NZ unveils climate plan to strengthen price on carbon, adoption of EVs

The Ardern government in New Zealand has unveiled the country’s Climate Action Plan, its response to a Productivity Commission inquiry that found a transition to a strong zero-carbon economy is achievable with the right policies in place.

The Climate Action Plan outlines the New Zealand Government’s response to climate change, including a package of initiatives that will see the country’s emissions trading scheme strengthened, new government investment bodies to support increased adoption of renewable energy and electric vehicles, and an independent climate commission to advise the government on policies and emissions targets.

The plan has been developed in response to the NZ Productivity Commission’s Low Emissions Economy Report, with the New Zealand Government immediately accepting the majority of the commission’s recommendations, and has committed to continue consideration of the remaining recommendations.

Many of the recommendations related to reforms to the New Zealand Emissions Trading Scheme, with the NZ Productivity Commission identifying opportunities for the market-based mechanism to be strengthened. Such reforms would drive further investment in lowering emissions without the need to develop a completely new mechanism, such as a carbon price, to put a price on greenhouse gas emissions.

Following the recommendations, the NZ Government will establish an independent climate change commission to provide ongoing advice and guidance to the government, similar to the Australian Climate Change Authority.

New Zealand climate change minister James Shaw announced last week that reforms to the NZ emissions trading scheme would see the gradual phase-out of free emissions permit allocations to large industrial emitters.

By phasing out the free allocations, the NZ Government hopes to incentivise further investments in emissions reductions from industrial operations and spur greater participating in the NZ emissions trading scheme.

Since the election of the Ardern Government and the appointment of NZ Greens MP James Shaw as the climate change minister, New Zealand has demonstrated strong leadership on climate change policy. This has included the introduction of legislation, that will establish a zero-carbon target in law.

New Zealand has established interim emissions reduction targets, including a commitment to reduce emissions by 30 per cent by 2030, establishing a trajectory towards reaching zero net emissions by 2050.

However, New Zealand also faces challenges, particularly relating to the significant role that agriculture plays in both New Zealand’s economic exports, and representing around half of the country’s greenhouse gas emissions.

The government has sought ways to effectively shield the agricultural sector from bearing the full burden for emissions reductions and the sector will retain the full value of its free permit allocations, despite allocations being wound down for other sectors.

“Our Government is committed to a just and rapid transition to a low emissions economy, because it’s vital that we play our part looking after our planet. We’re already taking action on many of the Productivity Commission’s recommendations. Climate change is an urgent issue requiring an urgent response, to ensure a stable climate for future generations of New Zealanders,” Shaw said.

“The Commission was clear that we must work together across every sector of our economy, from energy to transport to agriculture. We are all in this together.”

“Whether it’s supporting coastal communities to plan for sea level rise, working to make electric cars cheaper for families, or partnering with businesses and farmers to find the best ways to reduce their emissions and create sustainable jobs, our Government is working alongside New Zealanders to tackle the climate crisis.”

“We have listened to expert advice on how to reduce emissions. Cabinet has agreed to 43 of the Productivity Commission’s recommendations and agreed to do more work on 33 further recommendations.”

“For example, work is well underway to fix the Emissions Trading Scheme and establish an independent Climate Change Commission, reduce the price of electric cars, and require big businesses to report their climate-related financial risks – as the Commission recommended.”

New Zealand’s climate policies have spanned across multiple governments, and has support across the political spectrum, providing a stark contrast to the experience in Australia, where no effective price on carbon exists, and successive governments have failed to establish a meaningful policy to stimulate and guide the decarbonisation of the Australian economy.

Instead of following New Zealand’s lead to support the adoption of electric vehicles, Australian energy minister Angus Taylor revealed on Monday that Australia is negotiating with the Trump Administration to gain access to American strategic oil reserves to sure-up access to fuels in case of an international emergency.