taxi trip.

So expect to see some subtlety different messaging coming out around decarbonising transport: less about doing the right thing, and more about doing the financially sensible thing.