Our report provides advice on the Government’s final decision about the second emission budget. In addition to a wide range of policies considered in our earlier (May) report, the current report further investigates the impact of:

• alternative carbon pricing policies,

• the Electrify NZ policy,

• the EV charging network investment, and

• the Carbon Capture, Utilisation and Storage (CCUS) and the Refrigerants Regulated Product Stewardship scheme assumptions.

Our high-level results suggest that:

• the high carbon price of the Fourth Pathway scenario leads to larger adverse economic and equity impacts.

• a decrease in GDP is associated with lower household consumption, lower real wages and lower exports (volume). As will be discussed, the short,
  medium and long-term dynamics of these effects are important for households (as well as the emission and
  economic outcomes).

• the emission targets are achievable, but there is a significant adverse
  impact on economic and equity outcomes.

We sensitivity tested the results for seven different Nationally Determined Contribution (NDC) scenarios.

Our extensive modelling of the government policies provides a comprehensive database for various policy and investment assessments as well as the ESG planning. For further information refer to our latest article here.

The Commerce Commission is in the process of the 2025 reset of the electricity default price-quality path in a time of uncertainty and high-inflation. The Commission tasked Principal Economics to provide a solution for dealing with supply chain and economic uncertainty for regulating $25 billion of assets of the electricity distribution businesses over the DPP4 (2025-2030) period. For that work, we used a combination of methods, including stakeholder engagement, CGE analysis (for the impact of climate policy on cost categories), econometric analysis and forecasting. The work included significant stakeholder engagement and inputs from the electricity distribution businesses from their submissions (to the Commission). The outputs are adopted in the Commission’s latest decision and are available here.

We provided advice on the cost escalation indices relevant to Chorus’s cost categories, including network Operating Expense (OPEX), IT Capital Expense (CAPEX), network electronics, greenfield expansion, poles CAPEX, network sustain, building and services, physical network, site lease and fibre lease. The outputs were used for Chorus’s RPE1 submission. Our report was informed by the information provided by engineers and the stakeholders on the composition of cost factors. We provided advice on the available data and methodologies to provide robust projections and forecasts of the impact of COVID-19 disruption. This was particularly a challenging project because this was the first submission of Chorus and identifying the precise indices for predicting cost factors was critical.