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NEW ZEALAND'S ZERO CARBON BILL IS FINALLY HERE
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The Government has introduced the long awaited Zero Carbon Bill. The Bill is now on the NZ legislation website and will go to its first reading before Parliament followed by a Select Committee process

Background to Zero Carbon Bill

In July last year the Government sought feedback to help shape the Zero Carbon Bill to transition New Zealand to a low-emissions, productive and resilient economy.  Since then, the Government received 1500 submissions and a number of reports have been produced[1], which were considered in the process of producing the draft Bill. In addition, Minister Shaw has been working to achieve bipartisan support to ensure the long term durability of this legislation.

The Government has decided to introduce the Climate Change Response (Zero Carbon) Amendment Bill (‘ZCAB’) as an amendment to the current Climate Change Response Act 2002 (‘CCRA’) so that all key climate legislation is within one Act. That Act also currently provides for NZ’s emissions trading scheme (‘ETS’) (which will undergo changes through a separate ETS Bill at a later stage).

What the Bill contains

While the ZCAB takes into account New Zealand’s specific greenhouse gas emissions, responsibilities under Te Tiriti o Waitangi and existing climate change legislation, it is mostly modelled on the UK Climate Change Act and similarly provides for:

  • the Minister to:
    • set emissions targets and emissions budgets to achieve these targets;
    • prepare an emissions reduction plan;
    • prepare the first national climate change risk assessment and the national adaptation plans;
    • report on progress against the budgets and plans to Parliament; and
  • an independent Climate Change Commission (which will be a Crown entity) to provide expert advice, monitoring and reporting.

The targets

“The Bill gives New Zealand a plan to deliver on our Paris commitment. And, as far as we are aware, it is the first legislation in the world to make a legally binding commitment to living within 1.5 degrees Celsius of global warming.” [2]

The Bill sets a new greenhouse gas emissions reduction target, to reduce all greenhouse gases (except biogenic methane) to net zero by 2050. In practice this means we will not have to reduce our emissions to zero but any emissions will need to be offset by actions such as tree planting. As a result of negotiations with NZ First, the ZCAB includes a "split gas" target, so vulnerable communities methane has a different target than long-lived gases, like carbon dioxide.[3] The target in the Bill is to reduce emissions of biogenic methane within the range of 24–47 per cent below 2017 levels by 2050 including to 10 per cent below 2017 levels by 2030.

Te Tiriti o Waitangi and consultation

Māori engagement and the Government’s obligations under Te Tiriti o Waitangi were consistently mentioned across submissions [4], not just by iwi/Māori groups. These raised concerns about the impacts on move of a transition to a low emissions economy. They also raised the importance of a partnership structure to effectively represent the range of Māori, hapū and iwi views and suggested structuring the Commission to effectively provide for this or establishing a Māori Climate Change Advisory Group. The ZCAB goes some way towards allaying these concerns but does not provide for stakeholder representatives on the Commission.

The Bill amends section 3A of the CCRA which provides for the Crown’s responsibility to give effect to Te Tiriti o Waitangi by inserting:

  • that nominations for the Commission pay particular attention to seeking nominations from iwi and Māori representative organisations;
  • regard must be had for the Commission to have members who have technical and professional skills, experience, and expertise, and innovative approaches, relevant to the Treaty of Waitangi;
  • the requirement that the emissions reduction plan includes a strategy to recognise and mitigate the impacts on iwi and Māori of reducing emissions and that iwi and Māori have been adequately consulted;
  • the requirement that the national adaptation plan takes into account the economic, social, health, environmental, ecological, and cultural effects of climate change on iwi and Māori.

While the ZCAB provides for the Minister and the Commission to undertake consultation, mandatory public consultation is limited to the preparation of the emissions reduction plans and the national adaptation plans.

Reporting requirements

The ZCAB provides for 5 yearly emission budgets to be set by the Minister to achieve the targets - only the first budget is 4 yearly and commences in 2022. Progress against these is then regularly reported on by the Commission to the Minister and by the Minister to Parliament.

These reports include data from the New Zealand Greenhouse Gas Inventory as to emissions; and an assessment of the adequacy of the policies and measures which have been put in place to reduce emissions in different sectors (for example, the energy sector, heavy industry, and transport). However, the ZCAB does not provide for NZ companies to make climate-related financial disclosures. The Productivity Commission recommends this to be provided for through a standard under the Financial Reporting Act 2013. What such disclosure obligations will look like (i.e. who will be required to make them and whether the focus will be on climate change adaptation risk to a company (i.e. to its assets) or include greenhouse gas emissions data) will be discussed with industry under that process.

The ZCAB also includes requirements for reporting on adaptation risks and progress made in planning for adaptation. Significantly, the Minister will have the power to require central government organisations, local government organisations, and “lifeline utility providers” to provide information such as the organisations’ assessments of the risks climate change poses to their functions, the organisations’ proposals and policies for adapting to climate change, and their progress towards implementing these. 

What if the targets and budgets are not met

At the end of an emissions budget period, the Commission must evaluate the progress made in the relevant period and can recommend whether an excess reduction of emissions may be carried forward or deficiency carried back. The ZCAB focuses on offsetting and reducing emissions domestically but does allow the Government to purchase reductions sourced from overseas to meet emissions budgets under certain circumstances. There is provision in the ZCAB for the budgets and targets to be revised only in specific circumstances and if recommended by the Commission.

The Commission has an advisory role and has no enforcement or decision making powers to hold the Minister to account. If the Government of the day fails to meet the target or a budget, the ZCAB rules out all court remedies other than a court declaration with little consequent effect. While the UK Act is similarly “toothless”, it is nevertheless viewed as a success and relies on political pressure to hold the Government to account.

What might the fishhooks be?

Since our Bill is mostly modelled on the UK Climate Change Act, it is interesting to consider reviews[5] of that Act 10 years on. These note that problems mostly lie not with the Act itself but with its implementation and recommend:

  • while the Act has had success in encouraging investment in green technologies and practices in key areas such as renewable energy and the automotive sector and spurred innovation and start-ups, more certainty about carbon policies that stem from the Act is required;
  • more work to achieve genuine buy-in from all Ministries that emission reductions are prioritised;
  • more funding for local government to reduce emissions in sectors they are responsible for such as waste and public transport;
  • while the UK Committee on Climate Change is a powerful voice and ultimate provider of high quality climate change information and analysis, this Committee should be financially independent from Government.

The UK Act continues to be seen as a popular Act which has achieved what it set out to do, largely due to the high level of cross-party cooperation when it was passed. The UK’s first two carbon budgets were met quite easily, and the country is on track to meet the third. Carbon emissions were already decreasing and there has been a huge move from coal to natural gas, as well as other policies. However, now that the more straightforward measures have been carried out in the UK, the fourth and fifth budgets will require significantly more change and commitment to achieve. Nevertheless, the UK Committee on Climate Change (the UK’s version of NZ’s proposed Commission) has last week recommended that the UK should now set itself a more stringent target of net-zero emissions by 2050.

Comments

Climate change is the world’s biggest challenge. It is important for social, political and environmental reasons, that the Government takes action to reduce the likelihood of damaging warming, and begin the process of adaption. We cannot just throw up our hands and say ‘too hard’.

Whether NZ’s transition will be a smooth ride will depend on the stringency of our initial budgets, the type of policies the Government chooses to put in place to meet the budgets, and the magnitude of change required.
Given the target for methane requires reduction of emission of this gas, it remains to be seen how this will be implemented in the emissions trading scheme and the practical implications for agriculture and the waste sector.
Adaptation reporting will highlight the major risks to our infrastructure and will begin the process of considering how to plan, fund and support major infrastructure providers and local government in dealing with these risks. However, the requirements by public sector and infrastructure organisations to report on adaptation may turn out to be quite onerous and costly to these organisations.

The draft Bill will likely be open to public submissions in June. If you would like further information in relation to this topic or how this new legislation may affect your business, please get in touch.

Special thanks to Barbara Dean, Associate for writing this article. 

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