Abstract:
The core question in this study is how to investigate policies for climate change in New Zealand. By using different econometric techniques over the period from 1970 to 2014, this thesis investigates the economic and environmental impacts of implementing decarbonising policies in New Zealand. So this study aims at providing empirical evidences on the extent to which decarbonising policies in New Zealand could tackle emission reduction targets more efficiently and how various economic factors need to be taken into account when evaluating current conditions and deciding future actions. More precisely, in order to address the main research question, the thesis has three main empirical chapters which examine three different aspects but interrelated dimensions of the economics of climate change. The first empirical essay investigated how economic performance is influenced by mitigation policies. The E3ME model is employed to analyse the potential environmental and macroeconomic impacts of environmental tax reform (ETR) in New Zealand. A number of different scenarios including a baseline are constructed to investigate the performance of the NZ ETS and other complementary mitigation policies over the commitment period (2021-2030). According to the study findings, higher carbon prices especially in the early years would be necessary to achieve the ambitious GHG emissions target in New Zealand. The results also suggest that a combined NZ ETS and carbon tax approach with revenue recycling could lead to significant economic benefits. The second essay examined how effective the fuel tax and technology improvements are to influence decarbonising light petrol fleet in both short- and long-run. The study findings show that improving emissions standards in the long-term is more effective emission abatement policy than direct fuel tax in New Zealand. However, in the short-term, fuel tax is a better choice as it encourages consumers who drive and pollute a lot to choose a greener transportation. The third essay revisited the relationship between the level of CO2 emissions and some key economic and technology-related determinants. The empirical findings show that there are significant positive causalities from per capita real GDP and per capita energy consumption toward per capita CO2 emissions which are in line with findings in previous studies. However, the financial development, trade openness and technology boost show significant negative influences on emission levels implying that their improvements help to decrease New Zealand's emissions.