Insight: The costs of inaction are already here
When there’s so much uncertainty, and pressure to make rapid changes, there can be a temptation to try to slow the pace of change.
Living with uncertainty is our reality. Delaying action in the expectation that uncertainty will be reduced or resolved comes at a cost. Uncertainty may not reduce and the cost of delayed action may rise.
Covid-19 and now the outbreak of war in Europe is massively impacting supply chains, costs and revenues. There are added pressures on households and governments from rising inflation and in particular rising fuel prices, and our Government has already taken a financial hit to respond to the rise in the price of oil, reducing its tax take on petrol and halving public transport charges.
But there have always been (and will continue to be) uncertainties about our future. It is my view that we will never have a greater opportunity to advance the transition to a thriving, climate resilient and low-emissions Aotearoa than right now. The more we keep kicking climate change action down the road, the tougher it gets both to live in the past and to prosper in the future.
The cost associated with delayed action on climate change is rising rapidly. The costs and options to reduce emissions may be declining, but the options and costs of adapting to our changing climate are escalating. Our changing climate is already changing everything.
The latest IPCC report on mitigating climate change, released today, delivers an ultimatum on climate action – it is now or never.
Human-induced climate change is already affecting many weather and climate extremes in every region across the globe. If global warming reaches 1.5°C, this will unavoidably increase the risks of irreversible damage to ecosystems and communities.
The report says limiting warming to around 1.5°C will require global greenhouse gas emissions to peak before 2025 and be reduced by 43 percent by 2030. At the same time, methane would also need to be reduced by about a third. Even if we do this, it is almost inevitable that we will temporarily exceed this temperature threshold but could return to below it by the end of the century.
We have already waited too long to reduce greenhouse gas emissions. The more we wait, the more the impacts of climate change, and the costs of our inaction, will compound and cascade.
If we can limit global warming to close to 1.5°C this will substantially reduce projected losses and damages related to climate change, though would not eliminate them all. But even if we miss the 1.5 degree target it is clear that lower emissions sooner will lead to less worse outcomes.
Investing in emissions reduction, which is needed across all sectors – energy, buildings, transport, food and industry – is an investment in our future.
What the cost of inaction looks like
Humans and nature are being pushed beyond our abilities to adapt. Globally, increased heatwaves, droughts and floods are already exceeding plants’ and animals’ tolerance thresholds, and are adding billions of dollars in repair bills annually in countries around the world. The pace of change we have set off is overwhelming ecosystems and the required change is threatening how we organise our communities and make decisions.
In Aotearoa, we’ve also experienced one of our hottest summers on record and experienced record rainfall and flooding in many parts of the country. Extreme rainfall made 2021 a record year for weather damage claims – a storm system in mid-July cost private insurers more than $130 million alone.
We have seen the costs of inaction in stark reality in Australia, with recent floods claiming more than 20 lives and destroying thousands of homes, cars, schools, businesses, and infrastructure. It was the second ‘once in 100 years’ flood in eastern Australia in just over a decade. Rebuilding costs will be in the billions.
The Intergovernmental Panel on Climate Change has warned that high rain fall events will become more common in Aotearoa with flooding made worse due to sea level rise. We can also expect more heatwaves, fires, and droughts. While emissions reductions in Aotearoa may not change the incidence of these events, experience of climate change around the world will change consumer preferences, investor choices and regulation.
As the frequency and scale of disasters increase, we will grapple with the costs of catastrophe at the same time as we must invest to reduce our emissions, including our reliance on coal and fossil fuels, and fund action to adapt to climate change.
There is a growing appetite for change
While inaction will have dire consequences, the momentum for change is growing.
Globally and here in Aotearoa we are seeing financial capital shifting towards supporting sustainability – at the climate action summit COP 26 late last year trillions of dollars of pledges were made to reduce emissions and support adaptation.
Businesses are transforming how they operate and take advantage of emerging consumer preferences and technological changes coming to the market. Increasingly businesses are developing the skills to create low emissions products and services.
You can see this happening in the transport sector, which accounts for 21 percent of Aotearoa’s greenhouse gas emissions. We are seeing investment in new electric ferries, development of electric planes, and an ever-increasing number of electric cars. Decarbonising through electrification is a multi-billion dollar opportunity locally requiring thousands of new skilled workers.
Uptake of EVs is already above the demonstration path in the Climate Change Commission’s advice. Last year 13,247 EVs were registered in Aotearoa. In January and February this year another 2,473 were added and the motor industry says rising petrol prices are driving even more interest.
Local governments are unveiling plans for better connecting communities with cycleways and seeking to improve public transport.
There are also global drivers for climate action coming from foreign regulators, new technology and changing customer preferences. Businesses and industry in Aotearoa need to respond or risk being left behind — or even punished — by our trading partners and customers.
It’s easy as individuals to dismiss our own actions as insignificant, Aotearoa as too small. But we can all take responsibility for our own carbon footprints and our everyday actions and choices. The transition to a low emissions society and adaptation to our changing climate is not just a necessity, it is a vast opportunity for each of us. It is in our own self-interest to embrace the change.
The choices we make now shape our future options
Over the next few years, the choices we make will determine how much impact climate change has on our future. If current greenhouse gas emissions do not decline rapidly, we will be left with fewer choices for how we react.
If we don’t use this time to prepare and begin to adapt to the impact of a changing climate on what we produce, how we invest, where we live and what we consume, the changes we will have to make will be more abrupt, more risky, more costly and more disruptive. The need for change won’t go away just because we wish it to.
The recently released 2022 Better Futures Report shows that New Zealanders are increasingly committed to leading a more sustainable lifestyle. It is also clear that people are looking to the Government and to businesses for leadership.
Next month, we will see how the Government intends to act as it tells us through the Emissions Budgets and their Emissions Reduction Plan what the pathway – and cost – for change in Aotearoa will look like.
What we know is that the costs and risks of inaction are hard to measure, the additional benefits of taking action are often under-estimated and delaying action because of more pressing short-term priorities has already left New Zealand more vulnerable to the impacts of climate on our lives and livelihoods.