Building New Zealand's Capability for International Leadership
66. In order for New Zealand businesses to be able to continue to trade on New Zealand's international reputation, it is important for New Zealand to be widely seen as a leader in the development of world-leading sustainable practices.
67. New Zealand may have the potential to establish itself as a world leader in such areas as the management of greenhouse gases (GHGs) in the agricultural sector, the development of standards for aquaculture and the development of environmental technologies such as second-generation bio-fuels.
68. The stand-out example from the above is the management of GHGs from the agricultural sector. New Zealand has a strong incentive to develop solutions for managing emissions in agriculture. Part of the reason for this is that agricultural emissions are relatively less important for other countries, with the possible exception of countries such as Chile, Brazil and Ireland, and are therefore not the main focus of their research and development efforts.
69. While the science involved in reducing emissions from ruminants is complex and uncertain, and any results are likely to be long-term, the potential economic benefits to New Zealand could be very significant. The main benefit would be to give New Zealand more options in managing its future climate change obligations, possibly at lower cost. There would also be a significant marketing advantage to New Zealand in being seen to lead this part of the climate change challenge.
70. The government is helping to finance research into reducing emissions from ruminants through a government/industry research consortium, the Pastoral Greenhouse Gas Research Consortium (PGGRC). The PGGRC has spent approximately $19m since 2002 of which 50% has been funded by the government. The PGGRC is currently applying to FRST for joint funding to continue the programme for a further 7 years.
71. MAF is currently developing a comprehensive research programme for sustainable land management and climate change. One focus of this research will be the adaptation, mitigation and measurement technologies and practices for reducing methane and nitrous oxide emissions. Recommendations for future work and funding will be made as part of the report back to Cabinet on the Climate Change and Sustainable Land Management Plan of Action package in June 2007.
72. The government recently announced funding of $1m p.a. for a programme on international research collaboration in agriculture and climate change research (Fund for International Leadership on Climate Change Research in Agriculture and Forestry). As part of this programme, we are building on existing partnerships with Australia and the USA and are actively exploring further collaboration with other countries.
73. MED considers that there is a strong case for the government to invest more in this area, with a view to positioning New Zealand clearly at the forefront of this area of research in the world. This may require taking a bolder approach to how the research is currently being organised, including how New Zealand co-operates with other countries.
74. Sustainable aquaculture management is another area where New Zealand could further develop its international credentials. Government and industry interests are already collaborating to develop world-leading standards of performance (for both product quality and sustainable business). By re-organising priorities, the pace of this work can be increased. MFish, working in conjunction with MED and MfE, have already taken steps to do precisely this.
75. MFish is also initiating a programme to work with the fishing sector to achieve environmental certification of key fisheries. In 2007/08, this will involve seeking evaluation of the New Zealand fisheries management regime against an independent certification scheme for sustainable seafood products, the Marine Stewardship Council (MSC). Following this, MFish will support the fishing industry to seek MSC certification of particular fisheries. A contestable fund will be established from which the industry can seek funding.
76. The expectation is that eco-labelled seafood will fetch a premium price because consumers are increasingly willing to pay more for seafood harvested in an environmentally-friendly manner. Further, the label provides a market-based mechanism for well-managed fisheries (large retailers such as WalMart have signalled their intention to sell only MSC certified seafood). The certification of New Zealand fisheries is consistent with the MFish's goal to maximise the value New Zealanders obtain through the sustainable use of fisheries resources and protection of the aquatic environment.
77. Environmental technologies is another area where New Zealand could carve out an international profile. New Zealand has existing technology capabilities in many renewable energy areas, including, but not limited to, bio-fuels, marine generation,1 electricity distribution systems, geothermal engineering and micro-generation.
78. New Zealand's capabilities within these and other environmental technology areas, however, are scattered across very small (by international standards) businesses and research teams. The specialised nature of environmental technologies means that agglomeration opportunities such as through research consortia are likely to be limited.
79. To date, the government's consideration of bio-fuels has focused on the most appropriate mechanism to ensure bio-fuels enter the New Zealand market to displace petroleum product and the quality standards for these fuels, i.e. the nature of the mandatory sales obligation. This has involved consideration of bio-fuels production in New Zealand but this stems largely from consideration of domestic feedstock capacity for current bio-fuel technologies (i.e. maize/whey to ethanol and tallow to bio-diesel) and the ability of current vehicle technologies in the New Zealand fleet to cope with bio-fuel blends particularly ethanol blends. These tradeoffs have driven current bio-fuel obligation levels and in the medium term will influence how any future targets may be set.
80. Less attention, however, has been given to the wider economic development and strategic positioning advantages from a bio-fuels industry based around second generation bio-fuel technology development (e.g. from cellulose) in New Zealand, if viable, and whether New Zealand could establish itself as a recognised technology leader in this area. Officials propose to consider this question, including whether there is scope for the government to play a much stronger, more affirmative role than through FRST funding or a dedicated pre-commercialisation fund. Such a role could include the government developing active partnerships with other countries where there are potential synergies to be exploited.
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