Yesterday, He Pou a Rangi (the Climate Change Commission (Commission)) issued a draft of its first package of independent advice to the Government (Advice). The Advice describes the Commission's views on the policy necessary to set Aotearoa on a pathway to significantly and permanently reduce greenhouse gas emissions. Its recommendations raise the need for transformational change across society and the economy in order for targets to be met.
A six week consultation on the Advice is now open. The Commission has indicated that it is "committed to true consultation" on the Advice, and is willing to change any part of its work in response to feedback provided.
In this update, we set out:
- a summary of the areas the Advice covers;
- the legal process for finalisation of the Advice;
- the steps that the Government is legally required to take in response to the Advice; and
- a summary of the key recommendations in the Advice.
Given the importance of the Advice, we encourage prompt engagement with it. The Commission has attempted to make its Advice accessible and those interested can also watch recordings of Dr Rodd Carr (Chair of the Commission) discussing the Advice, and common questions. See here and here.
Russell McVeagh has a specialist, multi-disciplinary team able to assist you across the full spectrum of current and emerging issues in this fast-moving area of law and policy. Please contact us if you wish to discuss any aspect of the Advice or the related consultation process.
What does the Advice cover?
Broadly, the Advice covers the following four topics:
- Emissions budgets: The Commission gives advice to the Minister for Climate Change to enable the Minister to set emissions budgets (as the Minister is required to do under the Climate Change Response Act 2002 (CCRA)). The emissions budgets set the amount of greenhouse gases that can be emitted within New Zealand's geographic territory in the period covered by the budget.
- Emissions reduction plan: To meet the emissions budgets, the Minister must prepare an emissions reduction plan (a set of policies and strategies to reduce emissions and increase removals). The Commission gives advice on the policy direction required in the first emissions reduction plan.
- Biogenic methane (methane from animals such as cattle, or wetlands): The Commission gives advice about the potential reductions in biogenic methane emissions that might be required as part of a global effort to limit the global average temperature increase to 1.5˚C above pre-industrial levels.
- Nationally determined contribution: New Zealand (as required by international law) has set an emissions reduction target for itself (which is referred to as the "Nationally Determined Contribution" or "NDC"). The Commission gives advice on the extent to which the NDC is consistent with the goal of limiting global warming to 1.5˚C above pre-industrial levels, and makes recommendations on changes designed to ensure that our NDC is consistent with this goal.
What is the process for finalisation of the Advice?
The Advice is open for consultation from 1 February to 14 March 2021. Anyone can make a submission on the Advice. The Commission is required to deliver its final advice to the Minister by 1 May 2021.
We understand that government officials will be invited as observers in the Commission’s consultation process. This will provide insight into what might change in the final report and help safeguard the Government’s ability to fulfil its own statutory requirements by 31 December 2021.
What steps does the Government need to take when the Advice is finalised?
Key over-arching steps the Government must take are:
- Emissions budgets and reduction plan: The Minister must set the first three emissions budgets (for the periods 2022-2025, 2026-2030 and 2031-2035) and the first emissions reduction plan by December 2021. The Minister is not required to follow the Advice, but must respond and provide reasons for any departures from it.
- Biogenic methane and NDC: There are no specifically mandated steps in the CCRA in relation to the Commission's advice on biogenic methane emissions or New Zealand's NDC. In any event, we expect to see both regulatory reform relating to biogenic methane emissions tied to the Commission's recommendations and a review of the NDC.
- Adaptation: While climate change adaptation is not the primary focus of the Advice, the Government and Commission have a separate programme of work under the CCRA to deal with New Zealand's adaptation to the threat of climate change. Under the CCRA, the Government is required to prepare a national climate change risk assessment ("Risk Assessment"), which assesses the risk to New Zealand from the current and future effects of climate change and identifies the most significant risks. The first Risk Assessment was published in August 2020 and the Minister is required to publish a national adaptation plan (in response to the Risk Assessment) by August 2022. Going forward, future Risk Assessments will be produced by the Commission.
In a public event yesterday evening, the Chair of the Commission emphasised that the Commission's role has been to recommend policy settings that could be adopted to reach New Zealand's climate change targets, rather than proposing "the fine letter regulation that must now be devised". That more detailed regulatory work falls to the Government, and we expect to see significant regulatory reform across all sectors over the coming years as the Government works to respond to the final Advice.
What are the key conclusions and recommendations in the Advice?
The Advice concludes that "[t]ransformational and lasting change across society and the economy" is required to meet New Zealand's domestic targets of "net zero by 2050" for emissions other than biogenic methane, and a reduction in biogenic methane of 24-47% by 2050. However, the Commission considers that there are "achievable, affordable and socially acceptable pathways" that New Zealand can take to achieve this goal. It further concludes that current government policy settings "do not put Aotearoa on track to meet recommended emissions budgets and the 2050 targets."
The Commission recommends that the Government set the first three emissions in line with the below:
2022 – 2025 (budget 1)
2026 – 2030 (budget 2)
2031 – 2035 (budget 3)
|All gases, net
||271 Mt CO2e
||286 Mt CO2e
||223 Mt CO2e
||69.2 Mt CO2e
||67.7 Mt CO2e/yr
||57.3 Mt CO2e/yr
||44.6 Mt CO2e/yr
|Percentage reduction from 2018 average
The Advice includes further details as to how these budgets should be broken down across emissions and removals, and across different types of greenhouse gas. As a general rule, the Commission's view is that the budgets are possible to meet domestically (ie without the use of offshore mitigation) and it accordingly recommends a limit on offshore mitigation of zero for the first three emissions budgets.
The Commission makes a number of recommendations in support of its suggested emissions budgets, including seeking cross-party support, coordinating efforts to address climate change across Government and with local government, and action to ensure genuine and enduring partnership with iwi/Māori. In relation to the latter, the Commission highlights the concern that the response to climate change should not exacerbate historical grievances, needs to acknowledge iwi/Māori rights to exercise rangatiratanga and kaitiakitanga; and should promote equal access to new information, technology, employment and enterprise opportunities.
Approach to emissions reduction
The Advice sets out how Aotearoa could meet the Commission's proposed emissions budgets. This aspect of the Advice is broken down to address key changes that the Commission recommends to each relevant sector of the New Zealand economy.
While the Advice contains detailed proposals in relation to each sector, key priorities in the Commission's recommended path (which it recommends be implemented across the next three emissions budgets) include:
- Accelerating the uptake of electric vehicles.
- Improving the average efficiency of new internal combustion engine vehicles.
- Phasing out new light internal combustion engine vehicles.
- Electrifying medium and heavy trucks.
- Encouraging remote working and encouraging walking, cycling and public transport.
- Extending the electrification of rail, including the Auckland to Wellington and Hamilton to Tauranga lines.
- Supporting the development of biofuels and biofuel blending.
- Starting the electrification of ferries and coastal shipping to reduce emissions from freight.
- Heat, industry and power
- Phasing out gas heating systems in buildings and improving thermal efficiency.
- Phasing out fossil fuel-based load generation (including by, for example, setting a date by which coal electricity generation assets must be retired).
- Upgrading the transmission and distribution grids.
- Reducing geothermal emissions.
- Expanding the renewable energy asset base and increasing renewable generation.
- Replacing coal and gas with biomass and electricity.
- Land (agriculture and forestry)
- Adopting low emissions practices on farms (including reducing animal numbers and better animal, plant and feed management).
- Adopting low emissions breeding for sheep (low emission breeding for cattle is a future possibility).
- Encouraging the use of new low methane technologies when available.
- Increasing the establishment of native forests (300,000 hectares of new native forests to be established by 2035) and decreasing the planting of new exotic forests for carbon storage.
- No further native deforestation after 2025.
- Reducing the amount of waste generated and diverting organic waste from landfill.
- Improving and extending landfill gas capture systems.
- Reducing the importation of hydrofluorocarbons in second-hand products and increasing end-of life recovery for hydrofluorocarbons.
In many cases, the Commission recognises the need for policy support to be implemented by Government to support these transitions.
The Advice also recommends changes to investment regulation and reporting and the Emissions Trading Scheme, including changes to the price control settings for New Zealand Units under the auction scheme.
In relation to biogenic methane, the Advice concludes:
- It is possible to reduce biogenic methane emissions by 12-26% below 2017 levels by 2030 and 25-59% below 2017 levels by 2050 through reducing biogenic methane from both agriculture and waste.
- The lower end range could be achieved using currently available practices and technologies, however the use of new technologies (e.g. methane inhibitors) could "provide greater flexibility and unlock the upper range of reductions".
- New Zealand's national circumstances do not provide sufficient reason for a smaller reduction in biogenic methane emissions than other developed countries.
- The reductions that may eventually be required could be between 49% and 60% below 2017 levels by 2100.
Nationally determined contribution
The Advice concludes that the Government's current commitment to reduce emissions by an average of 30% from 2005 emissions levels by 2030 is not compatible with global efforts to mitigate the effects of climate change, and the NDC would need to be strengthened to reflect reductions of much more than 35% below 2005 levels by 2030. The Commission considers that offshore mitigation will be required to meet this goal (which is more ambitious than the domestic targets considered elsewhere in the Advice).
If you would like to discuss the Advice further, please get in touch with our expert team.