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Prime Minister Jacinda Ardern’s government introduced its Zero Carbon Bill into Parliament in May 2019, proposing to achieve net zero emissions of all greenhouse gases, except for methane emissions from agriculture and waste, by 2050. Methane emissions from these two sectors, which represent about 40% of New Zealand’s current emissions, with the lion’s share from agriculture, are covered by a separate target of at least 24-47% below 2017 levels by 2050, with an interim target of 10% by 2030.
While the introduction of the Bill is a significant step forward, excluding such a substantial share of emissions from the net zero goal lowers its ambition. During the consultation process for the Bill, an overwhelming majority (91%) of the 15,000 submissions received supported achieving net zero emissions for all greenhouse gases. Previous analysis found that a net zero target for all domestic GHG emissions in 2050 could be consistent with the Paris Agreement.
The Zero Carbon Bill will establish an independent Climate Commission to oversee a five-year carbon budgeting process to drive the required emission reductions. The Commission will also advise on future revisions of the 2050 target, the use of international credits and the extent to which emissions may be banked or borrowed from one budget to the next. The comparable climate advisory body in the UK unequivocally advised its government in February not to bank emissions from that country’s second carbon budget. New Zealand’s Climate Change Minister has called the practice “dodgy accounting”.
The Bill does not introduce any policies to actually cut emissions: New Zealand has very few policies to implement this bill.
The CAT rates New Zealand’s 2030 emissions reductions target as “Insufficient”, and its current policy projections do not put it on track to meet this target.
Prime Minister Jacinda Ardern has vowed to make New Zealand a climate leader. According to our analysis, this would mean: 1) implementing strong policies to reduce emissions quickly, 2) updating the Paris Agreement 2030 emissions reductions targets, including abstaining from carry-overs and other creative accounting rules, and 3) strengthening the long-term target.
We would expect to see PM Ardern taking a leading role at the UNSG Climate Summit in September.
New Zealand’s Paris Agreement-NDC target—ofa 30% reduction from 2005 levels by 2030— is ratedas “Insufficient,” meaning that it is not consistent with holding warming to below 2°C, let alone limiting it to 1.5°C as required under the Paris Agreement, and is instead consistent with warming between 2°C and 3°C.
If the CAT were to rate New Zealand’s projected emissions levels under current policies, we would rate them “Highly Insufficient,” indicating that New Zealand’s current policies are not consistent with holding warming to below 2°C, let alone limiting it to 1.5°C as required under the Paris Agreement, and are instead consistent with warming between 3°C and 4°C.
The Zero-Carbon Bill currently before Parliament would strengthen New Zealand’s 2050 target. The target under consideration would see the net greenhouse gas emissions from the energy and industry sectors and net non-methane greenhouse gas emissions in the agriculture and waste sectors reduced to zero by 2050.
These emission reductions are net because New Zealand plans to add any emissions or removalsfrom the land use, land use change, and forestry (LULUCF) sector. Historically, New Zealand’s LULUCF sector has represented a big carbon sink. The extent of the sink in 2050 is unclear. New Zealand’s “Kyoto forests”—largely exotic pine plantations planted in the early 1990s—are due to be harvested in the next few years. This will result in a massive reduction in the carbon sink of 20 MtCO2e/year between 2015 and 2030. This stands in strong contrast with the least-cost mitigation scenarios modelled by the Productivity Commission, which would require the LULUCF sector to increase the sink by between -25 to -50 MtCO2e/year by 2050. The Government has a policy to plant one billion trees by 2030; however, it is unclear as to the planned mix between exotic trees and permanent indigenous forests, adding further uncertainty to projections.
The Bill also includes a 2050 target for gross methane emissions from agriculture and waste, which represented about 40% of emissions today. These methane emissions would be reduced by at least 24-47% below 2017 levels by 2050, with an interim target of 10% by 2030.
The Bill would allow the government to use international market credits; however, only as a last resort. The Climate Commission has been tasked with setting a limit on emission reduction credits that can be purchased from overseas mitigation actions.
Alongside the development of the Bill, the government is also in the process of establishing the New Zealand Green Investment Finance Ltd. The 2018 budget earmarked NZ$100 million for the new institution. The purpose of the institution is to catalyse investment in low-emissions initiatives. It is supposed to begin developing its investment pipeline in June and make its first investments by the end of the year.
New Zealand’s main instrument to reduce greenhouse gas emissions is an Emissions Trading Scheme (NZ-ETS). The government is in the process of revising this policy. As of 1 January 2019, all transitional measures have been eliminated and participants are now required to cover all of their emissions rather than some fraction of them. The government is considering whether to expand the Scheme to include agricultural emissions. It is also planning to remove the current $25 cap on the carbon price no later than 2022.
After agriculture, transport is the second largest source of emissions in New Zealand. It has one of the oldest passenger vehicle fleets in the developed world and no emissions standards. The Government has set a target of increasing the number of electric vehicles (EVs) on the roads to 64,000 by 2021. This would be a 16-fold increase from 2017 levels and represents about 2% of the country’s vehicle fleet. The Government is actively considering further measures to support EV uptake; however, it will not provide a timeline for release of this strategy. To reach decarbonisation of the road transportation sector globally, the last combustion engine vehicle must be sold before 2035. The government is also in the process of developing a national rail plan to be released this year. The 2019 Budget included substantial increases in funding for rail and ferry services.
In November 2018, the Government banned new offshore oil and gas exploration. The Government has now turned its attention to how to support the hydrogen economy. Hydrogen can assist in decarbonisation a number of ways, particularly with respect to freight transport. However, it is important to distinguish between 'green' hydrogen produced from renewable energy and ‘brown’ hydrogen produced from fossil fuels. ‘Brown’ hydrogen causes a substantial amount of emissions and is thus in compatible with a 1.5°C world. Advocacy groups have called on the New Zealand government to develop guidelines regarding the source of hydrogen production and to only support green hydrogen production.