New Zealand

In 2002, New Zealand passed an Act of Parliament that forms the backbone of its climate change policy: The Climate Change Response Act 2002. Two further acts also play an important role: the Energy Efficiency and Conservation Act 2000 and The Resource Management Act 1991 (RMA).

In its initial version, the Climate Change Response Act included plans to introduce a carbon tax. Designed to cover most economic sectors (except agriculture and highly carbon intensive businesses), the planned carbon tax was scheduled to come into force in 2007. However, after the 2005 general elections, parliamentary support for a carbon tax waned and it was decided not to introduce the tax. Instead, in 2008, the government introduced a national emissions trading scheme (NZ ETS). However, after a government change in 2008 and in the midst of the global financial crisis, several changes were made to the initial legislation (e.g. longer transition periods) to reduce the impact of emission trading on New Zealand’s economy. Despite these changes, the NZ ETS remains New Zealand’s primary response to climate change. Today, the following sectors are covered under the scheme: energy, fishing, forestry, industrial processes, liquid fossil fuels (i.e. transport fuels), synthetic gases, and waste. The agriculture sector is required to report agricultural methane and nitrous oxide emissions but is not required to surrender obligations.

The Energy Efficiency and Conservation Act established the Energy Efficiency and Conservation Authority (EECA). The EECA promotes energy efficiency, the use and production of renewable energy, and, as a statutory requirement under the Energy Efficiency and Conservation Act prepares New Zealand’s national energy efficiency and conservation strategy (the most recent of which, published in 2011, covers the five-year period until 2016). The New Zealand Energy Efficiency and Conservation Strategy (NZEECS) is a companion document to the non-statutory New Zealand Energy Strategy 2011-2021 published by the then-Ministry for Economic Development (now Ministry of Business, Innovation and Employment). These combined documents state the government’s policies, objectives, and targets for energy for the next five to ten years.

The Resource Management Act (RMA) requires all people exercising duties and functions under the Act to have particular regard to the effects of climate change and gives greater emphasis to climate change and energy matters in resource management, planning, and decision-making (although decision-makers under the RMA may not consider the effects on climate change of discharges into the air of greenhouse gases).  Planning for, and responding to, natural hazards, including climate change related hazards is largely the responsibility of local government.

Two national GHG emissions reduction targets have also been formulated. In 2009, the government announced a conditional pledge to reduce emissions in the range of 10% to 20% from 1990 levels by 2020. In 2011, a second target of a 50% cut from 1990 levels by 2050 was gazetted under the Climate Change Response Act. In 2013, an unconditional target of 5% by 2020 was announced.

Carbon pricing

Political support for a carbon tax, which was initially part of the Climate Change Response Act, crumbled after the 2005 elections. Instead, the government promoted a national emission trading scheme that could be linked to other emissions trading schemes such as the European Union ETS. In 2008, forestry became the first sector to be covered under the scheme.

In November 2008, a new government announced a full review of climate change legislation, with a parliamentary select committee set up to discuss New Zealand’s approach to climate change and the NZ ETS in particular. In 2009, legislation to reform the NZ ETS was passed. According to the government, their principal aim was to ease the NZ ETS’s impact on the economy in a period of economic crisis. Under the modified scheme, agriculture, for example, was to enter the scheme in 2015 rather than 2013. Other measures include a different approach to free allocations of emission units to the most emission-intensive and trade-exposed industries. The allocation of emission units was to be indexed to output and therefore uncapped. Furthermore, until 2013 participating sectors (except forestry) had to surrender one unit for every two tonnes instead of one unit per tonne of emissions.

The Climate Change (Emissions Trading and Other Matters) Amendment Act 2012 made further amendments to the NZ ETS in order to ensure that businesses and households did not face additional costs during a phase of economic recovery. The 2012 amendments prolong the transitional measures introduced in 2009: non-forestry obligations remain at one emission unit for two tonnes of actual emissions, there is no phase-out of free allocations, the unit price is capped at NZD 25 (USD 19.65) and agriculture will not have to surrender obligations from 2015. Provision for further reviews at the discretion of the Minister for Climate Change Issues was included.

In 2013, the Government announced changes regarding the use of international units within the NZ ETS. International units may only be used for surrender in the NZ ETS up until 31 May 2015.  From June 2015 participants must surrender domestic emission units to meet their obligations. With some minor exceptions, this means the NZ ETS will effectively operate as a domestic scheme after May 2015.

Energy demand

The Energy Efficiency and Conservation Act established the EECA, which is charged with developing and overseeing the implementation of New Zealand’s national energy efficiency and conservation strategy. The first version of the strategy was published in 2001. Various programmes were initiated, including ENERGYWISE™. ENERGYWISE™ is EECA’s consumer programme that targets information gaps regarding energy efficiency, energy conservation, and renewable energy. The ENERGYWISE™ information programme provides: General home energy efficiency information; Information on government funding available for home insulation retrofits, clean heat and other energy efficiency solutions; Information to help consumers improve their energy choices (for example, purchasing and running home appliances); and Information on energy labelling schemes, such as ENERGY STAR®.

In 2011, the third version of New Zealand’s Energy Efficiency Strategy was published. Among other things, it set an economy-wide target of improving energy efficiency by 1.3% per annum.

Energy supply

Almost 40% of New Zealand’s energy is produced from renewable energy sources, most of it from geothermal, hydro and bioenergy with a growing amount from wind energy. Nearly 80% of electricity is from renewable sources, mainly hydro-electric power. In 2007, the government set two aspirational targets for the energy sector: that 90% of the country’s electricity should be produced from renewable sources by 2025, providing this does not affect security of supply; and a 9.5PJ increase in the direct use of energy from bioenergy and geothermal above 2005 levels. Although no mandatory legislation has been put in place to support these targets, a number of government and industry-led initiatives support renewable energy projects.

Government support is focused on increasing information through feasibility studies in the meat and dairy sector and to encourage switching from non-renewable heating sources to wood energy in industry. Funding for some renewable energy technology is available via a Technology Demonstration Programme to test new or under-used technology as a means to overcome scepticism or lack of confidence about its effectiveness or reliability.

REDD+ and LULUCF

The agriculture sector is the largest contributor to GHG emissions in New Zealand (46% of total emissions in 2012, excluding LULUCF). While agriculture was due to enter the NZ ETS on 1 January 2015, the Climate Change Response (Emissions Trading and Other Matters) Amendment Act 2012 removed the start date for agriculture. At present, NZ ETS participants for agriculture must report biological emissions (agricultural methane and nitrous oxide) at processor level, but there is currently no legislated date for agriculture participants to surrender units under the scheme. The government has indicated that this will only occur if economically viable and practical technologies become available to reduce agricultural emissions, and if New Zealand’s trading partners make more progress on tackling their emissions in general.

The forestry sector plays a major role in the economy and the NZ ETS is the main policy tool to encourage afforestation and reduce deforestation. New Zealand has also made several amendments to existing legislation and launched several programmes of relevance to REDD+ and LULUCF. In 1993, the government passed an amendment to the Forest Act 1949, restricting commercial logging from private native forest and areas managed under sustainable forest management plans. In 2002, further restrictions were made, prohibiting logging of native forests on public land. The government says that, today, less than 0.1% of forest production stems from native forests.

In 2007, the government presented a policy package for forestry and agriculture, the Sustainable Land Management and Climate Change Plan of Action. The plan consisted of a NZD175m (USD137.5m) work programme to promote adaptation, reduce emissions, and enhance carbon sinks. The programme provides support to three afforestation initiatives: an Afforestation Grant Scheme that operated from 2008 to 2012, the Permanent Forest Sink Initiative, and the East Coast Forestry Project. Under the Afforestation Grant Scheme, the government provides grants to landowners that have created new forests on Kyoto-compliant land (land that was not forested before 1990). The scheme also aims to reduce erosion, nutrient leaching, and flood peaks. The Permanent Forest Sink initiative established in 2007 gives landowners who create new non-harvest forest on Kyoto-compliant land carbon credits that they can trade on domestic and international carbon markets. Established in 1993, the East Coast Forestry Project’s primary goal is to create an additional 200,000 ha of commercially productive forests by 2020. Although the primary aim is to reduce soil erosion, it also enhances the sequestration of carbon in forest sinks. It is now administered on a non-legislative basis.

In 2009, the government facilitated the creation of the Global Research Alliance on Agricultural Greenhouse Gases (GRA) for research on agricultural GHG mitigation. To support and build capability for the GRA, the New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC) was established in 2009. This is 100% government-funded, and approximately NZD48.5m (USD38.1m) will be invested in the Centre over 10 years. Related programmes are the joint public-private Pastoral Greenhouse Gas Research Consortium (PGGRC) and the Livestock Emissions and Abatement Research Network (LEARN). Formed in 2002, PGGRC is a public sector-industry partnership that promotes research and supports livestock farmers in their efforts to mitigate their GHG emissions. Between 2001 and 2008, the programme spent around NZD19m (USD14.9m) supporting research on the production of methane and nitrous oxide from grazing livestock. Established in 2007, LEARN is an international research and collaboration initiative, involving more than 300 researchers from 47 countries. The network seeks to improve the measurement and monitoring of methane and nitrous GHG emissions from animal agriculture and to develop cost-effective mitigation solutions.

Transportation

New Zealand’s primary policy to reduce emissions from the transportation sector is to include transportation fuels in the NZ ETS. In 2011 the New Zealand Energy Strategy (NZES) 2011-2021 and New Zealand Energy Efficiency and Conservation Strategy (NZEECS) 2011-2016 were released. For transport, the strategy sets out areas government will continue to invest in to create an energy efficient transport system, including Roads of National Significance (these routes will ease congestion in and around the five largest metropolitan areas, and link major sea and air ports more effectively into the State highway network; a rail system that enables the efficient movement of freight and complements other modes of passenger and freight transport; reliable and cost effective public transport systems; and improvements to infrastructure for walking and cycling.

The NZEECS target is to continue to achieve a rate of energy intensity improvement of 1.3% per annum. The economy-wide target is shared between four key sectors: transport, homes, business and products. The NZEECS also contains a specific target that by 2016, the efficiency of light vehicles entering the fleet has further improved from 2010 levels. The NZEECS notes that the government will continue to support improvements to road and public transport; continue to fund transport infrastructure to support people to make energy efficient transport choices (i.e. walking, cycling, public transport systems, as well as reducing congestion on the roads); promote efficient business fleet management; and encourage the entry of alternative transport fuels and electric vehicles in the New Zealand market.

For a brief period, New Zealand had a mandatory quota for biofuels. In 2008, amendments were made to the Energy (Fuels, Levies, and References) Act 1989 to establish an initial blending mandate for biofuels of 0.5%, which was set to increase to 2.5% by 2012. However, after a change of government, the obligation was removed the same year. Later attempts to create a mandatory sustainability scheme for biofuels (Sustainable Biofuel Bill) were not successful. However, the government continues to support the production and use of biofuels through a number of measures. Bioethanol is exempted from excise tax and the government-funded Biodiesel Grant Scheme, which ran from 2009-2012, provided NZD36m (USD28.3m) of subsidies to the biodiesel industry.

Electric vehicles are exempt from road user charges in the period of 2009-2020 and in 2008, the government introduced a Vehicle Fuel Economy Labelling Scheme. The label provides information about vehicle fuel efficiency and aims to allow consumers to make more informed buying decisions.

Adaptation

The key piece of legislation for adapting to climate change and associated natural hazards is the Resource Management Act 1991 (RMA). All people exercising duties and functions under the RMA are required to have particular regard to the effects of climate change and this is undertaken as part of wider natural hazards management. Planning for, and responding to, natural hazards, including climate change-related hazards is largely the responsibility of local government under the RMA. Other adaptation-related legislation, policies and plans include the Civil Defence Emergency Management Act, the National Infrastructure Plan and the New Zealand Coastal Policy Statement.

The framework for adapting to climate change outlines the approach to adaptation and describes investment in research and guidance to support climate change adaptation. The government is investing approximately NZD100m (USD78.6m) over 10 years on research and projects relating to adaptation, as well as approximately NZD155m (USD121.9m) on water storage and irrigation. This research will assist local councils, businesses, individuals and communities to identify impacts and implement effective adaptation solutions.

The government has also prepared the guidance to assist local councils in planning for climate change: Guidance note on Natural Hazards Management (this includes information on managing flood hazards through RMA plans); Tools for Estimating the Effects of Climate Change on Flood Flow; Preparing for future flooding; Adapting to sea level rise; and Preparing for coastal change.