Leading New Zealand’s climate change challenge

As the impacts of climate change on New Zealand’s infrastructure resilience and supply chains becomes an increasingly urgent topic for owners and users of our nation’s key assets, leading voices – Chief Executive of Transpower, Alison Andrew, Infrastructure Sustainability Council’s New Zealand General Manager, Adrienne Miller, Chief Executive of Auckland Airport, Adrian Littlewood, Chief Executive of Ngāi Tahu Holdings, Mike Pohio, and General Manager of Sustainability at Ports of Auckland, Rosie Mercer – examine some of the challenges and issues.

The first challenge is how climate change is exposing the current state of New Zealand’s infrastructure assets, says Alison Andrew. Citing the example of a severe weather event on the Rangitata River in December 2019, when a huge increase in river flows ripped out a number of towers from a core transmission line into Christchurch.

“New Zealand’s infrastructure resilience is variable, and we face a significant challenge with climate change and natural disasters like earthquakes. We have to be mindful and ready to respond to severe weather and other events, and we need to think about the standards we build to make our infrastructure more resilient and affordable over time, particularly as 1-in-200-year events have the potential to become maybe 1-in-10-year events. At the same time, we have to be able to restore damaged infrastructure quickly and efficiently because it will not be cost effective to design our way out of every situation.”

"Under existing circumstances, we don’t have infrastructure resiliency.” - Mike Pohio, Ngāi Tahu Holdings

Mike Pohio is less positive: “Under existing circumstances, we don’t have infrastructure resiliency. Climate change highlights our deficit and the great need we have to fix current problems so we can provision for the future. We have a huge deficit and face significant climate change impacts on our existing infrastructure.”

A change in thinking is required

Adrienne Miller also has reservations. She doesn’t think New Zealand’s infrastructure is as resilient as we might have previously thought. Part of the problem, she says, is that we have tended to think that we can impose ourselves on nature and hold nature back.

“We’ve got to work much more holistically to think how we can work with Papatuānuku, all stakeholders and integrate multiple elements into the solution. We need really big picture, transformative and multidisciplinary thinking to deal with climate and weather, so we’re not as affected by events, and can bounce back quicker.

"A common misperception in the industry is that it costs more to put sustainability at the top of the list.” - Adrienne Miller, Infrastructure Sustainability Council

“A common misperception in the industry is that it costs more to put sustainability at the top of the list. I have presented to many audiences on the paradigm shift from a traditional cost, time and quality dynamic to one that focuses on impacts. In this revised model, cost and economics become about ROI across the asset’s lifespan. Notably too when you look at the full asset lifespan and you focus on impact and outcomes, the traditionally negative multipliers of cost and time flip to become positives – multipliers of good.” Rosie Mercer cites Ports of Auckland’s move towards a sustainable pathway as a response to the costs of not doing so being pointed out.

“We’re part of the Sustainable Business Council Low Carbon Freight Pathway Development, with nine organisations’ collaborating to develop a pathway for the freight sector to reach net zero by 2050 and halve its emissions by 2030. However, financial barriers are massive, and until there is some driver that incentivises organisations’ to make these changes, most won’t be able to take that hit to their financial bottom line. It’s a big commitment and a big shift which needs to be better understood.”

Supply chains, end users and people

Pohio sees two major issues of sustainability as those of supply chains and people. “Although our port infrastructure is well served at present, the real focus for me is the supply chain. This means maintaining big-ship capability, and the infrastructure to accommodate these big ships. How can we ensure this is in place over a 30–50 year timeframe?”

Involved in the development of the Ruakura Superhub and inland port that is taking shape in Hamilton, Pohio says that the plan is based on recognising that the Auckland and Tauranga ports don’t have sufficient footprint.

“We currently benefit from being a supplier of dairy to the world, so we get good pricing for our products and shipping connections. We must not become a satellite of Australia, which would embed cost and delays, and become an issue for our country in getting product to market.”

Adrian Littlewood highlights that Auckland Airport has the ability to control change and influence the awareness of the end-user, as the first airport in the southern hemisphere to adopt sciencebased target initiatives throughout its operations allowing it to achieve targets set in 2012/13. Now in the process of resetting these targets, he says the airport is focusing on its biggest impact areas as a landlord and infrastructure owner and embedding those changes into investments.

“For example, within our buildings we’re implementing changes in heating, ventilation, lighting systems, and thinking about embedded carbon in buildingsand concrete. We’ve provisioned ground power units to all the planes so they can turn off the jet engines while parked, and we’re reviewing how we change to only electric vehicles for our ground fleet. These are all factors we can influence and have a responsibility to do so.”

Alison Andrew says that because New Zealand relies on international imports, with little major manufacturing base as a country, we must think carefully about supply chains and diversity of supply.

“I think many people would be surprised to know just how much we rely on imports. A lot of domestic manufacturing has to export to be viable. Because New Zealand does not make much of the equipment needed for high voltage transmission, we had to look offshore to get six towers manufactured at short notice to rebuild our transmission line and restore power security to the upper South Island after the Rangitata flood. China has a factory that turns out towers for transmission companies around the world. They made our towers in a small run, and we got them in a few weeks. There is no capacity for this here in New Zealand.

“This means we’re working to understand the sustainability of our supply chain, trying to reach further and further back into the chain to understand carbon, labour practices, etc. The factors you are required to consider need to include how much you are prepared to put on table for low carbon products and will they be fit for purpose? As a result, we are doing a lot more work in prequalification – we’re getting more sophisticated about it.”

Ultimately, says Andrew, a lack of self-sufficiency is the reality for New Zealand.

"We need to stay connected internationally, particularly when recovering from weather events, and we need to look to international supply chains to ensure we have sufficient critical spares.” - Alison Andrew, Transpower

“I don’t see us as being self-sufficient. We struggle because our domestic demand is so small. We need to stay connected internationally, particularly when recovering from weather events, and we need to look to international supply chains to ensure we have sufficient critical spares. This also means we are reliant on specialist labour from overseas, because we don’t train enough specialist engineers here.”

Taking action and getting payback: the next big challenge

So, in this environment, do infrastructure organisations know how and where to start to take effective action to be more sustainable?

Rosie Mercer notes that Ports of Auckland initially set ambitious targets to achieve zero emissions by 2040.

“We joined the Climate Leaders Coalition and had to align our target with science, which created an even tougher roadmap than the original 2040 plan.

“We measured what we had and created possible pathways and a detailed financial model for the entire roadmap, including our different vehicles and emission sources. The detailed financial model provided us with analysis of the project options that different energy transition types would give us. Through this process we made some significant changes to our approach, as the modelling helped us realise how financially constraining some of those options would be. We needed to continually change our methodology.

“One such change was our original idea to have a significant transition to zero emission technologies like hydrogen and battery early to achieve our science based targets. However, it was simply not financially viable, and as an alternative we adopted a second-generation biofuel.

“We use different tools to assess and compare projects against the marginal abatement cost, essentially looking at how many dollars we’re spending for every ton of carbon we’re reducing. This provides a view of the efficacy of different project types and approaches.

“The process highlighted how important it is to create roadmaps that have flexibility, allowing you to adjust your expectations, based on your resource capacities while keeping the momentum going.”

Miller says that all this work is part of a wider paradigm shift that is underway.

"People want their assets to do more, to do good.” - Adrienne Miller, Infrastructure Sustainability Council

“People want their assets to do more, to do good. There is a pincer movement between regulatory and reporting changes and stakeholder preferences.

This applies right across the supply chain, with significantly reduced tolerance for negative impacts. The difference between what is legally permitted and what is acceptable to stakeholders is growing.”

Underscoring the dividend in investing in infrastructure sustainability, Infrastructure Sustainability Council shows that for every NZD1 spent on projects committed to sustainable performance the return is NZD1.64–NZD2.40. Miller says that the key question is sector readiness to capture the value uplift that have been quantified, as well as the enhanced amenity value, well-being and health outcomes that come from spending on infrastructure – which also results in averted spend elsewhere. It really starts before the business case going back to the options stage.

Pohio says: “This needs a full court press: incentives and stick, public pressure to generate momentum. There’s no way we’ll get there with any one approach. We need to demonstrate the medium and long term impacts on our standard of living. The Treasury’s Living Standards Framework allows people – investors, the public – to better present their cases against what Treasury can genuinely match. We need to show the standard of living difference between investing and not investing.”

Miller agrees, saying that ultimately the way forward is all about leadership.

“Sustainability leadership at any level is about seeing the bigger picture. You need those insights and perspectives to lead into the future. People grappling with doing the right thing also need to bring their team or organisation with them.

“The big picture thinking of sustainability is actually really, really good for dealing with disruptive conditions such as Covid and climate change, because it helps you think differently about problems and solutions. In a world of constant disruption, we are going to have to change.

“This is an opportunity to shine or be left behind.”

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