Climate Change Commission’s draft advice on the second Emissions Reduction Plan: A sector-by-sector guide

  • Legal update

    17 May 2023

Climate Change Commission’s draft advice on the second Emissions Reduction Plan: A sector-by-sector guide Desktop Image Climate Change Commission’s draft advice on the second Emissions Reduction Plan: A sector-by-sector guide Mobile Image

Against the backdrop of unprecedented weather events causing widespread damage across Aotearoa New Zealand, and the ever-looming climate emergency, He Pou a Rangi, the Climate Change Commission (Commission) has released its draft advice to the government to inform the direction of the second Emissions Reduction Plan for the 2026-2030 emissions budget period (Draft Advice). 

Below we provide an overview of the Draft Advice and summarise the Commission’s key recommendations that will affect your sector.

The Draft Advice

The Draft Advice focuses on critical areas where the government must accelerate policy that will achieve New Zealand’s domestic climate change targets – including reaching net zero by 2050.

The sectors where the Commission sees the biggest opportunity for policy development and change include the built environment, energy and industry, forestry, transport, and waste sectors.

The Commission is holding a series of in-person and online events to share its thinking and answer questions about its Draft Advice. At an event last week for members of the business community, the Commission highlighted that time is of the essence: a two-year delay to action would more than halve the total emissions reductions delivered out to 2030. There is a need for immediate and interim action in certain areas whilst robust strategies are being put in place.  

The Commission is currently consulting on its Draft Advice and is required to deliver its final advice to the Minister of Climate Change by 31 December 2023. That final report will be considered by the government in preparing its Emissions Reduction Plan to meet the targets of the second emissions budget period (2026-2030). The Emissions Reduction Plan is due to be delivered by the end of 2024. 

Agriculture: Developing an emissions pricing system while building resilience and incorporating the unique characteristics of Māori collectively owned land

In its Draft Advice, the Commission reiterates that the pricing of biogenic methane is a key tool to reducing emissions. The Ministry for the Environment and Ministry for Primary Industries have now separately proposed a levy on agricultural emissions to be imposed at a farm level from 2025. The Commission proposes that the pricing system must go further to reflect on-farm emissions (such as grazing dates for different feed types) while recognising farmers for their emissions minimisation actions. 

The Commission acknowledges that new technologies will assist farmers to reduce their emissions and the government has committed to assisting with the acceleration of this (reflected in the 2022 Budget). This support is a balance between ensuring that the technology is progressed quickly without negatively impacting the environment, human or animal health.  As part of the Emissions Reduction Plan, the Commission proposes that advisory and extension services to farmers are “enhanced” – it is not clear what form this will take, and public feedback will assist to show where advisory services are most useful.

The Commission also notes that diversifying the use of farmland is important for building resilience, but this is not as simple as full farmland conversions to forestry. It is important that individual land is carefully evaluated to identify suitable options that reduce emissions, diversify income and build resilience.

The Commission recommends that any policy changes must consider impacts on Māori collectively owned land. This is to ensure that the policy does not have a disproportionate impact on Māori and the Māori economy.

Built environment: Coordinating investment in infrastructure and buildings to reduce emissions

The Commission urges Aotearoa New Zealand to integrate its policy and funding frameworks related to the built environment to help meet the emissions budget and create climate resilience. As with agriculture, the government must consider the impacts of urban form on iwi and their taonga tuku iho, whenua, and taiao.  

The Commission proposes an integrated planning system that enables upward development of urban areas while reducing climate risks to align urban form and emissions reduction targets. This is proposed to be achieved via coordinating large-scale development and infrastructure projects and integrating those projects with existing mechanisms for central government, local government and private funding.

Opportunities for emissions reductions in the built environment are also being separately progressed through the resource management system reform and the government’s recently announced proposal to streamline consenting for renewable energy generation.

Additionally, the Commission recommends that the Emission Reduction Plan incentivises the retrofitting of buildings to ensure that there are healthy, resilient low emissions buildings. This is proposed to be coupled with prohibiting installation of fossil gas so that electric or induction is encouraged and incentivised – this could be progressed as part of the government’s Gas Transition Plan and National Energy Strategy. 

Energy and industry: Significant reduction of emissions is required

Energy and industry represent the greatest opportunities to reduce emissions in the second emission budget period.  

The Commission’s view is that we must prioritise and accelerate renewable electricity generation build as well as ensuring electricity infrastructure can support growth and variability of supply and demand. The Commission notes that renewable generation build has been delayed through policy settings and other factors, such as slow consenting processes and that such delays can increase emissions.  

The Commission is also concerned the government has overestimated how quickly emissions reductions from process heat can be achieved. In its view, the government must pursue more widespread process heat decarbonisation and establish mechanisms for other industrial sectors to decarbonise. Barriers (such as engineering and technical constraints) preventing or delaying the transition need to be addressed and policy support may need to be implemented.

The Commission is clear that electrification should be a focus for Aotearoa New Zealand as part of its decarbonisation process (on the basis that electricity generated from renewable energy sources is prioritised). 

Forestry: Need for clear objectives and direction

The Commission highlights the need to restructure the New Zealand Emissions Trading Scheme (ETS) to incentivise a reduction of gross emissions, over net emissions, and especially gross emission reductions from forestry emissions. The Commission recommends that ‘durable’ incentives should replace current policies – such as a stronger focus on planting more native varieties over exotics.  

While the Commission clarified its role is advising on policy direction over legislative content, it did propose examples of ways that the ETS incentives could be amended (and upholding Te Tiriti o Waitangi in the process). These are: 

  • Introduce biodiversity credits or grants to make native forestry more financially appealing;
  • Limit the proportion of forestry NZUs that emitters can surrender to meet their obligations under the ETS; 
  • Introduce a minimum emissions price for emitters via an additional levy or fee; 
  • Limit the area of new forest land that can register into the ETS each year; 
  • Implement an amended ETS that separates the incentives for gross emissions reductions from those applying to forestry;
  • Introduce an exchange rate between forestry and other NZUs or reduce the quantity of NZUs allocated for carbon sequestration by forests; and 
  • Reduce the ability to bank forestry NZUs by applying an expiry date (i.e. vintaging).

These changes could have significant implications for existing and future participants in the ETS.

The Commission indicates that clear direction on the role and objectives of forests in achieving the 2050 emission reduction target is needed to guide policy development and ensure alignment between policies such as the ETS and the Resource Management Act 1991 (RMA), which are sometimes not aligned to deliver good climate outcomes.

Transport: Avoid the need for travel, shift to lower emission transport and improve emissions efficiency

The Commission considers that decarbonising transport in Aotearoa New Zealand should continue to focus on the ‘Avoid, Shift, Improve’ model proposed in the Commission’s advice on the first Emissions Reduction Plan. Avoiding the need to travel is a key consideration in the development of urban areas so that communities do not need to travel for key services. This is coupled with designing infrastructure so that when travel is required there are sufficient options to move through walking, cycling and public transport.

The Commission recommends that the Emissions Reduction Plan simplifies planning and increases funding of integrated transport networks that optimise public and active transport. For Auckland, Hamilton, Tauranga, Wellington and Christchurch, the Commission proposes the government should also complete cycleway networks by 2030 and take steps to complete rapid transport networks by 2035.

Finally, the Commission considers fossil-fuelled vehicles must continue to be replaced by low carbon alternatives to improve emissions efficiency. The Commission recommends the government resolve the barriers to scaling up vehicle charging infrastructure and develop incentives to accelerate the uptake of zero emissions commercial vehicles, including vans, utes and trucks.

Waste and fluorinated gases: Improve incentives to improve efficiency 

The objectives of the waste management sector are based on the ‘Waste Hierarchy Consideration’ which include:

  • Reducing production of waste;
  • Phasing out organic waste going to landfill;
  • Reducing emissions from waste;
  • Avoiding and preventing fossil-fuel waste generation; and
  • Efficiently capturing gas at landfills accepting organic waste.

The Commission recommends the following objectives are added: 

  • Decrease waste generation and increase resource recovery;
  • Utilising specific, time-bound goals; and
  • Implementing regulatory change to assist with the reduction of waste emissions.

The government has signalled a reform of waste management legislation. This has the potential to require central and local government to consider the waste hierarchy in its decision making. This could include strategically using a waste disposal levy with clear long term price increases to assist with valuing the importance of waste reduction. 

The Commission recommends that policy instruments focus on achieving the optimal use and efficiency of landfill gas capture systems and technologies at all landfills and improving the accuracy and transparency of landfill gas capture data. 

The Commission also identifies that there a range of measures in the First Emissions Reduction Plan to reduce fluorinated gases (in particular hydrofluorocarbons) and does not make any specific recommendations in this Draft Advice.

Have your say

The Commission is seeking your feedback on its Draft Advice and is encouraging businesses to include both evidence and industry perspectives in submissions. Consultation will close on the 20 June 2023.

Please let us know if we can provide any assistance in preparing a written submission for your organisation, developing an approach to a written a submission, or in preparing and undertaking a consultation plan.


This article was co-authored by Victoria Tatam, a senior solicitor in our Property team, Amy Dresser, a solicitor in our Environment team, and Imogene Jones, a law clerk in our Environment team.