Net Zero Series #4 New Zealand Net Zero Strategy

Kavita Tulasimani,Aditi AhalparaonNet Zero,Climate Change

April 22, 2024

New Zealand introduced the Climate Change Response (Zero Carbon) Amendment Bill in 2019 which is the first ever legally binding commitment to living within 1.5 degrees celsius of global temperature in the country. New Zealand is committed to taking decisive actions to tackle climate change and this presents the country with benefits and challenges that can be overcome with robust and realistic solutions. The Bill proposes four main strategies as follows

Setting long term emissions reduction targets
Emissions budgets
Adaptation measures
Climate change commission

Setting long term emissions reduction targets
This strategy articulates New Zealand’s commitment to reduce greenhouse gas emissions in line with Paris Agreement’s long term goal of limiting global warming to 1.5 degrees Celsius to pre-industrial levels.
This includes two key components:

Reduce all greenhouse gases(except biogenic methane) to net zero by 2050

Reduce emissions of biogenic methane within the range of 24-47 percent below 2017 levels by 2050, including to 10 percent below 2017 levels by 2030

This target distinguishes between biogenic methane and all the other greenhouse gases. The different requirements for methane and all the other gases are due to their varying lifetimes in the atmosphere, concentration as greenhouse gases and ultimately their warming effects. To combat uncertainties that come with setting a target so far out in the future, the bill has flexible measures that include

New Zealand Emissions Trading Scheme is the primary carbon tool that creates a price signal by setting a limit on net emissions and letting covered entities purchase, receive and trade allowances for the right to emit New Zealand emissions units (NZUs). New Zealand Emissions Trading Scheme aligns with Emissions Budgets proposed in the Bill which encourages businesses and households to align investment decisions and choices with low-emissions alternatives.

The country also has the Climate Emergency Response Fund (CERF) established in 2021 at a size proportional to forecasted cash proceeds from the auctioning of units under the New Zealand ETS over a four-year period. The multi-year fund is intended to support climate-related spending under each budget and can also be drawn from outside the budget cycle.

If the Commission advises that the target should be revised, the government needs to manage the changes as fairly as possible. The parliament must follow strict guidelines with a full explanation and public consultation.

The approach is to set up a series of five year emissions budgets that specifies the quantity of emissions permitted in each budget period and reach the 2050 target.

Each budget in this target will set up guidelines towards how much greenhouse gas emissions will be permitted in CO2 equivalent. This includes all greenhouse gases. Emission budgets will be accomplished through reduction and removal of domestic greenhouse gas emissions. The target includes the following components as follows:

Along with an emission reduction plan, a climate change risk assessment helps in identifying the important risks that the country might face. In response to that, the Bill includes the following targets.

A Climate Change Commission has been set up as part of the Zero Carbon Amendment bill to provide expert advice and perform key functions as an independent advisory board. They are as follows :

The Climate Change Response Amendment Bill shows a critical breakthrough towards the Zero Carbon goal with four proposals however the bill has not highlighted which key sectors are considered under long term emission reduction target and emissions budgets which form two of their important strategies. The Agriculture Forestry and Other Land Use (AFOLU) sector is the cornerstone of the country’s economy and almost 50 per cent of total emissions are from the Agriculture sector, out of which about 70 per cent is biogenic methane. Despite its significance in the total emissions, the Zero Carbon bill has excluded accounting of biogenic methane in the action plan which will pose a unique challenge in the Zero Carbon journey. On the contrary The Nationally Determined Contribution (NDC) of New Zealand is to reduce net greenhouse gas emissions to 50 per cent below gross 2005 levels by 2030 which includes all GHG gases including biogenic methane. The NDC’s target is also economy wide covering of all sectors as per IPCC GHG Inventory guidelines.

The Energy Sector accounts for 40 per cent of total GHG emissions. Domestic oil consumption mainly in the transport and industry sectors was responsible for the largest share of energy-related GHG emissions in New Zealand, accounting for 61 per cent of the total in 2021, followed by natural gas at 19 per cent and coal at 20 per cent. Despite cumulative efforts towards Emissions Targets and policies, this could be a primary reason for Climate Action Tracker to rank New Zealand’s net zero strategy as poor. Another major limitation for the bill is the absence of discussion on Climate Finance. The Bill fails to explain how the government plans to cover the cost of climate actions whilst ensuring it does not cost the economy and the population.

Key Recommendations
New Zealand has a low emissions electricity system with over 80 per cent of electricity coming from renewable sources, with remarkable production of hydropower and geothermal. This presents an opportunity to focus on the transport and agriculture sector which accounts for one of the highest share of emissions. Transport sector is wholly dependent on oil as a fuel source. Industry sector is also a major contributing sector in total GHG emissions. There is a lack of clarity surrounding the four strategies proposed by the Bill to meet the climate targets including the role of the sectors, various technologies and climate finance. The government of New Zealand could consider the following:

Net Zero Series #4 New Zealand Net Zero Strategy

Highlights