Helen Clark addresses the New Zealand-Australia Climate Change Conference

Good morning and welcome, and a particular welcome to those who have travelled around the world to be here; from Australia, our co-host for this conference and represented here today by Hon Ian Campbell, Australia’s Minister for the Environment and Heritage; and visitors from China, Japan, and United States and Europe.

The range of countries represented here today reflects the fact that climate change is a truly global problem. Each of our nations will experience its impacts. If we are to succeed in stabilising our planet’s climate, we clearly need global solutions. Each of our nations will need to do its bit. But this is not only a global problem and challenge; it is a global business opportunity.

It has been a wild couple of years in the world’s, and New Zealand’s weather. There have been droughts in Australia, and major floods across the Manawatu and Bay of Plenty here in New Zealand. The 2003 European summer saw a heatwave which resulted in around 26,000 premature deaths. The Gulf of Mexico is seeing one of the most severe hurricane seasons in decades. Ten typhoons have hit Japan this season, the last of which, tragically claimed 62 lives. The previous record was six typhoons in a single season.

Scientists tell us that the frequency and severity of extreme weather events is likely to increase with climate change.

For countries, like New Zealand, whose economies are based on agriculture, this poses a significant threat. For some regions of Australia, already susceptible to drought and with rainfall forecast to decline further, the threat is even more severe. The President of Australia’s National Farmers’ Federation summed it up in August this year, when he said that climate change is possibly the biggest risk facing Australian farmers in the coming century.

New Zealand is committed to playing its part in the global response to climate change.

We are one of 189 countries which have ratified the 1992 United Nations Framework Convention on Climate change. We were the 101st of 126 countries which have ratified the Kyoto Protocol so far, including 33 other developed countries with binding emissions targets. New Zealand has always done its bit internationally. We always seek to operate multilaterally, whether the issue is draft netting, terrorism, or climate change.

There is, of course, also self-interest in this. Climate change puts our agriculture, our native ecosystems, and our unique New Zealand lifestyle at risk. Our contribution to global emissions is small, so we clearly can’t stop climate change on our own. Like many smaller nations, including many others in the Pacific region, we are likely to suffer the consequences of global climate change in disproportionate measure to what we emit ourselves. It is in our interest to see global action succeed. Participation in global agreements is the best and indeed the only way to help rally the rest of the world to action.

The global agreement at the heart of this change is the Kyoto Protocol. When Russia completes its ratification process, the Protocol will cover over 60 per cent of the emissions of developed countries.

Of course Kyoto is only a first step. Few believe that the targets set for the first five years will stop climate change. Future commitments will need to be stronger, and participation broader. But what is important about Kyoto is that we now have a framework within which to act. Like the early stages of trade liberalisation through the GATT process, initial agreements and targets do not provide a complete solution. But they will be strengthened through time, as the scientific evidence becomes even more certain, and as the actions we can take to do something about it become clearer.

But Kyoto also presents significant, global business opportunities.

Let me give you an example of the scale of that opportunity. At present the principal way of reducing emissions is to improve energy efficiency. Energy efficiency, not only delivers reductions in emissions, it delivers reduced energy costs. Reduced costs improve the bottom line and improve competitiveness.

DuPont and BP, which is the world’s second largest oil company, have been leading the charge. DuPont has cut its emissions by 67 per cent, while BP met its own target to reduce its emissions to 10 per cent below 1990 levels eight years ahead of schedule. The company claims that this was done at no net-economic cost because “savings from reduced energy inputs and increased efficiency have outweighed all the expenditure involved”.

This is the reality of the cost and benefit to business of tackling climate change. Many businesses will cut their emissions, and as a result become more efficient, profitably and competitive. Others, quite simply, will be left behind.

New Zealand’s choice must be at the forefront of change, and to position our economy to best advantage for the future. Our choice must be to seize the opportunities. Our support for this conference is part of that.

We face two challenges with regard to climate change. The first, the adaptation challenge is to prepare our infrastructure, eco-systems and productive sectors to be able to cope with its effects. The second, the mitigation challenge, is to limit both the magnitude and rate of climate change. That means working to reduce emissions of greenhouse gases.

Rising to these challenges means that over the coming decades we will need to make significant changes to the way we do things. The business opportunities created in doing so are significant and global.

The Kyoto Protocol has been specifically designed to enable business to take advantage of the opportunities tackling climate change offers. Its flexibility mechanisms offer global business opportunities to firms from ratifying nations which are not available to those companies from non-ratifying countries. I will briefly mention two of these:

1.the Joint Implementation mechanism allows New Zealand companies to develop projects inside other ratifying nations and earn emissions units, while,
2.the Clean Development Mechanism allows our firms to deliver projects in developing nations that are not the subject of binding targets, and benefits from units.

Firms from non-ratifying nations can get in on the act but they will have to do it in partnership with companies from a ratifying nation. The door is open for Australian or American businesses which want access to the multi-billion dollar Kyoto marketplace to partner with New Zealand companies. This, in itself, presents another obvious opportunity for New Zealand businesses.

The Kyoto emissions unit which these mechanisms deliver are fast establishing themselves as a global unit of currency. The age of the carbon economy is upon us.

As international trading increases, a price for carbon emissions is slowly firming up. The launch of the European Union’s emissions trading scheme on January 1st next year will give this price greater certainty. As with the development of any new market, its participants, the EU member states and its major companies, will face a steep learning curve.

The New Zealand economy will begin its own adjustment with the introduction of a domestic emissions charge. This will approximate the international price of carbon, but is capped at NZ$25 a tonne. That will give our companies time to adapt to carbon constraints, without forcing them into what may initially be a volatile international marketplace. The revenue from this charge will be fully recycled back into the economy, through, for example, the tax system, making the charge tax neutral on the economy as a whole.

The government retains the option of introducing wide scale emissions trading as an alternative to an emissions charge at a later date if the international carbon market is reliable. As you might expect, some New Zealand companies have already found a way to participate in emissions trading even at these early stages.

We introduced the new global currency, emissions units, into the New Zealand economy through our 2003 Budget. We did this by putting four million units, equivalent to four million tonnes of carbon dioxide, up for tender under our Projects to Reduce Emissions programme. Such was the enthusiasm of New Zealand business to maximise opportunities from the Kyoto process that this first tender round was oversubscribed. We’re running a second, again oversubscribed, bringing the total number of units offered in this way to 10 million.

It is not just big business that has identified the opportunity. Alongside New Zealand Windfarm’s 50 MW Te Rere Hau Windfarm, the Pask family of northern Hawkes Bay won units to support the instillation of a mini-hydro scheme.

The current round has brought forward more innovative thinking with applications coming in for projects relating to bio-fuels, energy efficiency and fuel substitution.

Tradable emissions units are also available to those who establish new permanent forests in New Zealand through the Permanent Forest Sinks programme.

As the proposals being brought forward under the Projects to Reduce Emissions programme show, tackling climate change will drive a wide range of technology shifts. Whether it is energy efficiency or bio-fuels, renewable electricity or working out how to store hydrogen, innovation is the key. It follows that those countries, and those companies, which embrace the change will benefit first and benefit most. Those who ignore, oppose, or delay will be left behind. Embedding a price for emissions into the global marketplace is an important early step.

New Zealanders are innovators. We are already world leaders in many areas of technology, from bio-tech and information technology, to agricultural production technologies. There is no reason why we should not also seize the global opportunities in climate change mitigation and adaptation technologies. The potential is great and we have no intention of seeing it wasted.

The businesses attending this conference are here for one underlying reason. They can see what a significant global business opportunity climate change represents. It will undoubtedly be the first of many such gatherings, as more businesses become alive to the scale and scope of that opportunity.

Many companies represented here will be taking their first steps or will have come to find out more before making a move. This is all part of the learning-by-doing process. There is no single solution to reducing emissions, nor is there one single business opportunity. You will hear about many over the next two days.

Companies will approach this in many different ways.

Some businesses will look to derive a climate change related benefit through improved efficiency in how they run their existing operations. Others will seek out opportunities to develop new climate change related goods and services.

One Auckland laundry business has invested $22,000 in making energy efficiency improvements. This has delivered around $50,000 in savings on its annual power bills. This makes that business much more competitive than its rivals. To this firm, the cut in emissions can be viewed as a consequential benefit.

Another company, Christchurch based Whispertech, has developed a world-leading micro combined heat and electricity unit for the domestic market in Europe. It saves power and emissions over ordinary supplies meaning lower energy bills for users and lower net carbon emissions. Here a kiwi company is leading the world through innovation, in a market driven by the need to take action on climate change.

Many other opportunities exist. New Zealand companies are exploring opportunities across the IT sector, agriculture and agribusiness, various biotechnologies, international consulting, the finance sector, and niche manufacturing. Improved climate forecasting and monitoring also has commercial value; especially when we use it to help prevent major disruption and improve agricultural production.

The business case for tackling climate change is clear. There is good money to be made. Being part of Kyoto provides further opportunities to make money. I am sure the best New Zealand businesses will prosper as a result.

The dual challenges of adapting to climate change and reducing emissions are global challenges. The solutions will be global solutions. And those global solutions will rely on the goods, services and knowledge of businesses that are alert to global trends and markets, and willing to seize the opportunities.

I wish you well as you get on with making the most of this opportunity. Enjoy the conference.