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Advice report

Final report: 2023 Advice on the direction of policy for the Government’s second emissions reduction plan

Our finalised advice on the direction of policy for the Government’s second emissions reduction plan

22 November 2023

About this report

This report provides the Commission’s advice to inform the strategic direction of the Government’s second emissions reduction plan, covering Aotearoa New Zealand’s 2026–2030 emissions budget period.

We consulted on a draft version of this report in April and June 2023.

Details & links

Title

2023 Advice  on the direction of policy  for the Government’s second emissions reduction plan

ISSN

3021-1565 (print); 3021-1573 (online)

Full report [PDF, 5.2 MB] Executive summary [PDF, 480 KB] Media release about this report

Supporting documents

Draft advice and consultation

We released the draft version of this advice for consultation during 26 April – 20 June 2023. A summary of what we heard during consultation is available in Chapter 2: What we heard in our final advice.

Final recommendations

The table below shows our initial proposed recommendations that appeared in the draft advice we consulted on, alongside our final recommendations to the Government.

Recommendations proposed in draft advice

#

Final recommendations:

We recommend that in its second emissions reduction plan, the Government...
[New recommendation following consultation] 1

Align and coordinate institutional and regulatory outcomes within and between levels of government and across all sectors of the economy to support the coherent implementation of the second emissions reduction plan.
Commit to a specific level of gross emissions for the second and third emissions budgets no less ambitious than 362 MtCO2e and 322 MtCO2e respectively, and ensure that its policy choices align with delivering this outcome. 2 Commit to specific levels of gross greenhouse gas emissions and carbon dioxide removals for the second and third emissions budgets and align policies to achieve or exceed the emissions reductions in the budgets. Gross emissions should not exceed 362 MtCO2e for the second emissions budget nor 322 MtCO2e for the third emissions budget. The levels the Government commits to for gross emissions and carbon dioxide removals must be developed in partnership with iwi/Māori under Te Tiriti o Waitangi/The Treaty of Waitangi.
Communicate indicative levels of gross emissions and carbon dioxide removals from forestry out to 2050 and beyond to guide policy development. 3 Communicate indicative levels of gross greenhouse gas emissions and carbon dioxide removals out to 2050 and beyond to guide policy decisions. The levels the Government communicates for gross emissions and carbon dioxide removals must be developed in partnership with iwi/Māori under Te Tiriti o Waitangi/The Treaty of Waitangi.

Make the emissions pricing system consistent with delivering the specific levels of gross emissions for the second and third emissions budgets, and with the 2050 net zero target, by:

  1. implementing an amended NZ ETS that separates the incentives for gross emissions reductions from those applying to forestry;
  2. developing an approach that can provide durable incentives for net carbon dioxide removals by forests through to and beyond 2050.
 4

Align the emissions pricing system with delivering the desired levels of gross emissions for the second and third emissions budgets, and with the 2050 net zero target, by:

  1. amending the NZ ETS to separate the incentives for gross emissions reductions from those applying to forests
  2. providing durable incentives for net carbon dioxide removals by forests through to, and beyond, 2050.

The redesign of emissions pricing incentives must take into account the unique characteristics and historical circumstances of land owned by Māori and options must be developed in partnership with iwi/Māori under Te Tiriti o Waitangi/The Treaty of Waitangi.
[New recommendation following consultation] 5 Reduce the barriers – including regulatory, institutional, and ownership barriers – to mobilising the public and private investment required to meet emissions budgets.
[New recommendation following consultation] 6 Provide adequate targeted investment and increased coordination, and facilitate widespread sharing of freely available climate change data and information to enable a research, science, innovation, and technology system that supports achieving emissions budgets and the 2050 target.
Accelerate Iwi/Māori emissions reductions in conjunction with climate change adaptation initiatives by exploring and implementing a mechanism to allocate resourcing direct to Iwi, and increase funding to Māori landowners (Te Ture Whenua entities). 7 Introduce ways to directly allocate resources to iwi/Māori and augment funding to Māori landowners to enable them to accelerate emissions reductions and removals in accordance with their assessments and priorities.
Ensure Iwi/Māori can drive the integration of mātauranga Māori into policy design, development, and implementation at central and local government level, by delivering sufficient resources to iwi/hapū. 8 Ensure iwi/Māori are empowered to lead the weaving of mātauranga Māori into policy design, development, and implementation at central and local government levels. This includes providing sufficient resources to iwi and hapū.
Enable a fair, inclusive, and equitable transition for New Zealanders by expanding the scope of the Equitable Transitions Strategy to include compounding impacts of climate change and adaptation as well as mitigation. 9 Expand the scope of the Equitable Transitions Strategy to also include the impacts of climate change and adaptation as well as mitigation.
Make use of existing mechanisms to manage impacts of climate policies in the interim, rather than delaying climate action. 10 Manage the impacts of climate policies using existing policy levers until the Equitable Transitions Strategy is implemented, rather than delaying climate action.

Advance the agricultural emissions pricing system to:

  1. enable recognition of a broader range of emissions-reducing practices and technologies
  2. incentivise gross emissions reductions in line with the 2050 target.
 11

Advance the agricultural emissions pricing system to:

  1. continuously broaden the range of recognised low emissions practices and technologies
  2. incentivise gross biogenic methane emissions reductions in a manner consistent with achieving the 2030 biogenic methane component of the 2050 target and putting the country on a trajectory to achieve the 2050 target in full.
Enhance advisory and extension services to farmers to enable them to respond to pricing and accelerate the adoption of emissions-efficient practices, appropriate land-use diversification, and emerging technologies to reduce gross emissions. These services should be co-designed and implemented in partnership with industry and Iwi/Māori. 12 Enhance advisory and extension services to farmers to accelerate land-use diversification and uptake of the technology and practices required to reduce gross emissions in line with emissions budgets and the 2050 target. These services must be co-designed, coordinated, and implemented in partnership with iwi/Māori, and should be developed in collaboration with industry.
Implement an integrated planning system that builds urban areas upward and mixes uses while incrementally reducing climate risks. 13 Ensure planning systems are integrated and support building urban areas upward and mixing uses in order to reduce emissions, while decreasing susceptibility to climate-related risks.
Incentivise comprehensive retrofits to deliver healthy, resilient, low emissions buildings. 14 Accelerate comprehensive retrofits to deliver healthy, resilient, low emissions buildings.
Prohibit the new installation of fossil gas in buildings where there are affordable and technically viable low emissions alternatives in order to safeguard consumers from the costs of locking in new fossil gas infrastructure. 15 Prevent the installation of new fossil gas infrastructure and connections in buildings except where there are no technically viable low emissions alternatives.
[New recommendation following consultation.]

 16 Strengthen product stewardship and expand coverage across products and packaging to help avoid emissions associated with waste.
[New recommendation following consultation.] 17 Declare construction material wood waste as a priority product to help reduce emissions from construction and demolition waste.
[New recommendation following consultation.] 18 Provide overarching guidance and an enabling regulatory framework to advance a circular bioeconomy that reduces emissions and increases resilience to climate change, ensuring cross-sector coherence.
Prioritise and accelerate renewable electricity generation build and ensure electricity distribution networks can support growth and variability of demand and supply. 19

Prioritise and accelerate renewable electricity generation build and ensure electricity networks can support growth and variability of demand and supply.

These outcomes must be progressed in partnership with iwi/Māori, particularly considering potential implications for mana whenua and mana moana and their rights and interests.
Pursue more widespread process heat decarbonisation and establish mechanisms for other industrial sectors and processes to decarbonise. 20 Accelerate the decarbonisation of process heat and pursue opportunities to reduce emissions across other industrial sectors.
Set and implement integrated objectives for the role of forests with respect to emissions mitigation and adaptation, while giving effect to the principles of Te Tiriti o Waitangi/ The Treaty of Waitangi. 21 Clarify the intended roles of different types of forests in achieving emissions budgets and targets. The effects of different types of forests on ecosystem services, socioeconomic factors, rural communities, and resilience to hazards and climate change must be considered in partnership with iwi/Māori under Te Tiriti o Waitangi/The Treaty of Waitangi.
Simplify planning and increase funding of integrated transport networks that optimise public and active transport. 22 Simplify planning and increase investment in integrated transport infrastructure and services that optimise public and active transport.
For major population centres, the Government should also complete cycleway networks by 2030 and take steps to complete rapid transport networks by 2035. 23 Provide dedicated long-term funding for the construction of integrated cycle and rapid transport networks in major population centres.
Rapidly resolve the barriers to scaling up vehicle charging infrastructure. 24 Rapidly upscale vehicle charging infrastructure, including removing existing barriers.
Develop incentives to accelerate the uptake of zero emissions commercial vehicles, including vans, utes and trucks. 25 Accelerate the uptake of zero emissions commercial vehicles, including vans, utes, trucks, and offroad vehicles.
Apply regulatory and policy instruments to achieve the optimal use and efficiency of landfill gas capture systems and technologies at all landfills. 26 #26: Ensure the use of landfill gas capture systems and technologies is widespread and efficient
Improve the accuracy and transparency of landfill gas capture data by reviewing and strengthening relevant regulatory and policy tools. 27 Improve the accuracy and transparency of landfill gas capture data.