The Government’s Emissions Reduction Plan is flush with incentives for low emissions transport, native tree planting and clean energy in industry but may struggle to meet its targets, Marc Daalder reports

Analysis: New Zealand’s first whole-of-economy plan to tackle climate change will transform society over the next 13 years, but is it enough?

The Emissions Reduction Plan (ERP) was released by Climate Change Minister James Shaw and Finance Minister Grant Robertson on Monday, responding to advice from the Climate Change Commission delivered to the Government in May 2021. Prime Minister Jacinda Ardern was unable to attend the release after she tested positive for Covid-19 on Saturday.

The 343-page document contains dozens of actions in every sector of the economy, from transport to industry to agriculture to construction. It was accompanied by the announcement of $2.9 billion in funding from the Climate Emergency Response Fund (CERF), which is made up of Government revenues from auctions in the Emissions Trading Scheme.

This includes $338 million for research into new technologies to reduce agricultural emissions, $652 million in subsidies to help industry and business decarbonise, nearly $100 million to incentivise native forests, $375 million for active and public transport to get people out of cars and $569 million for a vehicle scrapping scheme.

Nicknamed the Clean Vehicle Upgrade, the scrap scheme will begin with a pilot of 2500 vehicles over the next two years at a cost of $16 million a year. Low- and middle-income families would be paid to turn in their fossil fuel vehicles and buy low emissions alternatives with the cash.

The CERF still has $1.5 billion for future investments, Robertson said, and it would be reviewed ahead of the next Budget to see if more funding was needed.

While the money announced on Monday goes some way towards funding the key measures in the Emissions Reduction Plan, there are many actions which remain unfunded. Some parts of the plan don’t require additional funding, others will be paid for from government agencies’ existing baseline budgets and the remainder will have to seek resourcing in future Budgets.

The plan didn’t commit to some of the most controversial policies floated by the Climate Change Commission: 

– congestion charging,

– a ban on new fossil gas connections to homes from 2025 and

– a ban on the import of fossil fuel vehicles by 2035,

were all left to future Government decisions.

Cabinet will decide on whether to implement congestion charging later this year and legislation would then take two years to draft, pass and come into effect. The bans will be reviewed in future years as part of plans and strategies for the transport and gas sectors.

Ministers were also tight-lipped on the future of the half-fare public transport scheme, which was launched in March in response to high fuel prices. No funding for an extension of the scheme was announced on Monday, but further investments from the CERF are expected in Thursday’s Budget.

It also remains unclear whether the plan will actually be able to achieve New Zealand’s emissions budgets, which put a sinking lid on emissions in five year periods out to 2035.

Shaw and Robertson both said they were confident the plan as presented would achieve the budgets. But the plan itself includes two scenarios – one in which policies have high impact in reducing emissions, one in which they only have a low impact. If policies aren’t as impactful as hoped, the emissions budgets will be overshot by millions of tonnes of greenhouse gases.

The lack of certainty around the future of the Tiwai Point aluminium smelter also has the potential to throw a wrench into the works. The climate commission’s work anticipated the smelter would close in 2024 as previously announced, freeing up nearly 600 megawatts of clean electricity to aid the country’s transition.

However, the smelter’s owners floated earlier this year the possibility that the smelter may remain open. This would require New Zealand to build huge amounts of additional renewable electricity generation in the next few years or to slow the pace of the transition.

Shaw and Energy Minister Megan Woods both said on Monday the Government’s projections weren’t reliant on Tiwai closing in 2024. But the plan appeared to disagree, saying the projections incorporated the 2024 closure. Without the closure, New Zealand would emit an extra 2.4 million tonnes of greenhouse gases between now and 2025, another 9 million tonnes between 2026 and 2030 and 3 million additional tonnes between 2031 and 2035.

Newsroom has asked Shaw’s office for clarification of this issue.

If Tiwai remains open and some of the Government’s major policies don’t make as big a dent in emissions as expected, that could jeopardise the achievement of the budgets.

This is a developing story. Newsroom will continue to update this article throughout the day.

The Government’s Emissions Reduction Plan is flush with incentives for low emissions transport, native tree planting and clean energy in industry but may struggle to meet its targets, Marc Daalder reports

Analysis: New Zealand’s first whole-of-economy plan to tackle climate change will transform society over the next 13 years, but is it enough?

The Emissions Reduction Plan (ERP) was released by Climate Change Minister James Shaw and Finance Minister Grant Robertson on Monday, responding to advice from the Climate Change Commission delivered to the Government in May 2021. Prime Minister Jacinda Ardern was unable to attend the release after she tested positive for Covid-19 on Saturday.

The 343-page document contains dozens of actions in every sector of the economy, from transport to industry to agriculture to construction. It was accompanied by the announcement of $2.9 billion in funding from the Climate Emergency Response Fund (CERF), which is made up of Government revenues from auctions in the Emissions Trading Scheme.

This includes $338 million for research into new technologies to reduce agricultural emissions, $652 million in subsidies to help industry and business decarbonise, nearly $100 million to incentivise native forests, $375 million for active and public transport to get people out of cars and $569 million for a vehicle scrapping scheme.

Nicknamed the Clean Vehicle Upgrade, the scrap scheme will begin with a pilot of 2500 vehicles over the next two years at a cost of $16 million a year. Low- and middle-income families would be paid to turn in their fossil fuel vehicles and buy low emissions alternatives with the cash.

The CERF still has $1.5 billion for future investments, Robertson said, and it would be reviewed ahead of the next Budget to see if more funding was needed.

While the money announced on Monday goes some way towards funding the key measures in the Emissions Reduction Plan, there are many actions which remain unfunded. Some parts of the plan don’t require additional funding, others will be paid for from government agencies’ existing baseline budgets and the remainder will have to seek resourcing in future Budgets.

The plan didn’t commit to some of the most controversial policies floated by the Climate Change Commission: 

– congestion charging,

– a ban on new fossil gas connections to homes from 2025 and

– a ban on the import of fossil fuel vehicles by 2035,

were all left to future Government decisions.

Cabinet will decide on whether to implement congestion charging later this year and legislation would then take two years to draft, pass and come into effect. The bans will be reviewed in future years as part of plans and strategies for the transport and gas sectors.

Ministers were also tight-lipped on the future of the half-fare public transport scheme, which was launched in March in response to high fuel prices. No funding for an extension of the scheme was announced on Monday, but further investments from the CERF are expected in Thursday’s Budget.

It also remains unclear whether the plan will actually be able to achieve New Zealand’s emissions budgets, which put a sinking lid on emissions in five year periods out to 2035.

Shaw and Robertson both said they were confident the plan as presented would achieve the budgets. But the plan itself includes two scenarios – one in which policies have high impact in reducing emissions, one in which they only have a low impact. If policies aren’t as impactful as hoped, the emissions budgets will be overshot by millions of tonnes of greenhouse gases.

The lack of certainty around the future of the Tiwai Point aluminium smelter also has the potential to throw a wrench into the works. The climate commission’s work anticipated the smelter would close in 2024 as previously announced, freeing up nearly 600 megawatts of clean electricity to aid the country’s transition.

However, the smelter’s owners floated earlier this year the possibility that the smelter may remain open. This would require New Zealand to build huge amounts of additional renewable electricity generation in the next few years or to slow the pace of the transition.

Shaw and Energy Minister Megan Woods both said on Monday the Government’s projections weren’t reliant on Tiwai closing in 2024. But the plan appeared to disagree, saying the projections incorporated the 2024 closure. Without the closure, New Zealand would emit an extra 2.4 million tonnes of greenhouse gases between now and 2025, another 9 million tonnes between 2026 and 2030 and 3 million additional tonnes between 2031 and 2035.

Newsroom has asked Shaw’s office for clarification of this issue.

If Tiwai remains open and some of the Government’s major policies don’t make as big a dent in emissions as expected, that could jeopardise the achievement of the budgets.

This is a developing story. Newsroom will continue to update this article throughout the day.

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