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Cross-government Climate Action Plan announced

August 05, 2019

Contacts

Partners Gerald Lanning, Sarah Scott
Special Advisors Mark Baker-Jones, Chris Browne
Senior Associates Victoria Anderson, Joanna Lim

Climate change (inc Zero Carbon Bill and Emissions Trading Scheme) Local government Government reform and public policy

This weekend, the Government made one of the most important announcements this term about New Zealand’s climate change programme when it released the Government’s response to the Productivity Commission Low Emissions Economy report.

In summary - what you need to know

  • The response forms what the Government is referring to as the cross-government Climate Action Plan
  • Government has, by and large, accepted the majority of the Productivity Commission’s 77 recommendations on how to transition to a low emissions economy
  • The Climate Action Plan includes seven key sector policies (transport, forestry, agriculture, electricity, industrial and process heat, built environment and waste) to drive the transition and will align four major sector settings (innovation, laws and institutions, investment and emission pricing).

Background

In August last year, Te Kōmihana Whai Hua o Aotearoa (the New Zealand Productivity Commission), completed its inquiry into transitioning New Zealand to a low-emissions economy and subsequently released its Low Emissions Economy report. The inquiry had been made on the request of Hon Simon Bridges, who was then the Minister for Economic Development.

Hon James Shaw, Minister for Climate Change, announced on the weekend that the response formed the cross-government Climate Action Plan.

The inquiry by the Productivity Commission found three particular shifts must happen for New Zealand to achieve its low-emissions goals:

  1. We stop burning fossil fuels and switch to using electricity and other low-emission energy sources. 
  2. We undertake substantial levels of afforestation.
  3. We make changes to the structure and methods of agricultural production.

The Commission made 77 recommendations covering the following actions:

  • Establish a comprehensive and durable climate change policy framework
  • Reform the New Zealand Emissions Trading Scheme
  • Devote significantly more resources to low-emissions innovation and technology
  • Creation of a suite of other policy reforms to help drive the transition including introducing emissions standards for newly registered vehicles, a feebate scheme to accelerate the uptake of EVs, and mandatory climate-related financial disclosures

Government response

Noting that many of the recommended actions are already well underway, the Government’s Climate Action Plan agrees to 43 of the recommendations and confirms that the Government will do more work on 33of the rest, with there being only one recommendation that the Government did not agree was necessary.
 

The Climate Plan recognises seven key sector policies that will drive the transition:

Transport

  • Policy package that targets low emissions vehicle uptake, including consulting on both a clean car standard and clean car discount
  • Transitioning the Government fleet to EVs through targeted procurement policy
  • Investigating alternative fuel sources for heavy freight
  • Major investment in public transport through the Government Policy Statement which prioritises reducing emissions

Forestry

  • Tree planting grants and funding for partnerships
  • Regional council funding and support to address erosion prone land
  • Changes to the NZ Emissions Trading Scheme (NZ ETS) to simplify and de-risk afforestation
  • Mandate for joint ventures between Crown and landowners to plant commercial plantation forests
  • Develop a strategy to set a 30-year vision for forests and trees in New Zealand
  • Strengthening the NZ ETS to provide greater financial incentives to plant forests

Agriculture

  • Significant investment to support research and development in reducing emissions from the agriculture sector
  • Developing policies to support farmers to transition to a productive, low-emissions future
  • Consulting on how to price agricultural emissions

Electricity

  • Renewable energy plan to chart a pathway to 100% renewable electricity, including a strategy on green hydrogen
  • The Government is working on options to strengthen the National Policy Statement on Renewable Electricity Generation to provide a clearer signal of the importance of climate change in the consenting and planning process

Industrial and process heat

  • Consulting later this year on a policy package for reducing industrial process heat emissions

Built environment

  • Enabling higher density urban planning through the Urban Growth Agenda
  • Removing consenting barriers to enable quality densification in urban areas through reforms of the National Policy Statement on Urban Development Capacity

Waste

  • Expanding the Waste Disposal Levy to include more sites and enable the better collection of data

The Climate Plan also identifies four system settings that will be aligned to support the transition:

Innovation

  • Encourage low emissions innovation through the low emissions vehicle contestable fund
  • Ensure climate change is a focus in the research, science and innovation strategy
  • Establish a New Energy Development Centre in Taranaki to test and trial new energy forms

Laws and institutions

  • Zero Carbon Bill which will put in place legislation that establishes a robust framework and sets a 2050 target.
  • Establishing an independent Climate Change Commission
  • The bill to include measures for New Zealand to plan for the ongoing effects of a changing climate in a coordinated way (including a regular National Climate Change Risk Assessment and National Adaptation Plan)

Investment

  • Target government procurement policies towards low emissions goods, including vehicles and stationary heating
  • Accelerate low emissions investment through Green Investment Finance Ltd, the Provincial Growth Fund and Aotearoa Circle
  • Design a mandatory comply or explain regime for climate-related financial disclosures

Emissions pricing

  • Make changes to improve the effectiveness of the NZ ETS
  • Make decisions on the inclusion of biological emissions
  • Set a cap on emissions
  • Phase down industrial allocation

Over the next few weeks we will release a series of articles that look at the Climate Action Plan’s sector-by-sector impacts and provide commentary on the individual responses to the Commission’s 77 recommendations. The Government’s full response to the Productivity Commission can be found here.