Making sense of the Climate Change Bill
With Andrew Millar
In the first of our blog series on the new Climate Change Bill, Bryan Field explained the Government’s new emissions target, looking at whether it was achievable and how much it might cost. In this second instalment, Consulting Manager Andrew Millar places the new target in the context of the other key elements of the Bill — including five-yearly emissions ‘budgets’ and the proposed new Climate Change Commission.
After a long development period, the Climate Change (Zero Carbon) Amendment Bill has finally emerged into the light of day, to strong reactions all round.
Some have praised the new Bill as the solution that will provide a more productive low-carbon future. Others are concerned about what it might mean for them and their livelihoods. Some people are just a little confused about it.
The Bill is currently before Parliament’s Environment Select Committee, having passed its first reading. Closing date for submissions is 16 July. If you’re interested in making a submission, or if you just want to learn a little more about what the Bill proposes, this blog is for you.
What does the Climate Change Bill do? (And why is it important?)
The new Bill presents a framework for how New Zealand will respond to climate change at a national level over the next 30-plus years. It would make a number of significant changes to the current Climate Change Response Act 2002 — in particular it would:
- set a new, long-term reduction target for greenhouse gas emissions that New Zealand will need to achieve by 2050
- establish a series of five-yearly emissions budgets to act as steps or interim targets towards the 2050 target
- put in place a range of adaptation measures to help identity and better manage the impacts of a changing climate on New Zealand
- create a Climate Change Commission to provide expert, independent advice to government on how to meet those long-term climate change objectives.
The Bill’s purpose isn’t to specify the detailed actions New Zealand will need to take to transition to a low-emissions, climate-resilient future. Instead it would establish a pathway to a long-term target, telling us where we should head in order to help achieve the goal of limiting global temperature rise to 1.5 degrees Celsius.
Let’s look at the Bill’s key proposals in a little more detail.
The new 2050 target — a major commitment
At its core the Climate Change Bill would establish a statutory emissions reduction target for New Zealand to achieve by 2050. This target has two parts:
- reducing gross emissions of biogenic methane by 24 to 47 percent below 2017 levels by 2050, with an interim target of reducing these emissions by 10 percent below 2017 levels by 2030
- reducing net emissions of all other greenhouse gases to zero by 2050.
In 2017 New Zealand’s gross greenhouse gas emissions were 80.9 million tonnes of carbon dioxide equivalent. The new targets call for a significant reduction in those emissions and so, even as we plant more trees to store carbon, the proposed targets would be a major commitment.
A long-term target is important as it gives clear direction to businesses, households and individuals about the level of effort that will be needed to transition to a low-emissions future.
Businesses in particular have been calling for greater certainty around the Government’s objective of reducing greenhouse gas emissions so that they can start making the necessary investments. In fact, many businesses are already ahead of the Government here.
Why the split target?
The 2050 target has been the focus of much of the commentary since the Climate Change Bill was announced, particularly the decision to treat biogenic methane differently from other greenhouse gases.
As my colleague Bryan Field noted in his recent blog on the target, agricultural emissions are a particularly challenging issue for New Zealand. Just under half (48%) of our gross greenhouse gas emissions in 2017 were from agriculture (for example, sheep and cattle, and fertilizer) and are methane and nitrous oxide, not carbon dioxide.
Bryan noted that treating these two gases separately is consistent with research from the Intergovernmental Panel on Climate Change (IPCC) on the level by which global emissions need to be reduced by 2050 in order for the world to stay within the target of only 1.5 degrees Celsius of warming.
There is ongoing debate about whether the level of proposed reductions in biogenic methane is too ambitious — or not ambitious enough. The arguments on both sides will be tested as the Bill works through the legislative process, and is likely to be a key topic in many submissions to the Select Committee.
Notably, the target for biogenic methane calls for a gross reduction in emissions, while the target for other emissions requires a net reduction. This means New Zealand will need to meet this biogenic methane target through reducing emissions alone, without being able to use carbon stored in trees, or reductions bought overseas, to help meet the target.
This poses particular challenges for the agricultural sector given the early stage of development of technologies for reducing agricultural emissions, and because it may preclude the use of the offsetting of these emissions through the planting of new forests.
‘Budgeting’ towards 2050
While the 2050 target sets out New Zealand’s long-term goal, the emissions budgets break that down into successive, discrete steps between now and 2050. Each of these steps involves a ‘mini-target’ — a budget that specifies the volume of greenhouse gas emissions New Zealand will be able to emit while still meeting the 2050 target.
Think of it a little like household savings: if the 2050 target is your savings goal, then the budgets tell you how much you can spend and still be on track to achieving that goal.
The Climate Change Bill requires three consecutive five-yearly budgets to be in place at any one time. This will help avoid sharp changes in the level of emissions reduction between each budget period.
If New Zealand overachieves its emissions reduction goals for a particular budget period, it can ‘bank’ those extra emissions for a future budget. If it struggles to achieve its goals for a budget period, then it can also ‘borrow’ up to 1.0 percent of emissions from a future budget to help (of course it will need to pay this back later).
These budgets will be set by the government, which will be required to consider a range of factors in doing so, including scientific evidence, economic feasibility, feedback from public consultation, and global action on climate change. Once a carbon budget is set there will be only limited ability to revise it.
These emissions budgets will help provide greater clarity for businesses, households and individuals about what they’ll need to do in the short to medium term to support a smooth, progressive low-emissions transition. It will also help provide feedback to government and the public on whether the country is on track to meet the 2050 target.
Adapting to climate change
Another important part of the Climate Change Bill deals with adapting to the effects of climate change — including sea level rise, changing weather patterns, and an increase in extreme weather events.
Historically, adaptation measures in New Zealand have been on a regional or sector basis, without a consistent national approach. The new Climate Change Bill provides a framework for greater adaptation action by requiring a National Climate Change Risk Assessment to identify the places, sectors and communities that are most vulnerable to the impacts of climate change.
The Bill also requires a National Adaptation Plan — this will set out the government’s plan for addressing the risks to vulnerable places, sectors and communities identified in the Risk Assessment.
Alongside this, additional information-gathering powers will require central and local government agencies and ‘lifeline utility providers’ (including airports and ports) to provide climate change adaptation information if the government requests it. This will help build an understanding of climate change impacts and help to develop a response.
Collectively these changes will help ensure New Zealand takes earlier, more deliberate and more consistent action to adapt to the impacts of climate change. (You can read more about the kinds of action needed in the reports of the Climate Change Adaptation Technical Working Group.)
The new Climate Change Commission
The final key element of the Climate Change Bill is the creation of a Climate Change Commission to provide government with expert, independent advice on both reducing New Zealand’s greenhouse gas emissions and adapting to a changing climate.
The Climate Change Commission will play a key role in relation to the other key elements of the legislation explained above. For example, the Commission will be required to review the level of the 2050 target, and will be able to advise governments on whether that target needs to be changed.
Similarly, the Commission will advise governments when they’re setting the emissions budgets. The advice must include a recommended quantity of emissions for each emissions budget period. The Commission will have the ability to recommend a cap on the amount of offshore mitigation the government can use to meet the emissions budget.
The Commission must also provide advice on how the budgets might realistically be met, ‘including by pricing and policy methods’. This could include recommendations on New Zealand Emissions Trading Scheme (ETS) settings, such as the volume of units that should be available for auctioning, or the level of allocation to ‘energy intensive and trade exposed’ participants. It could also include recommendations for other, more direct policies to reduce emissions in the transport, energy, waste and agriculture sectors. The content of these policies are yet to be seen but are likely to have widespread implications for the whole economy.
Finally, the Climate Change Commission will prepare the National Climate Change Risk Assessment and present it to the government (although the government itself will undertake the first risk assessment). The government will then use this to create the National Adaptation Plan, which the Commission will be required to review every two years.
No silver bullets
The Climate Change Bill represents the biggest regulatory change in climate policy since the ETS was established in 2008.
The Bill sets up the tools and institutions needed to support a low-emissions transition. It creates a robust and predictable regulatory framework, underpinned by a long-term target and a series of emissions budgets that will help guide action by government, businesses and households to reduce emissions.
The long-term nature of the target — and the aim for it to endure over multiple election cycles — is crucial for regulatory stability. A slow, progressive transition to a low-emissions economy will be less costly and disruptive in the long term, but this requires stable climate policy from our governments, including on the level of effort required. It also requires early progress to be made against the first emissions budgets, in order to build credibility.
The requirements placed on the new Climate Change Commission under the proposed legislation are many and varied, but the work of the Commission will provide further rigour and transparency around climate policy in New Zealand.
Adaptation to climate change impacts has been less of a focus for climate policy in the past, so the increased focus on this will be welcomed — particularly by local government, which is facing the day-to-day effects of a changing climate.
There is also a lot about the Climate Change Bill that is likely to attract interest from submitters, including having different targets for biogenetic methane and carbon dioxide, the role of the Commission in recommending policy and measures to achieve the 2050 target, and what the impacts might be for those identified as living (and owning property) in areas considered highly vulnerable in the National Climate Change Risk Assessment.
The Climate Change Bill does not provide all the answers about how New Zealand will transition to a low-emissions future — there are no silver bullets when it comes to climate change. However, the Bill does set out a pathway for how we might get there. It is up to all of us to work together to make that future a reality.
About the author
As an experienced policy adviser and manager, Andrew is skilled at applying a strategic perspective to solve difficult policy problems.
He is skilled at developing and managing effective relationships. He knows how to work with multiple stakeholders, and understands how to use their perspectives to develop good policy.
Andrew has a particular interest in using new and innovative models of policy development to help resolve difficult policy problems.
Since joining professional services firm MartinJenkins in 2016, Andrews’ area of expertise has developed around sustainable economic development and climate change. For example, early in 2019 he supported the Ministry for Primary Industries with policy changes to the way forestry is accounted for in the New Zealand Emissions Trading Scheme.