New Zealand will be $30 billion better off if we respond to climate change sooner rather than later, according to new research commissioned by Westpac.
A report on moving to a low carbon economy by EY and Vivid Economics modelled two scenarios – one that involved an earlier and smoother transition to a lower carbon economy, and another in which action to reduce emissions was delayed for more than a decade.
The modelling indicates the economy would benefit by $30 billion by 2050 if government and business took early action. A key difference between the scenarios was the timing of the inclusion of agriculture within the NZ Emissions Trading Scheme (ETS).
Westpac NZ Chief Executive David McLean said the research showed New Zealand needed to accelerate its response.
“This research demonstrates the importance of taking immediate steps to cut our greenhouse gas emissions. The alternative is waiting and taking action later, but that is likely to require more drastic changes in behaviour and over the long-term hit people harder in the pocket,” he said.
“If we wait to take action on climate change it may mean a very slightly healthier economy in the near term, but this gain would be lost in future as emissions-intensive sectors were forced to play catch up.”
Mr McLean said the finance sector had a major role to play in helping New Zealanders transition to a low carbon economy and Westpac was stepping up its efforts to help curb climate change.
“Our lending to green businesses that are helping to provide solutions to climate change stands at $1.5 billion. We’ve set a new target to lift that to $2 billion by 2020. We’re also committing to reducing our own carbon emissions by another 25%.”
Westpac has decreased its own carbon emissions by 38% since 2012 and offsets the remainder of its emissions through the purchase of New Zealand carbon credits to be carbon neutral. Over the same period it has reduced lending to companies involved in fossil fuel extraction and production by 55%.
Mr McLean said Westpac had commissioned the EY report to get a better insight into the risks facing the bank from climate change, and is making the contents freely available so that other companies are informed.
“Westpac wants to provide useful financial information to our customers so they can plan ahead. It’s part of our commitment to help grow a better New Zealand,” said Mr McLean.