Finance Minister, Grant Robertson, announces pre-budget speech. Video / NZ Herald
Budget week kicks off with the Government unveiling its long-awaited master plan to cut emissions over the next decade and a half. What can we expect? Science reporter Jamie Morton explains.
What actually is the Emissions Reduction Plan?
If the three carbon budgets New Zealand just set out to 2035 are our destination, then the long-awaited master plan being unveiled today is the policy roadmap to get us there.
The Emissions Reduction Plan (ERP) represents one of the most important and ambitious steps New Zealand has made to do its bit toward tackling a climate crisis fast approaching the symbolic 1.5C threshold.
Arguably, it sits on a par with the founding of the independent Climate Change Commission - or even the creation of our lynchpin Zero Carbon Act, in which the five-yearly budgets are enshrined.
It's taken years of work to get here – but the pathway the commission proposed itself last year would've done much to guide the small army of policymakers behind it.
The commission's advice has troublingly told us New Zealand is on track to miss our set 2050 target of net-zero long-lived gases by millions of tonnes of carbon dioxide equivalent (CO2e) – and that we can't keep planting our way out of tough action.
The final carbon budgets confirmed this month, taking us out to 2035, are roughly similar to what the commission recommended nearly a year ago, along with what the Government floated in its own draft version of the ERP.
Over the first period, out to 2025, the Government wants to keep emissions to around 290 megatonnes of CO2e (MtCO2e) - or slightly under the emissions we've projected.
While the allowance lifts slightly over the second period – that's 305 MtCO2e between 2026 and 2030 – it's still calculated to be about 20 per cent less than what the country pumped into the atmosphere in the five years to 2021.
The third 240 MtCO2e budget, for 2031 to 2035, represents a 35 per cent cut.
Massey University sustainability expert Emeritus Professor Ralph Sims said analysis suggested New Zealand might blow out our first two budgets – and also our Paris Agreement commitment out to 2030 – by around 100 Mt.
But around two thirds of that still involved doing what we've traditionally done: paying for emissions reductions in other countries through carbon credits.
The Government has already moved to introduce new import standards on high-emitting vehicles. Photo / Mark Mitchell
Sims said planting more forestry and buying credits might reduce an overshoot of our Paris pledge – but much depended on the global carbon price, and it was likely to cost the country billions of dollars.
"So, it's far better for the ERP to significantly reduce domestic emissions and also gain the co-benefits that are often neglected in analyses – such as cleaner air, improved health and less traffic congestion."
To climate change campaigner David Tong, the ERP and the new budgets were both "extraordinarily significant and deeply insufficient".
"This will be New Zealand's first long-term, whole-of-government plan to confront the climate crisis – but the emissions budgets that have been announced fall far, far short of our fair share of limiting warming to 1.5C," he said.
"The decisions made this week risk locking us into spending billions of dollars to buy carbon credits from overseas."
Alongside today's launch, Finance Minister Grant Robinson will outline the Government's first investments from the Climate Emergency Response Fund.
Where can we expect the biggest shake-ups?
No part of our economy will be untouched by what's in today's plan, but commentators expect one sector - transport - will be affected more than any other.
Road transport is our fastest-growing source of our emissions and makes up nearly half the CO2 we send into the atmosphere today, mainly through the petrol and diesel our cars, SUVs and trucks use.
The commission has suggested that switching to low-emissions vehicles and otherwise boosting our use of greener modes could see the sector almost completely decarbonised as soon as 2050.
The Government itself has floated a target to get people to travel by car 20 per cent less by 2035 – while also bumping up the number of zero-emission cars in our fleet by a third.
Yet New Zealand's EV uptake has been markedly slow – as at March, they only accounted for fewer than 40,000 of more than 3.3 million light vehicles on our roads – despite recently-announced measures like new import standards and "feebates" that target polluting vehicles.
New Zealand's EV uptake has been markedly slow. Photo / Alex Burton
Professor Dave Frame, director of Victoria University's New Zealand Climate Change Research Institute, said he wanted to see the plan accompanied with green infrastructure investments that went beyond cycle lanes.
Experts also predicted big moves in another chunk of our emissions pie - those created through power generation, manufacturing, producing oil and gas, and heating our homes and offices - and which the commission had suggested could be nearly halved.
Again, the Government wouldn't be starting from scratch - it's already driven through a ban on new offshore oil and gas exploration and moved to phase out most industrial coal burners – and it might stick with a floated proposal to scrap new gas connections within a few years' time.
It's also proposed incentives to make new biofuels and hydrogen fuels, reducing organic waste to landfill, and installing technology at landfills to capture the emissions created when rubbish decomposes.
But how its final plan dealt with the tricky issue of forestry – long used as a climate policy crutch - remained to be seen.
While the commission had called for the planting of hundreds of thousands of new exotic forestry, the Government recently decided to exclude these from a new category of the Emissions Trading Scheme (ETS), amid concerns that could lead to large areas of land being blanketed in pine.
As for agriculture, commentators weren't expecting to see any radical shakeups in the plan for the big-emitting sector, such as the commission's bold proposal to chop dairy, beef and sheep numbers by 15 per cent this decade.
That's largely because the Government is negotiating separately with the industry through the He Waka Eke Noa programme – and big decisions around emissions cuts aren't likely until later in the year.
"It's likely that some of the biggest reductions will come from transport and industrial process heat," Tong said.
Agriculture isn't expected to be significantly affected by what's in today's plan. Photo / Mark Mitchell
"Unless the Government takes serious action to reduce agricultural emissions, these other sectors will need to take on proportionally more of the load."
Will the plan last?
Whether the ERP will be ambitious enough to transition New Zealand to a low-carbon economy is one question.
Whether it'll survive future political cycles is another.
Tong said it was "very significant" that National pledged to vote in favour of the emissions budgets – but it still wasn't clear if the party would support the policy detail in the emissions reduction plan itself.
He was particularly concerned the party had repeatedly asserted it'd overturn the ban on new offshore oil and gas exploration.
Sims noted there wasn't any commitment within the Zero Carbon Act for measures imposed to be enforced over the longer term.
Still, he felt the cross-party agreement on the new budgets offered "some level of confidence that most policymakers accept we have a huge problem that has to be resolved".
"In addition, many of our future trading partners will be looking closely at our track record of reducing emissions and may not buy our products if our emissions continue to be high and we fail to meet the international agreements we have signed up for."
Canterbury University political scientist Professor Bronwyn Hayward felt the budgets we locked today could be upgraded in future.
"The international think tank Carbon Action Tracker has rated our targets and performance as 'critically insufficient'," she said.
"We are small, that's no excuse for being haphazard and ineffective in our policy."
How the plan deals with the tricky issue of forestry - long used as a climate policy crutch - remains to be seen. Photo / Alan Gibson
Frame agreed it'd be important to set policies that could be scaled up over time.
"Subsidy-based policies may yield some early wins, but these are often prone to middle-class capture and, if they do become widely taken up, can become fiscally unsustainable," he said.
"Price mechanisms, such as that embedded in the ETS, can be scaled, but the recent fuel tax reduction throws a question mark over the Government's commitment to climate policy.
"It sends a signal that we believe in net zero commitments, but we aren't prepared to commit the political capital required to get there."
Ultimately, he wanted to see New Zealand invest more in gross emissions reductions here, rather than spending money on masking our warming by planting trees elsewhere.
"If it's true that meeting our very grand target implies shunting $30 billion dollars to unspecified foresters in unspecified countries, then I think we are failing in our core task of decarbonising New Zealand."
