Rod Carr marks final days at Climate Change Commission

New Zealand businesses are taking climate change far more seriously than many elected leaders, says outgoing Climate Change Commissioner Rod Carr.

He talked to BusinessDesk at the commission’s 21st-floor office in Wellington’s iconic former BNZ building and looked back at his five years in the chair.

Carr said climate change was serious, but there were also opportunities. 

“I think sometimes there are serious things, and you can't do much about them, like getting old. Then there are serious things that you should do something about because they will be worse if you ignore them, harder to deal with later, and have real consequences for people in their lives.”

Since taking up his role, Carr said he’d come to understand climate science probably up to a high school level.

“It’s been a complete privilege to have five years learning about things my kids told me I should have known about 20 years ago. It’s like, ‘Dad, where have you been? The stuff was knowable, you should have known it’.”

When the Climate Change Commission was established in 2019, Carr was shoulder-tapped to chair it. He’d been thinking about retirement but consulted his family, as he always has when unsure of what to do next.

“My youngest son basically said, ‘Well, Dad, you could just quit everything else and do this job. This is the only job that matters.”

The role of the Climate Change Commission

Carr said the commission was set up to advise the Government of the day not to make decisions. 

“We don't have the exclusive right to advise the Government and the [Climate Change Response (Zero Carbon) Amendment] Act always contemplated the Government might choose not to take the advice of the commission, so that's not a failure of the system. That's the system just operating, and a lot of our advice has been taken.”

Carr said its advice was also used by businesses, which increasingly needed a body of evidence to make their business investment cases.

That was particularly true for the energy transition.

Since taking on the role five years ago, far more people in the business world have understood what is happening. The global reinsurance industry realised the floods, fires and droughts around the world weren't part of a diversified portfolio of natural hazards.

“Oops, they look like they are highly correlated. When insurers see things that are highly correlated, they go, ‘What are we missing?’”

Then bankers got on board, worried about being the residual risk holders.

In 2024, the problem wasn’t the science or even public policy. It was behaviour change or the lack of it. 

“To some extent, the business leaders are getting ahead of the curve on this. It’s the elected leaders who want to pander to a relatively disaffected, alienated and sometimes misinformed group.”

Hubris and human nature 

So, what has Carr learned in his five years in the chair?

He’s learned a bit about climate change, that’s for sure. A problem that was just over the horizon is here and now. He’s also learned more about how policy is made.

Most significantly, Carr has learned a lot about human nature.

“I am intrigued by the extent to which hubris plays a part.”

Never before had the climate changed so fast, barring an asteroid strike, and never before had human activity caused the climate to change. And never before had the technologies existed that, if deployed now at pace and scale, could lessen the harm from climate change.

“We know what needs to be done. We just cannot figure out how to stare down those who profit from the current short-term extraction, production and burning of fossil fuels in the open air.”

Carr hadn’t been impressed to hear that the oil and gas industry was now asking the Government to underwrite the exploration risk.

“The risk of that is supposed to be a business risk. You’re supposed to be big enough and bold enough to actually say we’re prepared to put our money on the table without a government guarantee.”

Even the risk of a future government reimposing the 2018 offshore exploration ban was a normal regulatory risk.

The Government’s scorecard

Carr said it was hard to know for sure how he viewed the current Government’s approach to climate change until the second emissions reduction plan was released, which shouldn’t be far away.

The Government supported existing emissions reduction plans and said it would abide by the first three emissions budgets already in place.

When in opposition, the National Party criticised Labour’s Gidi (Government Investment in Decarbonising Industry)  fund as corporate welfare. Would it have been better to keep that to meet those targets?

Carr said the question was what to do with the money from an ETS (emissions trading scheme) auction, whether to ring fence it or put it with consolidated revenue. 

“I don’t think it’s appropriate to call some of the money that has been used as ‘corporate welfare’. Smoothing a transition is about managing impacts on communities and business.”

He did note the Government had set up a smaller $28 million grant to help heavy road freight decarbonise. 

Forestry and agriculture 

Carr said the Government was on record as saying New Zealand's emissions target was net zero not gross emissions reduction. The trouble is trees die, catch fire, and fall down in storms. 

"It requires the heroic assumption that one tonne of carbon sequestered from fossil fuels burned is equal to one tonne of carbon impermanently secured in a forest."

Carr said there were limits on how high carbon prices could go, and that was less than their true market price.

“We all have to accept that if the market clearing price to get the reductions in line with targets was multiples of the current New Zealand unit price, it would be socially unacceptable and politically, that isn't going to fly.”

Along with that, half of New Zealand's emissions weren't priced at all.

“So, you are pricing half of the economy and saying that's a really important tool to use because price devolves decision making to market, except for . . . the agricultural sector, where somehow price is not a tool that should be used.

“It's not a coherent principle-based approach, even to the use of the market tool.”

The quaint Amish country, revisited 

Carr is a regular speaker at events related to climate and the environment. At this year's Responsible Investment Association Australasia (RIAA) conference, he told the investors in the audience that their investments and leadership would determine whether or not New Zealand avoided becoming part of a “quaint Amish community” in the Pacific. 

What would that Amish-style future look like? 

“If we continue to practise – particularly agricultural – businesses the way we have in the past into the distant future, at what point may people come to look at how it used to be done in the world, rather than the way it may be done in the future?”

He said it was clear that protein and carbohydrates would be produced in factory manufacturing environments in the future.

“That's going to happen whether we like it or not. So, we can continue to farm as we have and continue to provide meat and milk protein. Increasingly, it will be quaint.”

Land-use change was inevitable, with knock-on effects for small rural communities. 

“I just think that we've got to help the transition into alternative land uses, which doesn't mean no sheep farming [and] no beef farming.

“It just means that some of the marginal land is going to be retired, and if not into managed forestry or native regeneration, what?”

No more 42km runs 

Carr has just been reappointed to the ASB board, so he won’t be putting his feet up completely.

There will be more time for his grandchildren, three of whom live just across the road from his Christchurch home. 

Carr has, however, given up marathon running. Like former prime minister Bill Rowling, he was a late starter to the sport, although he hated running as a child.

“My brother was sponsoring a fun run in Cromwell back in 2002, and he thought it would be nice if a member of the family showed up.”

He’s clocked up a total of 23 marathons in London and Boston, as well as Antarctica and Pyongyang. 

“Now I am retired.”