Supreme Court rules climate change a mandatory consideration when offering petroleum exploration permits for tender

Recently, the Supreme Court released a landmark climate decision in Climate Clinic Aotearoa Inc v Minister of Energy and Resources¹, confirming that climate change (including New Zealand's 2050 target) is a mandatory relevant consideration when the Crown decides whether to grant petroleum exploration permits through "block offer" tenders under section 24 of the Crown Minerals Act 1991 (CMA). In doing so, the Supreme Court observed that climate change was "so obviously relevant" to a decision to commence a process which is intended, if successful, to progress through to extraction of petroleum.

In this article, we outline the findings of this case, key takeaways for businesses, and highlight the continued relevance of judicial review in the climate litigation landscape.

Key takeaways

The case, which was brought by a group of students, challenged two decisions made in June 2021 to grant petroleum exploration permits in onshore Taranaki under section 25 of the CMA on the basis that they failed to take into account the climate change impacts of fossil fuel production and extraction. The High Court rejected the claim and Court of Appeal upheld that decision on appeal², in each case finding that the statutory scheme of the CMA did not require the Minister to take climate change considerations into account (see our discussion of the High Court decision in our earlier insight here).

The case was appealed to the Supreme Court. Although the appeal was dismissed on the facts (because the Minister's delegate had, in fact, considered climate change), the Supreme Court found that climate change is a mandatory relevant consideration where the Minister is making a decision to offer a block of permits for allocation under section 24 of the CMA.

The Supreme Court's reasoning marks a significant shift from the earlier High Court and Court of Appeal decisions, with key takeaways including the following.

Climate change is a mandatory relevant consideration when the Crown decides in principle whether to offer permits for tender.

The Supreme Court found that climate change (including New Zealand's 2050 emissions reduction target under the Climate Change Response Act 2002) was a mandatory consideration in making a decision to offer permits for tender. In doing so, the Court considered the purpose of the CMA, which is “to promote prospecting for, exploration for, and mining of Crown owned minerals for the benefit of New Zealand”,³ and held that the words "for the benefit of New Zealand" mean that the CMA only promotes exploration and mining that is for the benefit of New Zealand.

The Court noted that even where a statute does not list a factor expressly, a consideration is mandatory if it is so obviously material to a decision that anything short of direct consideration would not be in accordance with the Act's intention. In the present case, climate change was relevant given that:

• petroleum extraction and consumption are major contributors to greenhouse gas emissions, domestically and internationally;
• climate change effects are of concern for New Zealand and its wellbeing;
• New Zealand has binding international commitments to significantly reduce its greenhouse gas emissions;
• when the permit decisions were made, there was no comprehensive domestic framework directing how to address the climate change implications of making new exploration available; and
• the permitting process aimed to enable petroleum discovery and extraction, and any economically viable extraction would have clear climate impacts.

While the decision will require future decisions under section 24 of the CMA to take into account climate change, the weight given to climate change considerations is at the discretion of the decision-maker (ie it is not the "controlling consideration"). Accordingly, it does not follow that future block offers will not be made as a result of climate change considerations. Rather, it simply clarifies the matters that the Minister is required to consider before making such a decision.

When deciding whether to grant an individual permit, climate change considerations are limited to the preliminary capability assessment required by section 29A.

While the Court considered that climate change was a mandatory relevant consideration in connection with the offer of permits for allocation by public tender (under section 24 of the CMA), it did not consider that this extended to the separate decision under section 25 to grant a prospecting, exploration or mining permit to an individual applicant.

The decision under section 24 to offer a block of permits for tender is an in-principle decision to enable exploration in a specified area, on the expectation that successful exploration may lead to successful petroleum extraction. By contrast, the section 25 stage relates to an individual applicant once an in-principle decision to enable exploration in a specified area has already been made. The Court considered that it would undermine the CMA’s purpose to invite tenders under section 24 but then decline to allocate any permits at the section 25 stage for reasons that could have been considered earlier.

In addition, the Court considered that engagement with climate change considerations at the section 25 stage is unlikely to be necessary (absent a "significant intervening event" between the block offer and grant stages), because section 29A of the CMA already requires a preliminary assessment of the permit holder's ability to comply with relevant environmental legislation.

Accordingly, while the decision may introduce some uncertainty at the "block offer" stage of the process, it is unlikely to materially impact investor confidence at the individual permitting stage.

Potential legislative response

It remains to be seen whether the Government will progress any legislative response in response to the decision, although the Resources Minister has already indicated that he is not ruling it out.⁴ While such legislation may alleviate the immediate concerns of those involved in petroleum exploration about the effect the decision, the inherent tension between energy security and emissions reduction will not be going away soon.

Decision highlights the continued prominence of judicial review in the climate litigation landscape

This latest decision from the Supreme Court highlights that judicial review remains a significant feature of the climate change litigation landscape in New Zealand (see our earlier insight on this here).

Other key recent developments in this area include:

• The Supreme Court denied leave to appeal Lawyers for Climate Action NZ Inc v Climate Change Commission and Minister of Climate Change, also in December 2025.⁵ The appellants claimed that the Commission's May 2021 advice to the Government in connection with New Zealand's domestic emissions budgets and the first nationally determined contribution under the Paris Agreement, together with the Minister's subsequent decisions based on this advice, was unlawful. We discuss the Court of Appeal's findings in our previous update here. The Supreme Court considered that the arguments did not have sufficient prospects of success to warrant the grant of leave.
• Lawyers for Climate Action NZ Inc's judicial review of the emissions reduction plans is being heard by the High Court in March 2026.⁶ This case is significant as it will determine the legality of the Government's reliance on the use of forestry removals to achieve New Zealand's "net zero" climate target rather than through a primary focus on reducing gross emissions at source. We discuss the claims in this case in our previous update here.

* Special thanks to summer clerk Shanay Talopau for her assistance with this insight. 

This content is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter, please contact a Russell McVeagh partner/solicitor.