# Narratives and Definitions The TIMES-NZ scenario narratives reflect four critical qualitative uncertainties. These critical uncertainties are different paths that the country could take, and the different narratives for each inform the driving forces that have been selected to define each modelled scenario. Each scenario is intended to represent a plausible and realistic future pathway. The critical uncertainties identified are: - **Economic structure**: Whether our economy continues with its traditional structure or undergoes a structural shift. In both scenarios, the level of economic activity is broadly similar. - **Technology costs**: Trade and synchronicity between New Zealand and the rest of the world. This impacts global demand for our export goods, and the availability and costs of imported technologies. - **Individualistic or cooperative**: Our predisposition to cooperation domestically or everyone for themselves. This impacts policy settings under successive governments and consumer behaviour. - **Natural gas**: The role of natural gas in the energy system. We define two distinct narratives along these critical uncertainties: Steady and Shift. These represent mutually exclusive combinations: all critical uncertainties differ between the two scenarios. ## Narrative descriptions ### Steady The Steady scenario isn’t static, but the economy and the energy sector change less in this possible future than they do in the Shift scenario. In the Steady scenario, international demand for our traditional export goods remains strong, and new technology prices fall less than they do in the Shift scenario. New Zealand continues with its traditional economic drivers, meaning farming exports and other existing exports continue to find growing markets overseas and remain a mainstay of the economy. Industrial activity (including manufacturing) stays on its current expected path. There is moderate growth in demand for energy from high-tech sectors, such as data centres. Prices for new technologies (including wind turbines, batteries, solar panels and EVs) fall over the next twenty years, but not as quickly as they so in the Shift scenario. Demand for individual vehicle travel (cars, trucks, vans, utes) grows in line with Ministry of Transport projections. There is some community resistance to renewable electricity projects such as wind and solar farms. Domestic reserves of natural gas follow current government projections to decline sharply, and no new domestic gas reserves are uncovered. However, liquid natural gas (LNG) can be imported via a floating terminal to meet demand. In climate policy, successive governments rely on the Emissions Trading Scheme (ETS) and do not bring in complementary measures to cut greenhouse gas emissions, except those which are already in progress. This means there are no new subsidies or incentives for clean tech and no new penalties for high-emitting activities. Carbon price and forestry settings (for offsetting emissions) remain as they are, and the carbon price stabilises at $52/tonne by 2035, in line with government carbon price projections[^mfe_erp2_detail]. [^mfe_erp2_detail]: MFE | [ERP2 Detailed results (.xlsx)](https://environment.govt.nz/assets/publications/climate-change/ERP2/Detailed-results-for-ERP2-projection-scenarios.xlsx) ### Shift – reinventing ourselves In the Shift scenario, New Zealand reinvents itself as a new economy, breaking away from its dependence on farming exports. Global free trade increases faster, and this means clean technology costs fall faster than in the Steady scenario (making wind turbine, solar, battery and EV prices cheaper). Demand for energy used by meat and dairy processing plants falls because of lower international demand for these exports. Clean tech industries such as data centres and advanced manufacturing accelerate their growth, more rapidly increasing their energy demands. In this possible future, part of the change in New Zealand’s economy is driven by a drop in global demand for meat and milk products, and part is due to increased global trade meaning that clean technology costs fall faster as trade barriers are reduced. In this scenario, New Zealand doesn’t import LNG, and (as in the Steady scenario) domestic gas reserves fall sharply. Nationally, we prioritise sustainability and cooperation. Successive governments’ policies strengthen the ETS, and carbon prices rise to $260/tonne by 2050, in line with the Climate Change Commission’s demonstration path[^ccc_demopath]. Policy measures also support shifting travel from private cars to public transport, walking and cycling, and alternative fuels such as biomass or biogas. Public sector, business and consumer behaviour becomes more forward-looking, and consumers are more willing and able to make upfront investments that improve their long-term energy efficiency. [^ccc_demopath]: Climate Change Commission | [Updated demonstration path and current policy reference settings (.xlsx)](https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.climatecommission.govt.nz%2Fassets%2FAdvice-to-govt-docs%2FERP2%2Fdraft-erp2%2Fsupporting-documents%2FERP2-supporting-spreadsheet-Updated-demonstration-path-and-CPR-2022.xlsx)