Reducing greenhouse gas emissions is one of the biggest challenges we face in Aotearoa New Zealand. The New Zealand Government’s Emissions Reduction Plan (ERP), released on Monday 16 May 2022, is a positive step to moving to a low-emissions economy over the next three decades. In this blog we unpack the Plan’s main provisions and what they mean for business.
We also introduce our ‘How to move faster’ series of blogs – coming soon. These blogs will feature our recommendations for government and business to build on the ERP so that our country meets its international obligations and nails that crucial 1.5°C target to limit climate change. As the name of the series suggests, we’re ambitious! We believe we need to move faster as a country – and we think we can.
What is the ERP?
It’s the strategies and policies that make the Zero Carbon Act 2019 happen. The ERP sets out how Aotearoa New Zealand will meet the first of its three emissions budgets (for the period 2022 to 2025). It summarises priorities for managing emissions in five important areas for business:
- Transport
- Agriculture and forestry
- Energy and industry
- Building and construction
- Waste, circular economy and bioeconomy.
The ERP also focuses on adapting the New Zealand Emissions Trading Scheme (NZETS), managing biodiversity, learning from and incorporating Māori tikanga (customs) and providing transitional support for businesses, people and communities.
Why does this matter, now more than ever?
Last week, the World Meteorological Organisation announced that there is a 50:50 chance that global temperatures will temporarily reach 1.5°C above pre-industrial levels during at least one of the next five years. This is one of the thresholds we need to avoid under the Paris Agreement.
The challenge for Aotearoa New Zealand: to reach net-zero emissions by 2050
The problem: we’re on track to miss that target In fact, our emissions are continuing to rise. And we can’t keep planting trees and buying carbon credits in other countries to offset our emissions. We need to get serious about reducing them. Enter the ERP.
The main goals, actions and targets in the ERP
An ambitious target – three decades – all our major industries. It adds up to significant change.
These are the main goals, actions and targets that relate to business. (Not every part of the plan includes detailed goals or targets, but we’ve included them where they exist.) As a well-run business focuses on the wellbeing of its people, we’ve included examples that affect people outside the workplace too, like the homes they live in and how they commute to work.
This information is high-level. In coming months, the government will explain how it will work with business to take the ERP from plan to action.
You can read the full report here.
1. Emissions pricing
The New Zealand Emissions Trading Scheme (NZ ETS) is an economy-wide tool that incorporates the costs of emitting and benefits of removing greenhouse gas into day-to-day economic activity. The government is strengthening the ETS.
Examples of actions:
- Align the NZ ETS settings with emissions budgets; adjust the ETS to drive an appropriate balance of reductions in gross and net emissions
- Develop frameworks for market governance and a voluntary carbon market
- Price agricultural emissions from 2025
2. Transport
Road transport is our fastest-growing source of emissions and accounts for nearly 20% of emissions. We’re a country of cars, SUVs and trucks – and most are powered by fossil fuels.
ERP goal: By 2035, Aotearoa New Zealand will have significantly reduced transport-related carbon emissions and have a more accessible and equitable transport system that supports wellbeing.
Examples of actions:
- Reduce reliance on cars and support people to walk, cycle and use public transport (improved transport infrastructure, services and affordability)
- Rapidly adopt low-emissions vehicles (continued incentives through the Clean Vehicle Discount scheme, social leasing schemes, financial assistance to help lower- and middle- income households shift to low-emission alternatives when they scrap their old vehicles)
- Decarbonise heavy transport and freight (funding, including for public transport buses)
Targets:
- 30% of light vehicles are zero-emissions by 2035
- Total kilometres travelled by light vehicles are reduced by 20% by 2035
- Emissions from freight transport are reduced by 35% by 2035
- The emissions intensity of transport fuels is reduced by 10% by 2035
3. Agriculture and forestry
Almost half our greenhouse gas emissions come from agriculture. To date, agriculture has been excluded from the NZETS. Forests store carbon from the atmosphere, helping offset other sectors’ emissions.
ERP goals: Build Aotearoa’s brand as one of the most sustainable producers of food and fibre in the world and deliver a low-emissions future and resilient rural communities. By 2050, Aotearoa New Zealand has a sustainable and diverse forest estate that provides a renewable resource to support our transition to a low-emissions economy.
Examples of actions:
Agriculture:
- Price agricultural emissions (an agricultural emissions pricing mechanism by 2025, support for early adopters of low-emissions practices, all producers to have emissions reports by the end of 2022 and a farm plan in place by 2025)
- Reduce emissions from synthetic nitrogen fertiliser
- Accelerate mitigation technologies (new Centre for Climate Action on Agricultural Emissions to develop and roll out products and technologies to help the sector reduce emissions)
- Support producers to transition (advisory services, food and fibre science and mātauranga Māori accelerators, support for whenua (land-based) Māori entities e.g. with technology).
Forestry:
- Grow the forestry and wood processing industry; deliver more value from low-carbon products and through jobs
- Support afforestation (consider changes to the NZETS and resource management legislation to achieve the right type and scale of forests, support landowners)
- Encourage native forests as long-term carbon sinks (reduce costs, improve incentives)
- Reduce deforestation (encourage forest management practices that increase carbon stocks in pre-1990 forests)
4. Energy and industry
Emissions from our energy and industry sectors make up 27 percent of our total emissions.
ERP goal: By 2050, our energy system is highly renewable, sustainable and efficient, and supports a low-emissions and high-wage economy. Energy is accessible and affordable and supports the wellbeing of all New Zealanders. Energy supply is secure, reliable and resilient, including in the face of global shocks.
Examples of actions:
- Invest to help businesses switch from fossil fuels to low-emissions alternatives (e.g. to heat commercial buildings, in motorised plant and equipment) through the Government Investment in Decarbonising Industry (GIDI) fund and Energy Efficiency and Conservation Authority (ECCA)’s business programmes
- Ban new low- and medium-temperature coal boilers and phase out existing ones by 2037
- Ensure the electricity system can meet future needs (e.g. support the move to a highly renewable system)
- Speed up the development of the bioenergy market
- Improve insulation so houses take less energy to heat
5. Building and construction
In 2018, nearly 9.4 per cent of domestic emissions were building-related.
ERP goal: By 2050, Aotearoa New Zealand’s building-related emissions are near zero and buildings provide healthy places to work and live for present and future generations.
Examples of actions:
Building and construction:
- Reduce the embodied carbon of construction materials (innovation, regulation)
- Consider incentives for developing Environmental Product Declarations (EPDs)
- Accelerate the shift to low-emissions buildings (data, promotion of low-emissions design, materials, practices)
- Make buildings more energy-efficient (existing and new)
- Support workforce transition to ensure the sector can build for climate change
Planning and infrastructure:
- Improve the resource management system to promote reductions in greenhouse gas emissions and climate resilience
- Promote low-emissions infrastructure in the private and public sectors (funding, financing, data, innovation, policies)
6. Waste, circular economy and bioeconomy
In 2019, 94 per cent of waste emissions were biogenic methane – largely generated by decomposing organic waste such as, food, garden, wood and paper waste. While waste contributes a small percentage of our total emissions, biogenic methane has a warming effect 28 times greater than carbon dioxide.
ERP goal: By 2050, Aotearoa will have a circular economy that keeps materials in use for as long as possible and a thriving bioeconomy.
Waste:
Examples of actions:
- Manage organic waste (enable households and business to reduce, increase diversion from landfill, investigate banning from landfill by 2030)
- Manage construction and demolition waste (reduce and divert through R&D, infrastructure for sorting, separation and processing)
- Increase the capture of gas from municipal landfills
- Improve waste data and prioritise a national waste licensing scheme.
Circular economy:
Examples of actions:
- Start a circular economy and bioeconomy strategy (supported by R&D, investment, data collection and a circular economy hub)
- Integrate circular practices across government, communities and businesses
- Support businesses moving to circular economy business models
- Support the bioeconomy (accelerate the supply and uptake of bioenergy, support R&D, accelerate investment)
Targets:
- All municipal landfills must capture gas by the end of 2026
- 40% reduction of biogenic methane by 2035
7. Enhancing nature
The ERP recognises that the climate and biodiversity crises are inextricably linked and that they need to be tackled together.
Examples of actions:
- Prioritise nature-based solutions in planning and regulations
- Establish a work programme that delivers climate, biodiversity and wider environmental outcomes (e.g. afforestation, dunes and wetlands to protect against flooding)
- Report on biodiversity when reporting on emissions reductions
- Encourage global efforts to use nature-based solutions
8. Transitional activities
The plan contains activities to support the transition to a low-emissions economy. These include:
- encouraging Māori participation, actions and solutions; funding and resourcing
- partnerships with business and labour organisations, training, new jobs in low-emissions industries
- government ‘leading by example’ (e.g. replacing coal boilers, buying EVs, responsible procurement)
- finance and investment (e.g. the new Climate Emergency Response Fund, Sovereign Green Bonds, climate reporting legislation)
- advisory services to support business.
Up next, our ‘Moving Faster’ series
Plus, we’ll suggest ways we can move even faster as a country to help avoid the worst effects of climate change and identify how businesses across Aotearoa New Zealand can play their part.
The case for crashing the price of electricity
On the road to decarbonised transport
Building on change
May 2022