Driving down emissions

Unsurprisingly, the Emissions Reduction Plan - released on May 16 - requires actions across every sector of the economy including transport, energy and industry, building and construction, agriculture, forestry, waste and fluorinated gases. Photo: Ministry for the Environment

CLIMATE CHANGE INITIATIVES ANNOUNCED IN MAY ARE A CRITICAL PART OF THE EMISSIONS REDUCTION PLAN (ERP) THAT WILL PUT AOTEAROA ON THE PATH TO NET ZERO. BY JAMES PAUL

RELEASED May 16, the ERP1 was dubbed by Finance Minister Hon Grant Robertson as the most the significant day in New Zealand’s journey to combat climate change. The Climate Change Minister, Hon James Shaw, said the plan “means our net-zero future is closer than ever before”.

Titled Towards a productive, sustainable and inclusive economy, the ERP contains more than 300 actions to help New Zealand reduce its impact on the climate and enable the country to meet its first emissions budget. An emissions budget is a total quantity of emissions that is allowed to be released during an emissions budget period.

These actions will be financed by the ERP’s creation of a $4.5 billion Climate Emergency Response Fund (CERF). The CERF will recycle revenues from the Emissions Trading Scheme (ETS). Each emissions budget covers a period of five years (except the first emissions budget which covers the period 2022-2025), and will act as interim targets to reaching our 2050 emissions reduction targets.

Cabinet agreed that the first three emissions budgets will be:

• Emissions Budget 1 (2022–2025): 290 megatonnes of carbon dioxide equivalent greenhouse gasses (72.4 megatonnes per year);

• Emissions Budget 2 (2026–2030): 305 megatones (averages 61 megatonnes per year) [in principle]; and

• Emissions Budget 3 (2031–2035): 240 megatonnes (48 megatonnes per year) [in principle]. The first emissions budget equates to two megatonnes per year less than the five-year average leading up to this point (2017-2021), and 3.1 megatonnes less than projected emissions for 2022 to 2025. New Zealand’s legislated 2050 emissions reduction targets are: net zero greenhouse gas emissions (except biogenic methane); and a 24-47 per cent reduction in biogenic methane.

Unsurprisingly, the ERP requires actions across every sector of the economy including transport, energy and industry, building and construction, agriculture, forestry, waste and fluorinated gases. And one such area that is exposed to the risks of climate change is agriculture.

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Droughts and floods already pose a risk to this sector and will continue to be exposed at a greater rate thanks to climate change. Market pressures could also pose a risk to the sector but also an opportunity, the ERP states, to export low-emissions agricultural products.

While the ERP acknowledges that many producers are already reducing their emissions, it has five focus areas to help guide agriculture to further mitigate emissions. Interestingly, the Government and industry will assist producers in a transition to a more circular and low-emissions economy, integrating the ki uta ki tai (from the mountains to the sea) principle into sustainable land management.

Over the course of the first emissions budget, the Government will continue to fund initiatives that support a more sustainable, productive, and inclusive primary sector. To this end, the Government will also explore opportunities for the state-owned Landcorp Farming Limited (trading as Pa -mu) to lead in this area.

It is envisaged that a circular economy that also has “a thriving bioeconomy that seizes the opportunities from global trends and shifting consumer preferences” will be delivered by 2050. A circular economy is important because it will support New Zealand’s economic and social wellbeing and essential to meeting our emissions budgets, the ERP states.

A study2 commissioned by the Sustainable Business Network estimated that a more circular Auckland could reduce emissions by 2.7 Mt CO2-e and add $8.8 billion in additional economic activity by 2030.

Scion estimates3 that the bioeconomy (parts of the economy that use renewable biological resources to produce food, products, and energy) could create an extra $30 billion for our economy and help reduce emissions by 12.5 Mt CO2-e by 2030.

But it will require New Zealand to change the way we think about, and use, resources. So, before 2026, the Government will develop a strategy to deliver a circular economy and bioeconomy. This strategy will consider the skills, public and private investments, and innovation needed to achieve the new economy.

Enabling infrastructure, such as resource recovery centres will be crucial for this to succeed. So too will the Government’s proposal to partner with key industry, Ma -ori, and local government stakeholders to launch a circular economy hub, to support deployment of circular practices.

“The private sector has a key role to play in unlocking the significant potential of the circular economy and bioeconomy. We need business to design out pollution, make better use of resources and innovate circular solutions,” the ERP states.

Moving onto one of the country’s largest sources of greenhouse gas emissions, transport is responsible for 17 per cent of New Zealand’s gross emissions. Emissions from this sector are projected to reach 66.5 Mt CO2-e if ERP initiatives are not implemented. Conversely, the estimated emissions reduction from the initiatives in the ERP could be 1.7 to 1.9 Mt CO2-e.

Among the several key actions to reach that goal is the work to decarbonise heavy transport and freight by providing funding to support the sector to purchase zero- and lowemissions trucks and supporting the uptake of low-carbon liquid fuels by implementing a sustainable aviation fuel mandate and a sustainable biofuels obligation.

Four transport targets have been devised to help achieve these key actions, with target 3 being to reduce emissions from freight transport by 35 per cent by 2035. This target for freight transport includes emissions from trucks, rail, and ships.

What will it take to reduce that number of emissions? One critical initiative is to develop a national freight and supply chain strategy with industry that will take a long-term, system-wide view to identify how to best decarbonise the freight transport system to be net zero by 2050, while improving the efficiency and competitiveness of the supply chain.

Aviation isn’t exempt either; the ERP highlights implementing a sustainable aviation fuel mandate and the development of specific targets for decarbonising domestic aviation in line with 2050 targets.

The establishment of a public-private leadership body will help with these actions, including operational efficiencies, infrastructure improvements and frameworks to encourage research, development, and innovation in sustainable aviation.

Maritime is also in the gun for decarbonisation but has, at least, been trying to limit air pollutants since the Government acceded to Annex VI of the International Convention for the Prevention of Pollution from Ships in 2019.

However, the ERP highlights that new maritime emissions targets will be set to include: • Supporting the uptake of zero-emissions small passenger, coastal fishing, and recreational vessels; and

• All new large passenger, cargo, and offshore fishing vessels to meet highest carbonintensity reduction, as set by the

International Maritime Organization, by 2035.

Additionally, the Government wishes to work with other like-minded countries to put in place the conditions to allow low- or zero-carbon shipping on key trade routes by 2035.

Underpinning all of these initiatives is the ETS, an economy-wide tool that incorporates the costs or benefits of greenhouse gas emissions and removals into day-to-day economic activity – except for the agriculture sector and a portion of the waste sector.

The New Zealand Emissions Trading Scheme helps reduce emissions by doing three main things:

• Requiring businesses to measure and report on their greenhouse gas emissions;

• Requiring businesses to surrender one

‘emissions unit’ (known as an NZU) to the Government for each one tonne of emissions they emit; and

• Limiting the number of NZUs available to emitters (i.e., that are supplied into the scheme).

Two years ago, an NZU was sitting around $25 (per tonne of CO2 equivalent) but has since reached over $75, and the Climate Change Commission (CCC) has suggested this price needs to double to meet our 2050 emissions reduction target.

Consequently, the ERP highlights that the ETS settings need to align with the emissions budgets, among multiple other actions. And in order to do this, the CCC will provide advice on the unit limit and price control settings for 2023–27.

Whatever you think of the plan, it is a massive undertaking. And one, Shaw admits, the Government cannot do alone.

“The Emissions Reduction Plan is a plan for the whole of New Zealand. The Government will play a key role in getting the system settings right and accelerating the use of low-emissions practices and technologies. But we cannot do it alone.

“Tackling climate change requires the combined effort of government, iwi / Ma -ori, unions, communities, local government, and business. This plan will guide the work we do together so that collectively we transition to a low carbon future in a way that benefits everyone.”