'Mixed progress' on climate change
The government has responded to the Climate Change Commission’s first annual monitoring report on emissions reductions.
Many of the crown entity’s findings are broadly aligned with the government’s including that gross emissions have been tracking down since 2019 and New Zealand is on track to meet its first emissions budget, which runs to the end of 2025.
The commission board’s monitoring of implementing the first emissions reduction plan (ERP1) records “mixed progress”. Out of 305 actions, 41 have been discontinued. Six actions were canned by the previous government and 35 by the coalition now in power.
The current government has scrapped 35 because they don’t align with its approach on meeting emissions budgets or climate-change priorities or had no effect on emissions abatement, states a report published by the Ministry for the Environment (MfE).
Actions in ERP1 included continuing the clean car discount and establishing if it could be extended to other vehicle classes, and considering the future of the road-user charge exemption for light vehicles beyond 2024.
Measures to cut vehicle kilometres travelled (VKT) have been ditched. This includes revising the NZTA’s mode-shift plan to ensure activities align with the scale of VKT reduction and mode-shift in urban areas, and developing VKT reduction targets for major urban areas.
New investments for transport projects to show how they will contribute to emissions-reduction objectives and setting high thresholds for this have been scrapped.
Also gone are support for businesses moving to circular-economy models, starting a circular economy and bioeconomy strategy, establishing a high threshold for new roads, ensuring the government policy statement on land transport is consistent with ERP1 and pricing agricultural emissions by January 1, 2025.
The previous government ditched initiatives with direct relevance to the car industry. These included the scrap-and-replace and social-leasing schemes to make access to cleaner vehicles affordable for low-income households, and investigating if further targeted support was required to make low-emissions vehicles more accessible.
Labour also canned initiatives to boost e-bike uptake and implementing a sustainable biofuels obligation.
On the flipside, completed actions from ERP1 include publishing a list of approved smart electric-vehicle chargers that meet specifications for connectivity and efficiency.
The government’s electricity demand and generation scenarios have been updated, and research on extra market mechanisms to accelerate the transition to a highly renewable energy system has been completed.
The MfE report states the government has responded to the Climate Change Commission’s key findings on ERP1.
It says gross emissions are declining. The commission’s finding aligns with the government’s 2024 greenhouse gases inventory, which states gross emissions peaked in 2006 and declined from 2019-22.
The commission’s assessment is 94 per cent of overall reduction in gross emissions in 2022 were influenced by external factors, such as the Marsden Point Oil Refinery closing and increased hydroelectricity due to higher inflows into hydro lakes.
Emissions pricing through the emissions trading scheme (ETS) is the current government’s main tool to determine where and how to reduce emissions.
The ETS aims to incentivise private investment in reducing emissions and removing carbon. Current and expected future ETS prices “will be key” to New Zealand reaching its targets.
That said, the commission’s monitoring report reinforces the crown entity’s view “that the ETS cannot be relied on to ensure emissions budgets will be met”.
The MfE report states: “While the ETS cannot drive set abatement within an emissions budget period, the government’s overall approach is price-led, net-based and least-cost. Recent changes to ETS settings will ensure New Zealand has a more credible market.”
The government has committed to aligning the ETS with New Zealand’s climate targets and to giving participants confidence their investments to reduce emissions will be rewarded.
It has agreed to reduce the number of units available between 2025 and 2029 from 45 million to 21m. This will provide a high probability that ETS emissions will be within the estimated ETS cap for the second and third emissions budgets.
Together with emissions pricing, “a clear role exists for policies that allow the ETS to work better and support the early adoption of emerging technologies”, states the MfE’s report.
“The ETS is agnostic as to where the reductions and removals occur across the sectors included. Progress made and the future potential reductions in a particular sector will be considered in the context of economy-wide emissions and removals.”
It is the Climate Change Response Act that provides the framework by which New Zealand implements policies contributing to efforts to limit the global average temperature increasing, and which allow this country to prepare for and adapt to climate change.
The framework sets our domestic long-term emissions reduction targets to 2050 through a series of interim targets, or five-year emissions budgets, which act as stepping stones to 2050’s target
