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.

As part of global efforts to limit warming to 1.5°C, most countries, including New Zealand, have ambitious climate emission reduction targets. In New Zealand, the Climate Change Response Act (2002) requires all greenhouse gases to reach net zero by 2050. The current report provides detail on the identified transport policy levers to reduce emissions. In a parallel work, Waka Kotahi NZ Transport Agency commissioned Principal Economics to undertake research to assess how and to what extent generalised cost between private vehicles and public transport/active modes needs to change for mode shift to occur in New Zealand’s three largest urban areas.

The four categories of emission reduction policies identified are non-auto travel options, programmes for trip reduction, land use policies that reduce car travel demand, and policies that apply pricing.  Our Emission Reduction Iniatives (ERI) knowledge hub provides a description for each policy, the type of travel it affects, the method for measuring each policy’s travel and emission effects, its secondary impacts and other available information. Other lists and summaries are available at SuM4all (2019), ITF (2022), Transportation for America & Smart Growth America (2020), VTPI (2020), Byars et al. (2017), California Air Resources Board (2014), International Energy Agency (n.d.). Summaries with Australian or New Zealand context discussed include Wallis (2016) and Carran-Fletcher et al. (2020).

The identified policies overlap and interact in various ways. Many have synergistic effects – they are more effective if implemented together. Some compete; for example, ride-hailing may attract travellers who would otherwise use cycles or public transport. As a result, these policies are generally more effective when developed as an integrated programme that includes the optimal combination of strategies that maximises benefits and minimises problems.

Cite this article

Principal Economics. (2023). Emission Reduction Initiatives Knowledge Hub. Report to Waka Kotahi New Zealand Transport Agency.

Aotearoa New Zealand suffers from an infrastructure deficit. Without the key infrastructure needed now for our economy to thrive, we deprive future generations from significant economic prosperity. While transformational infrastructure projects necessitate time to be developed into sound technical solutions to our needs, many New Zealand projects are further delayed by policy decision and financing constraints.
In this novel application of the infrastructure Wider Economic Benefits approach, we quantify the cost to society of these further delays for the first time, by using the example of the Waikato Expressway. We used our subregional CGE model to estimate the downstream benefits of the Expressway. At a high-level, results of our analysis quantify the annual benefits of having the Waikato Expressway in the economy. Without the expressway in function as early as possible, $334 million of economic benefits were forgone each year.

Cite this article

Principal Economics. (2022). Great decisions are timely: Benefits from more efficient
infrastructure investment decision-making. Report to Infrastructure New Zealand.

Avoid costly delays in decision-making. For deep uncertainty, plan ahead, start small, and keep monitoring. Climate is beginning to exacerbate extreme “one-in-100-year” events. Our knowledge of the likelihood of these large-impact events happening in shorter intervals is limited. Adaptive Decision-Making can help to minimise the cost (from delays) to the economy through increasing flexibility at the planning phase. Our earlier work estimated the annual cost of delay to be equal to 18 per cent of the capital cost of projects.

Cite this article

Principal Economics. (2023). Climate change adaptation and investment decision making. Waka Kotahi NZ Transport Agency.