The Government has announced the first three "emissions budgets", the total amount of greenhouse gases New Zealand can release into the atmosphere over the next 14 years as it strives to meet its climate action ambitions.
It comes ahead of the release of the Emissions Reduction Plan next week, which will outline how New Zealand will act to reduce emissions across the country.
Under the Zero Carbon Act, the Government must release emissions budgets detailing the total amount of greenhouse gases that can be put into the atmosphere over a certain period of time. The budgets must be met through domestic action alone.
In a speech on Monday morning, Climate Change Minister James Shaw described the budgets as "a sinking lid on our emissions, the stepping stones by which we begin the next stage of our journey to net-zero". He revealed the first three budgets as:
- Emissions Budget 1 (2022–2025): 290 megatonnes of carbon dioxide equivalent greenhouse gasses
- Emissions Budget 2 (2026–2030): 305 megatonnes
- Emissions Budget 3 (2031–2035): 240 megatonnes
The first budget averages out at 72.4 megatonnes per year, two megatonnes per year less than the five-year average leading up to this point and 3.1 megatonnes less than the emissions projected for between 2022 and 2025.
"Remember that there are only 42 months left of the first emissions budget period – it started on New Year's Day this year," James Shaw said in a speech on Monday morning. "So even that is going to be tight, given the time lag between a policy decision and its actual effect."
It's exactly what the Climate Change Commission recommended and two megatonnes below what the Government proposed during consultation last year.
"Cabinet had proposed a slight variance to the Commission's recommended emissions budgets, based on updated forestry intentions numbers," Shaw said.
"There is considerable uncertainty around forestry projections and so, having reviewed the evidence, Cabinet chose to revert to the Commission's recommended first emissions budget.
"However, Cabinet has retained the modified second and third emissions budgets we consulted on late last year."
Those are only currently 'in principle'. The budget for between 2026 and 2030 averages at 61 megatonnes per year, 18.1 percent below average annual emissions from 2017 to 2021. The third budget - between 2031 and 2035 - averages out at 48 megatonnes per year, 35.5 percent below average annual emissions from 2017 to 2021.
"The Commission will review the latest evidence and update their advice, in advance of Cabinet finalising the next emissions budget in 2024 and then the one after than in 2029," Shaw said.
"That will take into account not just more recent and firmer forestry projections, but also uptake of new technology and scientific advances.
"The nature and momentum of those changes, of course, will rely in large part on what we are able to achieve through our first Emissions Reduction Plan."
That plan will be released next Monday, setting out exactly how the Government plans to cut emissions to ensure the first emissions budget is met.
Shaw said in his speech that 15 ministers with 18 portfolios are named as having responsibilities as part of the plan, meaning "nearly every minister is a Climate Change Minister".
On the same day, the Minister of Finance will outline the first investments from the Climate Emergency Response Fund, which is how the Government will spend the proceeds from the Emissions Trading Scheme (ETS). It was established last year with $4.5 billion to be spent over the next four years. It all comes ahead of Budget 2022 next Thursday, when climate action will be a core focus.
The Zero Carbon Act, passed in 2019, set a domestic target of cutting greenhouse gases (except biogenic methane) to net-zero by 2050. Biogenic methane must be cut to 24-27 percent below 2017 levels by 2050.
The emissions budgets are different to New Zealand's Nationally Determined Contribution (NDC) under the Paris Agreement, put into place to limit global warming to 1.5C above pre-industrial levels.
Ahead of COP26 in Glasgow last year, the Government announced it would cut greenhouse gases by 50 percent below 2005 levels by 2030. While the emissions budgets are met through domestic actions, the NDC can be met by entering into international arrangements. This could see emissions reductions occur offshore, but be paid for by New Zealand.
The latest Greenhouse Gas Inventory released last month by the Ministry for the Environment shows New Zealand's gross or total greenhouse gas emissions increased by 21 percent between 1990 and 2020. Emissions dropped 3 percent between 2019 and 2020, largely due to COVID-19 restrictions.
Agriculture now makes up 50 percent of New Zealand's total emissions, followed by energy making up 40 percent. Emissions from the waste sector decreased by 17 percent due to ongoing improvements in the management of solid waste disposal at landfills.
Overall, New Zealand's total emissions comprise 44 percent carbon dioxide, 44 percent methane, 11 percent nitrous oxide and 2 percent fluorinated gases.
The United Nations Intergovernmental Panel on Climate Change (IPCC)'s sixth report, also released last month, warned that without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5C is beyond reach.