Key takeaways from our first Emissions Reduction Plan
New Zealand’s first Emissions Reduction Plan outlines how New Zealand will achieve its target emissions reductions from now until the end of 2025.
Following consultation with the public after the release of the Emission Reduction Plan discussion document last October, the Government released the final plan for the 2022 – 2025 period in May.
The plan outlines both high-level objectives and specific actions that the Government intends to pursue in order to put Aotearoa on track to meet our emissions reduction targets, being:
- Net zero greenhouse gas emissions (other than biogenic methane) annually by 2050;
- 10% less biogenic methane emissions than 2017 emissions levels by 1 January 2030; and
- 24% to 47% less biogenic methane emissions than 2017 levels by 1 January 2050.
The plan confirms that pursuing these targets will bring significant implications for the economy’s key sectors over the coming decades, with the transport and energy sectors being the key focuses in the short term.
A key mechanism in our climate response is the use of “emissions budgets”. Each budget represents the total quantity of emissions that the country is allowed to release during a particular period. They are intended to act as “stepping stones” towards our 2050 targets.
With the exception of the first budget for 2022 – 2025, each budget will cover a five-year period. The Government has released the first three budgets as below:
|First emissions budget (2022 – 2025)
|Second emissions budget (2026 – 2030)
|Third emissions budget (2031 – 2035)
|All gases, net
All figures represent metric tonnes of carbon dioxide equivalent (MtCO₂e).
Emissions Reduction Plans
Prior to each budget period beginning, the Government is required to release a new emissions reduction plan. Each plan must detail the policies and strategies to be used to meet the targets of the next emission budget, and may also detail the those intended to be used in the two subsequent budget periods.
As the current plan is both the first of many and only applies to a shorter three-year period, it details many policies and strategies that are intended to be adopted in the second and third budget periods. This gives insight as to what direction we can expect Aotearoa to go across several key sectors between now and 2035.
Expected Implications on Key Sectors
Transport is one of the country’s largest sources of emissions, contributing approximately 17% of our gross domestic emissions and 39% of total domestic CO² emissions.
The Government has the sector as one in which meaningful change can be effected relatively quickly. It has set the following targets it aims to be reach by 2035:
|Reduce vehicle kilometres travelled by cars and light vehicles by 20% by 2035
|Providing better transport options, including through new mass transit (such as that proposed under “Let’s get Wellington Moving”)
|Encourage the design and development of urban areas that are conducive with safe and efficient walking and cycling.
|Focusing population density along key transport routes.
|Increase zero-emission vehicles to be 30% of the light vehicle fleet by 2035
|Continue the Clean Vehicle Discount scheme.
|Assist low-income New Zealander’s to purchase low emission vehicles through leasing schemes and a vehicle scrap-and-replace scheme.
|Support the further rollout of EV charging infrastructure.
|Consider further restrictions on the import of high-emission vehicles from 2027.
|Reduce emissions from freight transport by 35% by 2035
|Develop a long-term national freight and supply chain strategy with the industry, with a goal of reducing emissions within the industry.
|Invest in and improve New Zealand’s rail networking in line with the New Zealand Rail Plan.
|Reduce the emissions intensity of transport fuel by 10% by 2035
|Research and develop alternative low and zero carbon fuels, with a view to later implementing a sustainable aviation fuel mandate.
|Implement the “sustainable biofuels obligations”, which requires fuel suppliers to reduce the total emissions of the fuels they supply by a set percentage each year through the deployment of biofuels.
The Government is adopting a multi-pronged approach to lowering transport emissions, by:
- Implementing policies to reduce society’s reliance on private vehicles (such as through the increase in investment in public transport and the recent National Policy Statement change on Urban Development allowing for higher density living along key transport corridors);
- Increasing the proportion of low-emission vehicles in the private vehicle fleet that remains, and making such vehicles available to more people (through policies such as the existing Clean Car Discount scheme); and
- Reducing the emissions of fuels that power emitting vehicles, including freight vehicles such as aircraft, boats and trucks.
Energy and Industry
The energy and industry sectors currently account for approximately 27% of our gross greenhouse gas emissions. Due to our high level of renewable generation already in Aotearoa (equating to over 40% of total primary energy supply and nearly 28% of final energy consumption), we are well placed to further decrease emissions in the sector.
The Government has a goal of increasing the proportion of energy consumption coming from renewable sources. It aims to do this by focussing on the following:
|Futureproof the electricity system
|Continue the development of new renewable electricity generation through wind and solar.
|Investigate the adoption of electricity storage technologies such as pumped hydro and large-scale battery to assist in “dry years”.
|Ensure the electricity system and market can support high levels of renewable energies by phasing out fossil-fuel baseload electricity generation.
|Reduce Aotearoa’s reliance on fossil fuels.
|Develop a gas transition plan by the end of 2023, setting out the pathway for the transition away from fossil gas to renewable gases.
|Investigate and develop low-emissions biofuel options.
|Develop a roadmap for greater adoption of hydrogen as an energy source by 2023, and ensure that appropriate regulatory settings are in place to support that wider adoption.
|Implement programmes to encourage and assist households and businesses to switch to efficient technologies.
|Reduce energy usage in industry.
|Develop a “Decarbonising Industry Action Plan” by the end of 2024, outlining how the Government will support existing industries to decarbonise and innovative low-emissions industries to grow.
|Continue the roll out of and consider expanding the “Government Investment in Decarbonising Industry Fund”, which provides grants to improve energy efficiency and assist in the transition of low-emissions fuels.
|Finalise and begin to implement the “Advanced Manufacturing Industry Transformation Plan” by the end of 2022, which provides an action plan for how Aotearoa will create a circular, net-zero emissions manufacturing sector.
The key risk that needs to be mitigated in the further adoption of renewable electricity generation is how dry, calm and cloudy years will be dealt with, in which renewable energy sources are unable to fully perform. It is for this reason that the Government intends to investigate long-term electricity technology storage projects such as the proposed pumped-hydro project at Lake Onslow.
In recognition that electrification will not be a universal solution, the Government intends to invest in the research, development and adoption of non-electric substitutes that produce lower emissions, such as bioenergy and hydrogen solutions.
This sector is key to our climate response due to the ability of forests to act as “carbon sinks” and absorb carbon dioxide. Given that Aotearoa has vast amounts of land suitable for afforestation, the planting of additional forests is a means through which carbon reduction can quickly be achieved in the short term.
To achieve this, the Government is focussing on the following:
|Support appropriate afforestation.
|Ensure regulatory settings deliver the appropriate type and scale of forests in the appropriate places (for more about the Government’s proposed changes, see our article here).
|Support landowners to carry out afforestation through the provision of grants and incentives, such as the the One Billion Trees Fund (now closed for new applications) and Erosion Control Funding Programme.
|Improve the availability and quality of forestry planning and advisory services.
|Encourage the planting of native forests to act as long term carbon sinks.
|Update ETS yield tables to include indigenous species.
|Reduce the cost of native afforestation, including by investing in the nursery sector to increase the availability of seedlings.
|Maintain existing forests.
|Explore measures to reduce deforestation of pre-1990 native forests.
|Maintain and increase carbon stocks in pre-1990 forests.
|Grow the forestry and wood processing industries to deliver more value from low carbon products.
|Develop a forestry and wood processing industry transformation plan in partnership with Māori, industry and workers to stimulate the production of new cost-effective, low-emissions products and wood-based biofuels.
|Invest in expanding the supply of woody biomass to ensure the availability of sufficient quantities to fuel the bioeconomy.
|Develop forestry policies that support Māori rights to exercise kaitiakitanga and rangatiratanga and align with the aspirations of Māori groups and forestry experts.
While Aotearoa is relying significantly on the sequestration benefits of high afforestation, the benefit of large-scale forest plantation will eventually plateau, as the gains will be offset by the carbon losses caused by the eventual harvesting and natural decay of the forests. For this reason, the Government has noted that forestry cannot be overly relied upon to meet our targets at the expense of efforts in other sectors.
Agricultural emissions make up approximately 50% of our gross emission, meaning that reductions in the sector are required to achieve our targets, including a reduction in biogenic methane emissions by 24-47% by 2050.
Agriculture currently enjoys the benefit of being exempt from the Emissions Trading Scheme (ETS). The Government now intends to price agricultural emissions from 2025, but has afforded the sector the opportunity to propose its own pricing scheme, outside of the ETS. This is partly in recognition of the fact that many of the gases emitted by the sector are short-lived in the atmosphere.
The He Waka Eke Noa Partnership, a joint initiative between the sector, Māori and Government, was formed to develop this proposal. In late May, it delivered its proposal for a farm-level, split gas levy (meaning that emissions would be calculated on a farm specific basis, and short-lived and long-lived gases would be charged at different rates). The funds raised through the scheme would be re-invested into research and development for emissions mitigation technologies in the sector. See our website here for more information on the proposals for agricultural emissions.
Aside from emissions pricing, the Government is focussing on the following in the agricultural sector:
|Accelerate the research and development of new technologies that will reduce emissions from farming
|Establish a new Centre for Climate Action on Agricultural Emissions to drive the research, development and commercialisation of emissions reduction technologies.
|Invest funds from the agricultural emissions pricing scheme into research and development of emission reducing technologies, such as nitrous oxide inhibitors and ruminant methane vaccines.
|Improve regulatory pathways for the commercialisation of agricultural emissions mitigation tools.
|Transition to lower emissions land use and systems
|Research and encourage regenerative agriculture practices and food and fibre science.
In the first budget period, the agricultural sector will largely be laying the foundations for greater emissions reductions in the second and third periods.
The initial focus on research, development and commercialisation presents an opportunity for us to lead global science on agricultural emissions reduction, which may open up some major first-to-market commercialisation opportunities globally.
While waste is responsible for just 4% of our total emissions, 94% of those emissions comprise biogenic methane – which has a significantly greater warming effect than carbon dioxide (of approximately 28%). This makes it an important sector to target reductions within.
Actions taken to mitigate waste emissions will also have wider beneficial effects on the other aims of the plan – such as supporting the shift to a more circular economy.
The government is aiming to reduce biogenic methane emissions in the waste sector by 40% by 2035 by focussing on the below:
|Assist households and businesses to reduce organic waste.
|Encourage and educate on behaviours to prevent waste generally at home.
|Encourage businesses to reduce food waste, including by encouraging businesses to engage in voluntary food waste minimisation agreements.
|Increase the amount of organic waste diverted from landfill.
|Invest in organic waste processing and resource recovery infrastructure.
|Require the separation of organic waste from other types of waste, and introduce kerbside collection of it.
|Explore banning organic waste from landfills by 2030.
|Reduce construction waste and divert what remains to beneficial uses.
|Support the building and construction sectors to minimise waste through research and facilitating improved sector capabilities.
|Invest in sorting and processing infrastructure for construction and demolition waste.
|Increase the capture of gas from landfills
|Investigate requiring municipal landfills to implement gas capture systems at landfills.
|Improve waste data collection
|Implement a national waste licensing scheme to improve the level of understanding of the sector’s current emissions and practices, which will guide future policy decisions.
The Government is again taking a multi-pronged approach in its waste strategy, by seeking to:
- reduce the amount of waste generated overall;
- reduce the amount of waste that is generated going to landfill, by diverting it to other uses; and
- capture the gas emitted by waste at landfills, minimising the emissions that enter the atmosphere.
Building and Construction
As at 2018, approximately 9% of our emissions were building-related, emitted by various sectors involved in the construction process. The Government is looking to adopt a “whole-of-life” approach to reduce these emissions by reducing both the operational emissions of buildings and their embodied emissions (emitted during construction and deconstruction).
The Government is looking to decrease building-related carbon emissions by focusing on the following:
|Reduce the embodied carbon of buildings
|Consult on the introduction of whole-of-life embodied carbon requirements to the Building Code.
|Establish a sector advisory group to develop proposals for reporting and measurement of whole-of-life embodied carbon emissions.
|Consider providing grants to increase the number of “Environmental Product Declarations” for building materials and products.
|Support the development and uptake of sustainable forestry materials in the construction sector through the Forestry and Wood Processing Industry Transformation Plan.
|Explore requiring waste minimisation or recovery plans for building consents.
|Reduce operational emissions of buildings
|Improve building energy efficiency in new builds through introducing higher efficiency requirements in the building code.
|Improve building energy efficiency in existing buildings through incentives and support options such as the Warmer Kiwi Homes Programme.
|Facilitate the shift from fossil fuel energy to cleaner energy where fossil fuels are being used (as is common in rural and off-grid communities).
|Encourage behaviour and attitude changes in the public and in the construction sector.
In addition to construction-sector specific measures, the sector will see a decrease in related emissions through emissions reductions in other sectors (such as in transport, waste, and energy).
The Government will need to strike a careful balance in construction sector so as to avoid significant increases in the costs associated with construction in an already high cost housing market.
The emissions reduction plan provides the clearest view we’ve had yet of how our climate response will shape both the economy and society over the coming decades. This first emission budget period is just the start, with significant work needing to be done by the Government prior to the commencement of the second emissions budget period (which imposes far more ambitious targets).
Want to know more?
If you have any questions about the emissions reduction plan and its potential implications on you or your business, please contact Josh Williams, Tom Mohammed, or a member of our specialist carbon and climate change teams.
PDF version: here.