Regional Cooperation and Asia’s Low Carbon Economy Transition: the Case of New Zealand

Abstract

There are significant institutional, regulatory and financial difficulties associated with the transition to low carbon economies in Asia. Nevertheless, a range of market and non-market mechanisms, particularly those pertaining to low carbon energy systems, can accelerate and deepen the transition. While most of the dynamism for these changes will need to be generated from within Asia, countries outside of the region can also contribute through finance, technology and expertise. In this chapter, the specific example of New Zealand is utilized to discuss the challenges and opportunities associated with such regional cooperation for low carbon. New Zealand enjoys certain advantages in pursuing a pattern of low carbon growth, including widespread usage of renewable energy and high levels of engagement in emerging regional initiatives around emissions trading and carbon markets. In addition, increased trade in environmental goods and services, especially those related to renewable energy, could emerge as an important avenue, particularly given New Zealand’s involvement in multilateral trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP) and Trans-Pacific Partnership (TPP). Despite the significant opportunities for emerging technologies around energy in Asia, there is no question that there are still significant obstacles in attracting investment, particularly into the smaller and less transparent economies of the region. A significant portion of the latter part of the chapter is devoted to analyzing the role of institutional investors in financing and sometimes building energy infrastructure in Asia, focusing specifically on New Zealand-based members of the Investor Group on Climate Change (IGCC). Finally, the chapter highlights how development cooperation is an area where countries such as New Zealand could clearly have an impact on Asia’s low carbon growth trajectory. While in recent years New Zealand’s aid programme has become increasingly narrowly focused around the Pacific Region, there are certainly initiatives that demonstrate the country’s commitment to engendering a low carbon growth pattern for Asia through its aid programme. Taken together, the different market and non-market mechanisms analysed in this chapter demonstrate the considerable potential for regional cooperation to facilitate low carbon growth in Asian economies.