Low-Emissions Development Strategy (Te hau mārohi ki anamata)

Te hau mārohi ki anamata Transitioning to a low-emissions and climate-resilient future AOTEAROA NEW ZEALAND’S LONG-TERM LOW-EMISSIONS DEVELOPMENT STRATEGY Published in November 2021 by the Ministry for the Environment Manatū Mō Te Taiao PO Box 10362, Wellington 6143, New Zealand ISBN: 978-1-99-003393-3 Publication number: ME 1607 © Crown copyright New Zealand 2021 This document is available on the Ministry for the Environment website: environment.govt.nz CONTENTS A message from the Minister of Climate Change 4 Transitioning to a low-emissions and climate-resilient future 5 Emissions budgets and emissions reduction plans 11 Our current reality 16 Empower New Zealanders 24 Our long-term emissions reduction strategy 28 System settings 30 Sector plans 44 Equitable transition 60 Next steps 62 Glossary 63 A message from the Minister of Climate Change In Aotearoa New Zealand, tens of thousands We are currently consulting on proposals have taken to our streets in climate strikes, for the emissions reduction plan, which focusing attention on the climate crisis and must be published by 31 May 2022. This demanding greater urgency. This is reflected will set out how we will achieve the first across the political spectrum, with Parliament emissions budget, while also alleviating unanimously passing the Zero Carbon Act the impacts policies may have on employers in 2019. and employees, regions, iwi and Māori, and wider communities. It is critical The private sector is also mobilising, with that New Zealanders have a say in how companies individually and collectively we move to a low-emissions and climate- committing to measuring and reporting their resilient future. emissions, adopting emissions reduction targets and taking the temperature goals In the meantime, this document – the first in the Paris Agreement seriously. part of our emissions reduction plan – sets out our long-term vision, as well as how In its most recent report, the sectors and systems across the economy Intergovernmental Panel on Climate Change will contribute to this vision. It also describes warned that the world will exceed warming our national circumstances and sets the of 1.5°C and 2°C during the 21st century scene for the detailed policies and strategies unless there are deep cuts to greenhouse that follow in May 2022. gas emissions in the coming decades.1 This is a critical step. It reiterates our This means immediate, rapid and large- commitment to a low-emissions, climate- scale action is needed to avoid a climate resilient future for Aotearoa New Zealand catastrophe. However, it also gives us an and to playing our part in the fight to stop opportunity to reshape our economy and the climate crisis. society, and reap significant environmental, economic and health co-benefits. Making the most of this opportunity requires a collective effort involving central and local government, iwi and hapū, as well as businesses, households, communities, and HON JAMES SHAW every sector of the economy. MINISTER OF CLIMATE CHANGE

1 Intergovernmental Panel on Climate Change. 2021. Climate change 2021: The physical science basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press. 2021. 4 Aotearoa New Zealand's long-term low-emissions development strategy Transitioning to a low-emissions and climate- resilient future Aotearoa New Zealand’s climate change mitigation strategy Vision: A productive, sustainable and inclusive economy Purpose: To contribute to the global effort to limit warming to 1.5˚C above pre-industrial levels Targets: Net zero long-lived gases by 2050 and a 24–47% reduction in biogenic methane by 2050 Emissions budgets and emissions reduction plans 2046–50: Sixth emissions budget (set 2035) and emissions reduction plan (published 2044) Nationally 3 Determined 2041–45: Fifth emissions budget (set 2030) and emissions reduction plan (published 2039) Contribution 2036–40: Fourth emissions budget (set 2025) and emissions reduction plan (2034) Nationally 2 Determined 2031–35: Third emissions budget (set 2022) and emissions reduction plan (published 2029) Contribution 2026–30: Second emissions budget (set 2022) and emissions reduction plan (published 2024) Nationally 1 Determined 2022–25: First emissions budget (set 2022) and emissions reduction plan (published 2022) Contribution Our long-term emissions reduction strategy System settings Sector plans Equitable transition Government accountability Transport Māori and coordination Energy and industry Regional communities Funding and finance Building and construction Skills and education Emissions pricing Waste and F-gases Workers Behaviour change Agriculture Population groups Planning and infrastructure Forestry and Research, science, technology nature-based solutions and innovation International cooperation Circular economy and bioeconomy Empower New Zealanders Māori Central government Local government Private sector Civil society Our current reality Gross emissions: 82.3 Mt CO2-e Net emissions: 54.9 Mt CO2-e Change since 1990: + 26% Climate change is the greatest challenge of our time. The impacts are already being felt in Aotearoa New Zealand, in the Pacific and around the world. Avoiding worse effects means urgently reducing greenhouse gas emissions and limiting global average temperature rise to 1.5˚C above pre-industrial levels. We also need to adapt to the impacts that are already locked in. The future wellbeing, security and prosperity of New Zealanders depends on climate action. Aotearoa will play its part by contributing to the global fight against climate change, standing with the Pacific and building a low-emissions and climate-resilient future.

Aotearoa New Zealand's long-term low-emissions development strategy 7 Vision The vision for Aotearoa New Zealand is ► transitioning in a way that enhances to build thriving, sustainable communities New Zealanders’ wellbeing and creates that are good for people and that function jobs, new industries, sustainable business within the limits of our planet. We envisage models, resilient communities and a a productive, sustainable and inclusive healthy environment economy where: ► building people’s skills to drive and adapt ► economic activity is nature-enhancing, to the transition carbon neutral, circular and climate resilient ► partnering with Māori and honouring the ► energy and transport systems are Government’s obligations under Te Tiriti. accessible, affordable and sustainable The Government is putting in place an ► production systems are regenerative, ambitious programme of investment in providing a way for Aotearoa to innovate actions to accelerate our transition. These and invest to meet future challenges will move Aotearoa away from fossil fuels; ► every household can meet its material increase investment in energy efficiency, needs, in turn reducing child poverty renewable energy and bioresources; and ► partners under Te Tiriti o Waitangi (Te reduce agricultural emissions through Tiriti)2 work together to realise mutually emissions pricing and emerging technologies beneficial economic opportunities and and practices. There is also scope for greater their obligations as kaitiaki (guardians). investment in forestry. This journey will be challenging. All We have the chance to use the unique New Zealanders must play their part and strengths of Aotearoa to turn global climate work together in innovative ways to reduce challenges into economic solutions. emissions and set the economy up for We can transform the economy to be success in a low-emissions world. more productive, innovative, circular and There are also significant co-benefits: new sustainable. jobs, new markets and opportunities for Kiwi Our aim is to be globally competitive in businesses, a more renewable energy system, a net-zero emissions world and to create a a more sustainable agriculture sector, less air better future for this generation and those pollution, warmer and drier homes, improved to come. public health, new technologies, protection of Achieving this future means: native species and ecosystems, cost savings for businesses, and overall resilience. ► making significant and urgent cuts in our greenhouse gas emissions and expanding our carbon sinks, so that we achieve our 2050 targets and contribute to global efforts to limit warming to 1.5°C above pre-industrial levels

2 Te Tiriti o Waitangi (the Treaty of Waitangi) is an agreement between the British Crown and around 540 Māori rangatira (chiefs), which was first signed on 6 February 1840. It is regarded as Aotearoa New Zealand’s founding document and has led to the development of principles that form the basis of Crown–Māori relationships today. These principles include partnership, active protection of Māori interests and participation. 8 Aotearoa New Zealand's long-term low-emissions development strategy Purpose Our main purpose is to urgently reduce In doing so, we will also contribute to global greenhouse gas emissions and increase efforts to limit temperature rise to 1.5°C. carbon sinks, so that we meet our domestic emissions reduction targets. WHY WE NEED TO LIMIT TEMPERATURE RISE TO 1.5°C It is critical that the world limits warming to 1.5°C above pre-industrial levels. Any additional warming will increase the impacts of climate change. Any warming over 1.5°C will increase the severity and frequency of extreme heat events, the intensity of rainfall and the risk of drought. As flooding, water scarcity and extreme weather events worsen, they will affect industries and the economy. Compared with 2°C, limiting warming to 1.5°C is projected to protect up to 10 million people from risks associated with sea-level rise. Limiting warming to 1.5°C could reduce the proportion of the world population exposed to water stress induced by climate change by up to 50 per cent. 3 Limiting temperature rise to 1.5°C is expected to make it easier for ecosystems, food and health systems to adapt, and estimated costs of adaptation may be lower. Limiting warming means reducing anthropogenic (produced by humans) emissions of carbon dioxide (CO2) to net zero. Under the 1.5°C limit, net-zero CO2 probably needs to be achieved by around 2050. Emissions of non-CO2 gases, like methane and nitrous oxide, also require deep reductions, though not necessarily to zero. Long-term, net negative emissions and additional reductions in non-CO2 emissions may be needed to prevent further temperature increases and minimise sea-level rise. As part of its sixth assessment report, the Intergovernmental Panel on Climate Change recently released a new report, Climate Change 2021: The Physical Science Basis. This provides new estimates of the chances of crossing the global warming level of 1.5°C in the next decades. It finds that, unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, the 1.5°C and 2°C temperature goals in the Paris Agreement will be beyond reach.3 3 Intergovernmental Panel on Climate Change. 2021. Climate change 2021: The physical science basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press. 2021. Aotearoa New Zealand's long-term low-emissions development strategy 9 Targets In 2019, Aotearoa legislated a series of This approach reflects the different warming emissions reduction targets for the first time. effects that greenhouse gases have on the atmosphere. It also acknowledges The Climate Change Response Act 2002 the emissions profile of Aotearoa and will requires that all greenhouse gases, other than effectively drive change across the economy. biogenic methane, reach net zero by 2050. Separate targets for biogenic methane emissions require a 10 per cent reduction by 2030 and a 24–47 per cent reduction by 2050 (compared with 2017 levels).

BIOGENIC METHANE EMISSIONS IN AOTEAROA The high level of agricultural production in Aotearoa means we produce a lot of methane and nitrous oxide. These have a greater warming effect than carbon dioxide. Nearly half (48 per cent) of our gross emissions come from the agriculture sector. Most of these emissions are biogenic methane, with the sector contributing around 91 per cent of our total biogenic methane in 2019 (the remaining 9 per cent came from the waste sector). Typically, agriculture constitutes only a small proportion of gross emissions in other countries. 10 Aotearoa New Zealand's long-term low-emissions development strategy Emissions budgets and emissions reduction plans Emissions budgets Emissions budgets set the pace of our transition. They specify the amount of greenhouse gas emissions that are permitted over a five-year period or, in the case of the first emissions budget, over four years. The emissions budgets act as interim targets that step towards the 2050 target. Emissions budgets focus on reducing emissions On 31 May 2021, the Climate Change in Aotearoa. For this reason, they must be met Commission advised the Government on – as far as possible – through domestic action the first three emissions budgets (2022–2025, to reduce emissions and increase removals, for 2026–2030, 2031–2035). The Government example, through forestry. must set the first three emissions budgets by 31 May 2022. The use of offshore mitigation to achieve the emissions budgets is strictly limited. Figure 1. Relationship between emissions budgets and Nationally Determined Contributions Emissions budget 1* Projected greenhouse (1 Jan 2022–31 Dec 2025) gas emissions (net) Emissions budget 2* Net greenhouse gas emissions (1 Jan 2026–31 Dec 2030) Emissions budget 3* (1 Jan 2031–31 Dec 2035) Nationally Determined Contribution (1 Jan 2021–31 Dec 2030) 2020 2025 2030 2035 Year *The Government will make final decisions on the first three emission budgets by 31 May 2022 12 Aotearoa New Zealand's long-term low-emissions development strategy NATIONALLY DETERMINED CONTRIBUTIONS Aotearoa is committed to the Paris Agreement and will set progressively ambitious Nationally Determined Contributions (NDCs). An NDC is a commitment to reduce global emissions over a given period. Each NDC must represent our highest possible ambition for contributing to efforts to reduce global emissions. Aotearoa recently updated its NDC, committing to reduce net emissions to 50 per cent below gross 2005 levels by 2030. This corresponds to a 41 per cent reduction using a multi-year emissions budget starting from the 2020 emissions target. The update to the NDC followed advice from the Climate Change Commission in May 2021. Our NDC is our contribution to reducing global emissions, and this can be met through a combination of domestic emissions reductions, removals from forestry within Aotearoa, and international cooperation to access offshore mitigation with environmental integrity under Article 6 of the Paris Agreement. In comparison, reducing domestic emissions and transitioning our economy are the focus of the domestic 2050 target, emissions budgets and emissions reduction plans. As noted above, these must be achieved by taking action at home. In using international cooperation (such as international carbon markets) to drive mitigation action offshore for the purposes of meeting our NDC, Aotearoa is committed to ensuring environmental integrity, robust accounting and transparency, and supporting sustainable development. See further details on our approach to carbon market cooperation.

Figure 2. Pillars of the Paris Agreement and Zero Carbon Framework Paris Agreement Zero Carbon Framework An international agreement for the global response A domestic framework for reducing our emissions to climate change Goals: Goals: Hold global average temperature rise to 2°C above pre-industrial levels and Contribute to efforts to limit global average temperature rise to 1.5°C pursue efforts to limit temperature rise to 1.5°C Transition Aotearoa to a low-emissions and climate-resilient economy Net zero emissions in the second half of the century By 2050, long-lived greenhouse gases are net zero and biogenic methane Increase resilience and make global financial flows consistent emissions are 24–47% below 2017 levels, and 10% below by 2030 with low-emissions and climate-resilient development Nationally Determined Contributions (NDC) towards Emissions budgets focus on cutting domestic the global effort emissions Countries must communicate their contributions to the global response to Aim to meet our domestic and international commitments climate change To be met through domestic emissions reductions and removals; access to New Zealand’s first NDC covers 2021–2030 international markets is strictly limited Contributions can be achieved through both domestic action (emissions Domestic abatement will count towards meeting our NDC reductions and removals) and international cooperation (offshore mitigation) Emissions reductions plans provide the detail Long-term low-emissions development strategy Detailed policies and strategies that focus on the next 5–15 years High-level national strategies to reduce greenhouse gas emissions to be communicated under the Paris Agreement The first plan published at the end of 2021 with a new plan published every five years from 2024 Supplements the long-term low-emissions development strategy Aotearoa New Zealand's long-term low-emissions development strategy 13 Emissions reduction plans Emissions reduction plans are one of the main By 31 May 2022, the Government requirements in the Zero Carbon Framework will publish: (figure 3). This was introduced through ► the first three budgets (2022–25, amendments to our primary piece of climate 2026–30 and 2031–35) change legislation, the Climate Change ► the first emissions reduction plan. Response Act 2002. Among other things, these amendments: ► referenced the 1.5°C temperature goal in our climate change legislation ► legislated domestic targets for 2050, which require biogenic methane emissions to reduce by 24–47 per cent and all other gases to reach net zero4 ► set up a framework of emissions budgets and emissions reduction plans to manage the transition between now and 2050.

Figure 3. Zero Carbon Framework Emissions reduction Emissions budgets Emissions reduction plans Adaptation measures targets Interim targets that step The policies and strategies to Strategies to help us By 2050: towards 2050 achieve the emissions budgets understand and respond to climate change risks Long-lived greenhouse gas emissions are net zero Biogenic methane emissions are 24–47% below 2017 levels The Climate Change Commission provides independent, expert advice to the Government by: Reviewing New Zealand’s Undertaking National Climate Advising on the policy emissions targets every five Recommending emissions Change Risk Assessments, and direction of the emissions years or at the request of budgets every five years reviewing and monitoring the reduction plans the Minister National Adaptation Plan 4 These targets were informed by the Intergovernmental Panel on Climate Change’s special report on the impacts of global warming at 1.5°C. 14 Aotearoa New Zealand's long-term low-emissions development strategy This document is Part I of the first emissions reduction plan The emissions reduction plan will detail how The second stage involves publishing the Aotearoa will meet its first emissions budget, full emissions reduction plan in May 2022, and put the country on a path to meet future following public consultation in October– emissions budgets and the 2050 target. November 2021 and final decisions. This will include detailed policies and strategies for: The plan also serves as our long-term low- emissions development strategy for the ► making an equitable transition, including purposes of the Paris Agreement,5 and will through a fair distribution of costs and be published in two stages (figure 4). benefits, strong partnerships, and ensuring iwi, Māori, businesses and communities Part I is the first stage. This sets out the have a leading role current reality in Aotearoa, how the emissions reduction plan fits into the country's wider ► aligning system settings across sectors to climate response, and the long-term strategy enable a streamlined transition throughout for each sector and system covered by the country the plan. ► reducing emissions in the key sectors of the economy, increasing removals in the first emissions budget period and setting us up for success in the long term.

Figure 4. Development of the emissions reduction plan February– The Climate Change Commission consulted on recommendations for the first three March 2021 emissions budgets and the direction of policy for the emissions reduction plan 31 May 2021 The Government received the Commission’s final advice August 2021 The Government made in-principle decisions on the levels of the first three emissions budgets October– Government consultation on new proposals for the first emissions reduction November 2021 plan (The final plan may include other policies and strategies that are subject to separate consultation.) November 2021 Publish the first part of the emissions reduction plan 31 May 2022 Publish the first three emissions budgets in the New Zealand Gazette. Publish the full emissions reduction plan 5 Paris Agreement, Article 4, paragraph 19. Aotearoa New Zealand's long-term low-emissions development strategy 15 Our current reality National circumstances Aotearoa New Zealand and our place in the Pacific • Aotearoa lies in the South Pacific and is part of the Realm of New Zealand (along with the Cook Islands, Niue, Tokelau and the Ross Dependency). • Tokelau is a territory of Aotearoa. Our ratification of the Paris Agreement was extended to Tokelau in 2017, and Tokelau’s emissions are included in the New Zealand Greenhouse Gas Inventory. Government Te Tiriti o Waitangi • Aotearoa has an unwritten constitution and is a • Māori are tangata whenua, the indigenous people constitutional monarchy. Queen Elizabeth II is of Aotearoa. our Head of State. • Te Tiriti o Waitangi (the Treaty of Waitangi) is our • Executive central government is formed from a founding document and the source of principles that democratically elected House of Representatives. govern Crown–Māori relationships. • Parliament consists of the House of Representatives • These principles include partnership, participation and and the Sovereign. Its principal functions are to enact the active protection of Māori knowledge, interests, laws and hold the Government to account. values and other taonga. • Local government has devolved responsibility for local • The principles of Te Tiriti mean that partnership is a planning and resource management. fundamental part of our transition to a low-emissions, climate-resilient economy. Geography • Aotearoa is long, narrow and mountainous, with a combined land area of around 27 million hectares and 17,200 kilometres of coastline. • We have one of the largest exclusive economic zones (EEZs) in the world. • Grassland for agriculture, natural forest and plantation forestry form our main land cover. • One-third of our land area (mainly natural forest) is protected for conservation purposes.

Our population • Aotearoa has a population of 5.1 million people (March 2021). • Our population has increased from 3.5 million in 1991 and could reach 6 million by 2050. This is largely driven by net migration to Aotearoa. • The population is widely distributed, which contributes to emissions due to the need for transport (dominated by private petrol and diesel vehicles). Economy • In the year ended March 2021, our nominal gross domestic product (GDP) was NZ$325 billion (US$226.9 billion). Since 1990, our average annual economic growth rate has been 2.6 per cent. • Our economy is based on services (about two-thirds of GDP) and the manufacturing and primary sectors. • The primary sector (agricultural, horticultural, forestry, mining and fishing industries) directly accounts for around 8 per cent of GDP and contributes just over half of total export earnings. It is also an important employer. • Before the COVID-19 pandemic, international tourism was an important source of income, directly contributing 5.8 per cent of GDP in 2019. • Trade is critical. From 2008 to 2018, international trade made up 60 per cent of all economic activity. Emissions profile Emissions trends • Our emissions profile is shaped by the size • In 2019, gross greenhouse gas emissions were of the land sector (agriculture and forestry) 82.3 Mt CO2-e and net emissions were 54.9 Mt CO2-e. relative to the population. • Gross emissions have grown 26 per cent since 1990. • Our largest sources and sinks of emissions • Energy and agriculture emissions have grown between are in the land sector: 1990 and 2019. — in 2019, almost half of gross emissions — Energy sector emissions have increased by 44.3 per were methane and nitrous oxide from cent, mainly due to increased use of fossil fuels in road livestock farming transport, and in manufacturing and construction. — in 2019, land use, land-use change and the — Agriculture sector emissions have increased by forestry sector were responsible for net 17.1 per cent, mainly due to an 82 per cent rise in the removals of 27.4 metric tonnes carbon size of the national dairy herd and a 662.7 per cent dioxide equivalent (Mt CO2-e) and offset rise in the use of synthetic nitrogen fertiliser since 33 per cent of gross emissions. 1990. This increase has been partially offset by a • Energy1 is the second largest source of decrease in the populations of sheep, beef cattle and emissions, contributing 42 per cent of gross deer by 53.6 per cent, 15.3 per cent and 17.0 per cent emissions in 2019. Energy emissions are respectively since 1990. The overall rise has also dominated by transport, manufacturing occurred despite successful efforts to reduce the industries and the production of heat and emissions intensity of livestock on farms. electricity. • While emissions have grown since 1990, they have been 1 In the emissions reduction plan, transport emissions are separate largely unchanged since 2003. This shows that emissions from stationary energy and industrial process emissions. efficiency has been increasing and we seek to accelerate this trend.

Syntheঞ1 greenhouse Carbon dioxide Methane Nitrous oxide gases 2% (CO2) 46% (CH4) 42% (N2O) 10% Energy 42% Industrial Processes Transport 20% Other energy 17% Electricity 5% Agriculture 48% and Product Use 6% Waste 4% Our climate change response Climate change is a global problem that ► align financial flows and decision-making requires a global solution. Aotearoa is with the pathway towards low emissions committed to doing its part and strengthening and climate resilience. We do this through that global response. We do this by taking international climate finance, pricing action domestically, in our region and globally. emissions, removing environmentally We aim to: harmful subsidies (and pushing for others ► play our part in limiting global temperature to do the same) and requiring climate- rise to 1.5°C. We take on and meet related financial disclosures. ambitious emissions reduction targets that The following three pages set out our climate are grounded in science; take steps towards change response and the role of the plan. a low-emissions economy; contribute to an effective multilateral climate response; provide climate finance and support; and contribute to international efforts to reduce emissions ► adapt and build resilience to the adverse impacts of climate change. We work to understand and adapt to the climate risks facing Aotearoa; we support others, particularly Pacific Island countries – recognising that climate change is the single greatest threat to livelihoods, security and wellbeing in the Pacific region 20 Aotearoa New Zealand's long-term low-emissions development strategy At home Mitigation Nationally Determined Contribution (NDC) Emissions budgets Our commitment to reduce global emissions between Interim targets that limit the amount of domestic 2021 and 2030. Aotearoa recently updated its NDC to emissions permitted over a five-year period. reduce net greenhouse gas emissions to 50 per cent Emissions reduction plans below gross 2005 levels by 2030. This corresponds to Policies and strategies for meeting emissions budgets a 41 per cent reduction using a multi-year emissions and managing the impacts of the transition. budget starting from our 2020 target. See New Zealand's NDC. Emissions pricing Emissions are priced through the New Zealand Legislated domestic emissions reduction target Emissions Trading Scheme and the Synthetic Our commitment to reduce domestic emissions (within Greenhouse Gas Levy. The He Waka Eke Noa – Primary New Zealand). The 2050 targets are: reduce biogenic Sector Climate Action Partnership is working to price methane emissions by 10 per cent by 2030, and by agricultural emissions from 2025. 24–47 per cent by 2050 (relative to 2017 levels); reduce emissions of all other gases to net zero by 2050.

Adaptation National climate change risk assessment Information and reporting A mandatory six-yearly assessment of the risks The Minister of Climate Change or the Climate Aotearoa faces from climate change. It covers Change Commission may request certain the natural environment, built environment, human, organisations to provide information, including the economic and governance domains. Read more. risks faced and how they are managing these. National adaptation plan Climate Change Adaptation Act Required every six years, this sets out what we must We are developing legislation to address managed do to respond to the risks identified in the most recent retreat and the funding and financing of adaptation. national climate change risk assessment. Read more. Enablers Climate Change Response Act 2002 Data and evidence Our primary legal framework for climate action in We regularly report on emissions and removals, Aotearoa, which includes: including through the New Zealand Greenhouse Gas • the ‘Zero Carbon Framework’ to manage Inventory, environmental reporting, biennial reports our transition to a low-emissions and climate- and national communications. resilient future Aligning financial flows with low emissions and • independent expert advice and monitoring of climate resilience progress (via the Climate Change Commission) We are doing this by pricing emissions, removing • emissions pricing via the New Zealand Emissions environmentally harmful subsidies, requiring Trading Scheme and Synthetic Greenhouse climate-related financial disclosures, funding Gas Levy low-emissions alternatives and research and development, and through our sovereign wealth • international climate change obligations including fund practices. the legal framework to collect information and report on our domestic greenhouse gas emissions. Aotearoa New Zealand's long-term low-emissions development strategy 21 In the Pacific Standing with the Pacific Ambition Regional action We recognise the importance for the region of limiting Aotearoa and other Pacific Islands Forum members temperature rise to 1.5°C. We have placed this at have affirmed that “climate change is the single the heart of our climate change response, and we greatest threat to the livelihoods, security and are working to influence others to align their actions wellbeing of the peoples of the Pacific” in the Boe with 1.5°C. Declaration and the Kainaki II Declaration. We will continue to pursue bold and innovative regional Sea-level rise and maritime zones solutions to climate change. This year, Pacific Islands Forum leaders issued the Declaration on Preserving Maritime Zones in the Face Amplifying Pacific voices of Climate Change-Related Sea-Level-Rise. This As a Pacific country, Aotearoa will continue landmark declaration sets out our collective intention to support and amplify the voice of Pacific Island to maintain our maritime zones in the face of sea- countries in global climate change processes. level rise. It continues the region’s proud record of leadership on oceans issues, while upholding the integrity of the United Nations Convention on the Law of the Sea.

Climate-related support Aotearoa has increased its international climate Support for adaptation finance commitment to $1.3 billion for 2022–2025. A major focus is support for adaptation in the Pacific. At least 50 per cent of this finance will be delivered Of our overall climate finance, at least 50 per cent will in the Pacific. be used for adaptation although in the Pacific this proportion will likely be much higher given the priority This is a considerable change in scale in our the Pacific places on adaptation and resilience. climate finance commitments, and underlines the importance we are placing on global efforts for This support helps developing countries take practical climate change action. action, including improving water and food security, protecting the oceans, strengthening ecosystems and Partner-led approach improving access to climate science to support Our approach to climate-related support is based on decision making. partner countries' national plans and identified needs. We support capacity building targeted to activities, such as agriculture development, renewable electricity generation and building resilience to disaster risk. 22 Aotearoa New Zealand's long-term low-emissions development strategy In the world Multilateral response Paris Agreement Maritime and aviation emissions Aotearoa is committed to the global implementation We are pushing for action to align international of the Paris Agreement, and effective and ambitious maritime and aviation emissions with limiting global action. We champion environmental integrity temperature rise to 1.5°C. This includes taking part and ambition in the rules for implementing the in the International Maritime Organization and agreement, and the mechanisms that will allow International Civil Aviation Organization negotiations scrutiny and give confidence in Parties’ actions. on reducing greenhouse gas emissions from Read more. these sectors. Cooperation Developing solutions and sharing best practice International carbon markets We champion international research on measuring We advocate for international carbon markets with and reducing agricultural emissions, by jointly high environmental integrity via plurilateral processes establishing the Global Research Alliance on (eg, the Ministerial Declaration on Carbon Markets Agricultural Greenhouse Gases. and Asia–Pacific Carbon Markets Roundtable) and working bilaterally (eg, the Florence Process, Innovative approaches International Carbon Action Partnership). We co-launched the Agreement on Climate Change, Trade and Sustainability. This brings together some Trade for All of the inter-related elements of the climate change, Trade for All will help ensure that our trade policy trade and sustainable development agendas. delivers for all New Zealanders and contributes to addressing issues such as climate change. Advocacy and support Climate-related support Fossil fuel subsidy reform A significant amount of our $1.3 billion climate We are a leading advocate for the reform of finance commitment will be spent outside the Pacific environmentally harmful subsidies such as for fossil and include support for mitigation and adaptation fuel. We progress this through an informal “Friends” initiatives. group and the World Trade Organization (WTO), Asia-Pacific Economic Cooperation (APEC), United Nations Framework Convention on Climate Change (UNFCCC) and the Organisation for Economic Co-operation and Development (OECD).

Aotearoa New Zealand's long-term low-emissions development strategy 23 Empower New Zealanders The success of our transition relies on many groups taking leading roles, including central and local government, iwi and Māori, local government, the private sector and civil society. Māori Central government Māori have an important leadership role in The Government must coordinate efforts to the transition to a low-emissions and climate- address climate change by factoring it into resilient future. decision-making and leading by example. A number of governance arrangements and Māori are tangata whenua (the people of tools already support this shift. the land) and the partner of local and central government. Te Tiriti obliges the Government GOVERNANCE and Māori to make decisions together The transition requires shifts across the about our pathway in a way that balances economy and actions that span several kāwanatanga (the right for the Government ministerial portfolios. to govern) with rangatiratanga (the right for Māori to make decisions for Māori). For greater coordination, the Climate Response Ministerial Group was established Māori have diverse perspectives as whānau, in 2020. It is chaired by the Prime Minister hapū and iwi, land owners, workers, educators and made up of Ministers who hold portfolios and community members. Māori businesses relevant to climate change. and investors are also significant contributors to the economy. The Climate Response Ministerial Group meets regularly to discuss the climate change Climate change – and our transition – will work programme and give direction on key have different and intersecting impacts for areas, including reducing emissions and these groups. A number of iwi, hapū and adapting to climate change. Māori organisations are building resilience and reducing emissions, and the importance ADMINISTERING CLIMATE POLICY of this leadership will only increase. The Ministry for the Environment is the We must all support these efforts and Government’s primary advisor on climate work with Māori to achieve a fair and change, the environment and international inclusive transition. matters affecting the environment. It also Māori have been at the forefront of the call administers the Climate Change Response for sustainable management and care for the Act 2002. natural world, as expressed in the ethic of Although the Ministry for the Environment kaitiakitanga (guardianship). It is important to leads climate change policy, the response recognise the value of te ao Māori (the Māori to climate change involves efforts across world view) and mātauranga Māori (traditional Aotearoa. Other government agencies knowledge) to the climate change response. contribute policy over a range of sectors, Te ao Māori focuses on maintaining the and other actors in the economy implement balance between the physical and spiritual policy. worlds. It recognises anthropogenic global warming and biodiversity loss as reflecting practices that are incorrect, irrational and unsustainable. Te ao Māori and our obligation under Te Tiriti to protect Māori culture and people underscore the urgent need to make changes.

Aotearoa New Zealand's long-term low-emissions development strategy 25 Since 2019, the Government has driven The aim is to make a number of public a whole-of-economy climate change work organisations carbon neutral from 2025. programme through the Climate Change CNGP participants should: Chief Executives Board. This brings together ► measure, verify and report on their chief executives from the Ministry for the emissions annually Environment, the Treasury, the Ministry ► set gross emissions reduction targets of Transport, the Ministry of Business, and longer-term reduction plans Innovation and Employment, the Ministry for Primary Industries, the Energy Efficiency ► introduce a plan to reduce their and Conservation Authority and the Ministry organisation’s emissions of Foreign Affairs and Trade. ► offset remaining gross emissions from 2025. INFORMING POLICY DECISIONS Since 1 November 2019, government agencies Local government have been required to undertake (and report Local authorities (city, regional, district and on) a greenhouse gas emissions analysis for all unitary councils) are at the forefront of policy proposals that go to Cabinet and meet dealing with the impacts of climate change. certain criteria. This analysis, called a ‘Climate Implications of Policy Assessment’, must Local authorities have a decision-making include an estimate of the emissions impacts role in the use and management of our natural for Aotearoa if the proposal is brought in. resources, exercised through planning and These assessments inform Cabinet’s policy permits. For most people, local authorities decisions and align them with the emissions are the main government interface. They reduction targets included in the Climate have an important role in providing public Change Response Act 2002. education and building support for climate change policy. LEADING BY EXAMPLE A number of councils are already addressing In 2020, the Carbon Neutral Government the impacts of climate change and the need to Programme (CNGP) was set up to accelerate reduce emissions. Some are working together the reduction of emissions in the public on initiatives to support the transition. sector. The Government will join businesses These initiatives include strategic planning, and communities that are leading the way. providing infrastructure and services, and managing growth. Regional councils are increasingly providing climate data and models that show climate change impacts at a local level. The Government is working to ensure that national policies are in place to help guide local government action.

26 Aotearoa New Zealand's long-term low-emissions development strategy Private sector Civil society There is significant support from the private Individuals and non-governmental sector for the shift to a low-emissions organisations will continue to play an economy. Organisations are increasingly important role in the transition. taking meaningful action to reduce It is vital that we provide ongoing, meaningful their emissions. opportunities for members of the public to Organisations such as the Climate Leaders have their say. Coalition and Sustainable Business Council Consultation on proposals for the emissions are also making strides. reduction plan between 13 October and The Climate Leaders Coalition is a CEO-led 24 November 2021 will also inform final organisation launched in July 2018 with 60 government decisions on emissions budgets. signatories. It promotes business leadership The Government will continue to consult and collective action on climate change. Now on new policies and measures that seek to with over 100 signatories, it accounts for reduce emissions and increase our carbon almost 60 per cent of our gross emissions sinks. and around 38 per cent of GDP, and employs Non-governmental organisations will also over 200,000 people. have a role in raising awareness of climate Signatories commit to measuring and publicly change, mobilising action and holding the reporting their emissions, setting a public Government to account for progress. One emissions reduction target, in line with the notable example is Generation Zero, a youth- temperature goals of the Paris Agreement, led organisation that was instrumental in disclosing climate risk and working with their delivering the Climate Change Response employees and suppliers to reduce emissions. (Zero Carbon) Amendment Act 2019. The Sustainable Business Council is a membership organisation with over 115 businesses from all sectors, ambitious for a sustainable Aotearoa. Members represent more than $111 billion of collective turnover, 34 per cent of GDP and nearly 180,000 full- time jobs. The network gives members the ability to take large-scale collective action. The Sustainable Business Council is part of the BusinessNZ network and is the National Global Network partner to the World Business Council for Sustainable Development. Aotearoa New Zealand's long-term low-emissions development strategy 27 Our long-term emissions reduction strategy The emissions reduction plan is a roadmap for meeting the first emissions budget (2022–2025), staying on track to meet our next emissions budgets and reaching the 2050 target. The next sections contextualise the detailed policies and strategies that will follow in mid-2022 and provide the long-term strategic direction for the systems and sectors included in the final emissions reduction plan. System settings To foster low-emissions development and avoid locking in high-emissions pathways, we must align system settings across all sectors. This will help to bring about the economy-wide transformation we need over time. Government accountability and coordination CONTRIBUTION TO OUR LONG-TERM VISION Long-term strategy Keep government institutions fit We will: for purpose, moving the country ► make government institutions and to a low-emissions economy and processes fit to respond to climate change leading by example. challenges, through stronger accountability and better public monitoring and reporting on progress State of play ► continue to strengthen the regulations, to The Government must address climate change align all policies, investments and strategic when making decisions, lead by example and direction with a low-emissions future be accountable for meeting the budgets and wider reduction targets. ► provide funding and resources for climate action, and promote greater private sector What we are doing now investment in the transition. A number of measures already provide greater accountability and coordination across the Government. For example, we have: ► made climate change a government priority and established the Climate Response Ministerial Group, chaired by the Prime Minister and supported by the Climate Change Chief Executives Board ► aligned the Government procurement system with low emissions and invested heavily in state sector decarbonisation ► established the CNGP, which aims to make a number of public organisations carbon neutral from 2025.

Aotearoa New Zealand's long-term low-emissions development strategy 31 Funding and finance CONTRIBUTION TO OUR LONG-TERM VISION What we are doing now Public and private funding and Aligning public finance finance help to drive the transition The Government is considering how the public finance system can better support to a sustainable, low-emissions, climate objectives, including ways to: climate-resilient future. ► prioritise spending for positive climate action through the annual government State of play Budget process Finance is an important catalyst for lowering ► assess and report on what gets funded emissions and increasing climate resilience. through public spending, including how It can reduce emissions directly, as well as well this aligns with our climate objectives support others to invest in and undertake low-emission activities. ► coordinate and encourage private sector investment in climate-positive initiatives There is no single ‘right’ way to direct the flow of finance towards climate goals; rather ► effectively co-invest with the private sector we must consider a portfolio of options to to accelerate climate-positive investment achieve the outcomes we seek. ► recycle proceeds from the New Zealand For an overview of current government Emissions Trading Scheme into climate work (at mid-2021), within the context of spending. broader international trends, see International Initial work in these areas will inform the next Developments in Sustainability Reporting.6 Government Budget. It will build on a number of existing government funds and programmes that support low-emissions activities, such as the Government Investment in Decarbonising Industry Fund, the Low Emission Transport Fund and the technology demonstration funding programme. 6 Ministry of Business, Innovation and Employment. 2021. International developments in sustainability reporting. Wellington: Ministry of Business, Innovation and Employment. 32 Aotearoa New Zealand's long-term low-emissions development strategy Government agencies are also looking at ► introduced mandatory climate-related novel ways to boost public investment in low- disclosures in 2021 to help investors emissions activities. For example, Kāinga Ora better understand climate-change-related (the agency that delivers the Government’s risks and opportunities, and support priorities for housing and urban development) investor activity. The Financial Markets launched its Sustainability Financing Markets Authority (the agency responsible Framework in 2020, to support investment for financial regulation) also published in green buildings. its disclosure framework for integrated financial products in late 2020, to support Mobilising private finance the growing market for environmental, The investment needs of a climate change social and governance funds response cannot be met by public finance ► mobilised private finance to help regional alone. There are significant opportunities for economies become more productive, private investors in expanding green finance resilient, inclusive, sustainable and Māori- markets. In fact, the private sector is already enabling. This has been done through taking these opportunities, for example, the Ministry of Business, Innovation and through the recently launched Sustainable Employment’s $200 million Regional Finance Centre. Strategic Partnership Fund.8 Over the past three years, the Government has taken steps to support the private sector Long-term strategy to undertake climate-aligned investment. Given the breadth, scale and duration of For example, it has: the transition to a low-emissions economy, ► established New Zealand Green Investment we will: Finance Limited (NZGIF) in 2018, to direct ► ensure adequate, durable and certain private sector capital into investments that public funding for climate action reduce emissions. The latest Government Budget provided an additional $300 million ► thoroughly consider climate change at for NZGIF to invest in decarbonising public every stage of decision-making for the transport, waste and plastics use of public funds

► banned default KiwiSaver7 funds from ► support climate-positive private investing in fossil fuels investment through co-funding, overcoming information barriers and regulating where necessary. 7 KiwiSaver is a voluntary government savings scheme to help New Zealanders save for their retirement. 8 In 2020, a new $200 million strategic partnership fund was established to accelerate the development of local plans by regional economic development agencies while continuing to roll out individually funded Provincial Growth Fund projects over the next parliamentary term. This is administered by the Ministry of Business, Innovation and Employment’s Kānoa – Regional Economic Development and Investment Unit (REDIU). Aotearoa New Zealand's long-term low-emissions development strategy 33 Emissions pricing CONTRIBUTION TO OUR LONG-TERM VISION State of play Emissions and removals are priced The New Zealand Emissions Trading Scheme using appropriate mechanisms. (NZ ETS) plays an important role in driving emissions reductions. Recent amendments These play a key role in aligning ensure it continues to help us meet our emissions and financial flows with domestic and international targets. domestic and international targets. The NZ ETS has the world’s broadest sector By 2050, the New Zealand Emissions coverage. Gross emissions from all sectors, Trading Scheme cap will be at except agriculture, are priced via the NZ ETS and the Synthetic Greenhouse Gas Levy. net zero. Only unavoidable emissions Eligible foresters can also choose to join the will be offset via removals or NZ ETS and take responsibility for emissions offshore mitigation. and removals from their forests. The He Waka Eke Noa partnership (see page 56) is developing a suitable mechanism to price agricultural emissions by 2025. 34 Aotearoa New Zealand's long-term low-emissions development strategy Key challenges Long-term strategy The Government sets and reduces the number We will: of units supplied into the NZ ETS over time ► apply economy-wide emissions pricing (not including units provided for removals). through the NZ ETS and an appropriate This is done through a ‘cap’ set on a rolling pricing mechanism for agricultural five-year basis. Cap settings and auction emissions price controls will be aligned with our targets. ► align pricing with the targets and ensure Decisions on the emissions reduction plan, they work with non-pricing policies. The and the plan for achieving the NDC will NZ ETS cap, auction price settings and determine these NZ ETS settings. any potential links to international carbon Challenges include managing the settings to markets will need to be aligned with plans account for non-price policies and measures; for achieving targets and the NDC. This will and coordinating the settings with those for be informed by independent advice from agricultural pricing, to ensure Aotearoa meets the Climate Change Commission its domestic targets. ► strengthen NZ ETS market governance The significant stockpile of units held by to keep it fit for purpose and discourage private participants puts pressure on the market misconduct as the market evolves NZ ETS. This is being managed over time by ► ensure NZ ETS settings are appropriately ‘stockpile adjustments’, which decrease the adjusted as necessary if offshore mitigation number of units that will be auctioned into is needed to meet the NDC (eg, via the the scheme. quantitative limit on the use of approved The risk of emissions leakage remains offshore mitigation) a concern.9 The current practice of free ► develop procedures for approving the allocation to emissions-intensive and use of any offshore mitigation within the trade-exposed firms is targeted, and we are NZ ETS and ensure compatibility with phasing out allocation rates. However, there Paris Agreement requirements. is tension between the purpose of allocation (reducing the risk of emissions leakage) and the purpose of the NZ ETS (reducing emissions). A review of industrial allocation policy is underway.

9 Emissions leakage describes situations where emissions pricing drives production and associated emissions overseas, leading to an increase in global emissions. Aotearoa New Zealand's long-term low-emissions development strategy 35 Planning and infrastructure CONTRIBUTION TO OUR LONG-TERM VISION Competing land use is putting pressure on the environment and economy. Environmental Strategic planning, investing in monitoring and reporting highlight the loss infrastructure, and managing land of productive land to urban sprawl. There and resources help us meet our are also mounting environmental pressures targets, build climate resilience and from rural and productive land use, such as improve people’s wellbeing. the impact of farming on freshwater and soil health. State of play There is an urgent need for more housing. The The planning system and infrastructure are planning system can facilitate where and how not geared towards driving down greenhouse we grow towns and cities, and promote low- gas emissions. We are in the process of emissions buildings, transport and urban form. reforming the resource management and The current system has been piecemeal, with planning system. a narrow focus with respect to mitigation. Until recently, it did not nationally address Key challenges changes to planning laws and development Urban development decisions have not of national direction on industrial greenhouse prioritised reducing emissions. Recent gas emissions. progress has been made in promoting well- There are tensions between environmental serviced, medium and high-density, mixed-use values, such as biodiversity and freshwater, development. However, these projects remain and low-emissions activities (eg, renewable largely constrained by barriers such as zoning electricity generation). Not enough focus rules, a multi-decade infrastructure deficit and has been placed on integrating goals for difficulties in coordinating land-use planning multiple benefits. Larger councils have taken with infrastructure investment. local action, but this should fit more closely Despite significant demand for housing with the actions of other councils and close to urban centres, the barriers have the Government. historically led to low-density and often car- The planning system has not encouraged dependent greenfield development in outer the private sector to cut emissions and there suburbs, resulting in poorly functioning urban are still barriers that affect the ability of form. This pattern has significantly increased planning and infrastructure to support the transport emissions and household costs transition. We need to remove these barriers for land, transport and energy; and reduced and boost incentives for low-emissions housing variety and choice. It has also buildings and medium and high densities in increased embodied and other emissions mixed-use neighbourhoods close to centres from construction. or rapid transit.

36 Aotearoa New Zealand's long-term low-emissions development strategy What we are doing now Long-term strategy For the past 30 years, the Resource We will: Management Act 1991 has largely governed ► integrate climate objectives into the the way we manage the environment. Reforms reformed planning legislation with the are underway and provide an opportunity to necessary levers to drive down emissions. integrate emissions reduction into land-use We will increase infrastructure funding planning and investment. for this Other initiatives include: ► partner with Māori so that planning ► national direction10 for urban development reforms reflect the relationship of iwi and ► national direction on industrial emissions hapū to the environment, as well as their rights and interests ► urban design schemes for safe, accessible, liveable neighbourhoods at a small scale ► support local government climate action and develop frameworks for funding ► partnerships between the Government, and financing local government, iwi and hapū to produce long-term spatial plans for high-growth ► remove barriers and encourage low- regions, with well-planned intensification emissions urban development; this includes and public transport-oriented projects reducing embodied and operational and enabled use emissions, and optimising ► Kāinga Ora: a large-scale urban infrastructure types and locations to regeneration programme, building energy- reduce emissions efficient, low-emissions buildings in neighbourhoods with sustainable transport. ► develop tools and gather data and evidence This is aided by the Housing Acceleration so that urban centres can plan for growth Fund for infrastructure and by work to and infrastructure apply a climate lens to urban planning. ► drive behaviour change through better public education and increased awareness ► work with the private sector to remove barriers to reducing emissions. 10 Local authorities largely implement the Resource Management Act 1991. The Government can support implementation on national, regional or local issues using tools we call national direction. These support local planning and can take the form of national policy statements, national environmental standards, national planning standards and regulations. We have a national policy statement on urban development that supports well-functioning urban environments and includes objectives for climate mitigation and adaptation.

Aotearoa New Zealand's long-term low-emissions development strategy 37 Research, science, technology and innovation CONTRIBUTION TO OUR LONG-TERM VISION State of play Research, science and innovation RSI provides new knowledge and technologies (RSI) provides the knowledge and that mitigate the risks and realise the opportunities from reducing emissions. It insights to transform Aotearoa into partners with the private sector to enable a low-emissions economy that mitigation and adaptation, which is an achieves economic prosperity essential activity in transforming Aotearoa to and improved wellbeing for all. a prosperous low-emissions future at pace. This, in conjunction with forming strategic Good access to new knowledge, partnerships with sectors and international technologies and processes organisations, can accelerate the path can inform decisions and help towards a higher-value economy delivering communities, iwi, government a healthy environment and wellbeing for all New Zealanders. and businesses remain resilient in a changing climate. The Government invests across the system, from frontier research to business support RSI drives the development and for innovative firms bringing new solutions deployment of innovative low- to market. This includes enabling Aotearoa emissions solutions into existing to be an active participant globally in the development and adoption of transformative industries and sectors, accelerating knowledge and technology. However, a lack our economic transition. of coordination and connectedness within the RSI enables the growth of new RSI system can be a barrier to fully realising this transformation. sectors, market opportunities and high-value jobs, which in turn leads to transformation and an equitable transition. 38 Aotearoa New Zealand's long-term low-emissions development strategy The RSI system structurally supports An ongoing programme of sustained decarbonisation on three fronts. investment in areas with the potential to ► Developing the knowledge needed for create competitive advantage in the global informed decision-making: A growing green economy is needed to achieve the knowledge base helps the Government, economic transformation required and create iwi, communities and businesses to do a just transition for all. things better and make informed decisions. What we are doing now Mātauranga Māori enhances our ability The Government is committed to increasing to frame problems and develop solutions, expenditure to stimulate research and while international partnerships expand development activity and developing a our capability frontier. more connected and coordinated RSI system. ► Using innovation to overcome barriers This would enhance the existing activity to sector decarbonisation by partnering that the RSI system contributes to emissions with sectors and providing support to reduction efforts. accelerate innovation: Novel methods can solve the challenges in reducing emissions Existing initiatives include: in domestic sectors. RSI can help through ► science funding mechanisms that enable the exploration, piloting and translation of scientists to deliver an increasing volume of international technologies and practices. public good science that directly addresses ► Maximising our impact in the global our country’s challenges. The Government green economy: Cutting-edge science has increased the climate signals in our expertise and innovators give Aotearoa an flagship funds (eg, Endeavour) to encourage advantage in designing new, low-emissions this growth technology, building frontier firms and ► contributing to an international creating new sectors. As well as providing understanding of the impacts of climate an economic growth opportunity, exporting change, for example, through the domestic innovation means we can have a Global Research Alliance on Agricultural global impact on emissions reduction. New Greenhouse Gases opportunities will create jobs that underpin ► supporting fundamental advances in the a just transition. technology required to transition our At 1.4 per cent of GDP, current investment in emitting sectors (eg, hydrogen catalysis RSI is insufficient to transform Aotearoa into supported by the Advanced Energy a high-value economy that achieves net-zero Technology Platform) emissions by 2050 and improves wellbeing. ► supporting the development and application of mātauranga Māori in the science system, including through the Vision Mātauranga Capability Fund

Aotearoa New Zealand's long-term low-emissions development strategy 39 ► supporting innovative firms with a range of involves initiatives to pilot emerging grants and tax incentives to take advantage technologies and de-risk its adoption by of the global demand for green innovation. providing confidence in the effectiveness These firms include Mint Innovation, which of novel low-emissions technologies. uses biorefining technology to extract This support ensures that Aotearoa is an precious metals from e-waste, and ZeroJet, active participant in the global market which makes electric jet propulsion for technology, as both a developer systems for small boats. and a procurer. A notable example is the Government’s current investment The RSI system supports sectors and to encourage low-emissions energy communities through: innovation and technology including the ► developing strategic partnerships for development of green hydrogen and impact. Partnering with iwi, regulators, sustainable aviation fuels. sector policy leads, international research organisations and frontier firms to ensure Key challenges research and innovation has impact. Strategic investment required to enable One existing programme is the Innovative the transformation of our economy Partnerships Programme, which attracts The transformation to a prosperous low- frontier firms to conduct research and emissions future requires a step change in development, invest and build a sustained investment. This will involve the creation of presence in Aotearoa and ensure new industries and radical changes to existing the country is an attractive testbed for industries. It will also require the creation new technology of jobs that support a just transition to a ► deploying tools to support knowledge low-emissions future. Wider transformation development, transitioning sectors and the of the economy will require a deeper unlocking of opportunities. This involves evaluation of investments in science and funding and co-investing in initiatives and innovation, and expanding into new frontiers. infrastructure that play a fundamental role While we have some idea of the future state in our response to climate change. The of a decarbonised economy, there is still RSI system also plays an important role in uncertainty around the source and magnitude the talent pipeline for sectors, in the form of gains from future scientific discoveries and of both an international talent attraction innovation. This will mean that, while we have strategy and domestic talent development to be pragmatic, we must also balance the ► supporting the development, assessment need to move swiftly from idea to impact. The and deployment of technology. Government will need to play a coordinating Technology will help sectors to reduce and facilitating role to support the supply their emissions and underpin many of of innovative ideas and increase demand for the new opportunities associated with low-emissions innovation. a low-emissions economy. This support

40 Aotearoa New Zealand's long-term low-emissions development strategy No individual country will produce all of Long-term strategy the science and solve all of the innovation challenges associated with the transformation To ensure our RSI system meets these to a low-emissions future. In addition to challenges, the Government is supporting: providing local capability, the RSI system ► a higher-intensity knowledge economy must help transform transitioning sectors through strategic investments in research and communities by identifying and engaging and science with offshore initiatives. It must also help ► structural reform of the science system to to translate international technology and deliver a more coordinated and connected practices, so they are suitable in our national research and innovation system that context. This will require aligning science has clear priorities. This enables deeper priorities and research with international integration of the RSI system with all efforts, supporting innovative firms to sectors through a fluid exchange of deliver green technology to consumers, knowledge, talent and solutions. This will attracting innovation talent from overseas enhance direct support for climate science and supporting Aotearoa to become a and advanced technology testbed for low-emissions technology. ► mātauranga Māori both as a frame for Absorptive capacity for mitigation understanding the challenges climate and adaption change presents and as a source of An important challenge is to ensure low- sustainable, innovative solutions for emissions innovation and technologies are the future available in a much shorter timeframe than ► strategic international partnerships to is achievable by waiting for market forces deepen our connectedness to the global to drive demand for innovation. This will knowledge and innovation frontier require the Government to actively de-risk associated with a prosperous low-emissions and support the development and translation future. This includes encouraging global of innovation into our national context. innovators to use Aotearoa as a testbed for To accelerate the impact from innovation, pioneering low-emissions technologies and we need to coordinate and align research approaches, which will promote uptake of and development, frontier firms, investment, innovation by communities and firms talent, regulation and market development. ► the accelerated uptake of clean technology With the short timescale for the transition, into sector. This includes strategic and the breadth of science and innovation investment in advanced technologies with required, our RSI system must be adaptable, the potential to play an important role in resilient, connected to the global frontier, our low-emissions future. and able to deliver and absorb innovation at pace. Aotearoa New Zealand's long-term low-emissions development strategy 41 Circular economy and bioeconomy CONTRIBUTION TO OUR LONG-TERM VISION State of play The Aotearoa economy is high- Many parts of the world are shifting to a value and underpinned by circular circular economy: designing out waste and pollution; keeping products and materials practices, skills, innovation and in use and maintaining their value; and the efficient use of renewable regenerating natural systems.11 These steps bioresources. Economic activity recognise the interdependency between the is designed to take place within, natural world and economic activity. and to regenerate, the natural A distinctive Aotearoa approach to a circular environment, create jobs and economy is emerging. This draws from te improve wellbeing for all. ao Māori worldview, takes responsibility for future generations and builds in equitable and inclusive outcomes for people and communities. It also reflects our unique natural environment and the knowledge of our world-leading primary sector. A bioeconomy provides renewable resources, like wood and other plant products, that can be used to displace fossil fuel-based products. When used sustainably, they can lead to high- value products that allow us to operate within the biogenic carbon cycle and regenerate natural systems. In this way, our bioeconomy can be seen as a component of a circular economy. Moving to a circular economy will make an important contribution to reducing emissions. Globally, 45 per cent of emissions come from making products – everyday items like cars and clothes – and activities such as managing land.12 Using finite resources more efficiently and in circular ways can also yield co-benefits, such as less reliance on imported materials and a more resilient economy and society.

11 Ellen MacArthur Foundation. What is a circular economy? Retrieved 28 October 2021. 12 Ellen MacArthur Foundation. 2019. Completing the picture: How the circular economy tackles climate change. Ellen MacArthur Foundation, p 13. 42 Aotearoa New Zealand's long-term low-emissions development strategy Key challenges and opportunities Long-term strategy Aotearoa currently has a largely linear Aotearoa is in the early stages of developing a economy – extracting resources, converting circular economy with a thriving bioeconomy. them into a product, and using and then To support this shift, we will: discarding them. This model is highly emissions-intensive. ► build on the actions underway in the waste sector, including through a new national The move to a circular economy will waste strategy and updated legislation involve a significant shift in how many ► partner with Māori on a long-term, New Zealanders value materials and cross-sector strategy that supports this products. It will also require us to move transition. This will yield benefits across away from entrenched patterns of the four wellbeings: social, economic, production and use. environmental and cultural. A thriving bioeconomy will require the sustainable management of limited bioresources. Both will require learning and change on many fronts: technological, financial, behavioural and cultural. These changes are also an opportunity to rethink and strengthen the economy for the long term. As well as reducing emissions, we can find new ways of doing business in regions and communities that are regenerative, are inclusive by design and enhance wellbeing for current and future generations. Aotearoa New Zealand's long-term low-emissions development strategy 43 Sector plans Tailored measures will help key sectors take up opportunities, reduce emissions and increase forestry removals. Transport CONTRIBUTION TO OUR LONG-TERM VISION Key challenges Aotearoa will reduce transport Causes of these high per capita emissions include: emissions to net zero by 2050, ► heavy reliance on fossil fuels for transport. while building a healthy, Electricity and biofuels made up less than safe, equitable and accessible 0.2 per cent of transport fuels in 2020. In transport system. comparison, in Sweden, renewable fuels contributed 14.7 per cent in 2015 State of play ► poor fuel economy of light vehicles Transport currently produces over entering our fleet. In 2020, light passenger 19.6 per cent of our domestic greenhouse vehicles (cars and SUVs) entering the fleet gas emissions, and almost half of our CO2 had an average reported emission intensity emissions. Transport emissions have risen of 158 grams of CO2 per kilometre travelled more than any other emissions source, with (g CO2/km); for light commercial vehicles an increase of over 84 per cent between (vans and utilities), the figure was 219 g 1990 and 2019. CO2/km. In contrast, the figure for Europe Of the 43 Organisation for Economic was 122 g CO2/km for cars and 158 g Co-operation and Development (OECD) CO2/km for light commercial vehicles countries that track these emissions, Aotearoa registered in 2019 has the fifth-highest per capita rates of CO2 ► reliance on road freight. Seventy per cent emissions from road transport. of freight moves by road, 16 per cent by rail and 14 per cent by coastal shipping ► urban areas characterised by sprawling low-density land-use patterns supported by motorways. This has contributed to vehicle dependence and has limited the potential for public transport and active transport use ► decades of planning and funding for travel by private car that have encouraged car use over alternatives, for example, by building extra lanes to solve traffic problems, rather than changing how we travel.

Aotearoa New Zealand's long-term low-emissions development strategy 45 Sectors connected with the transport sector ► transitioning to a low-emissions have a significant impact on transport government fleet (implemented), with the emissions. It will be important to collaborate aim of cleaning up the Government’s fleet with these sectors, which include the planning by reducing its number of vehicles and system, housing and urban development, the choosing electric or hybrid vehicles unless energy sector and the tax system. operational requirements prevent this ► the zero-emissions vehicle (ZEV) mandate. What we are doing now The Government has created a mechanism Existing initiatives include: to ensure there is a minimum percentage ► extending the light electric vehicle (EV) of ZEVs in the imported light vehicle exemption from road user charges to supply. It will be used if the Clean Car 2024, which will continue to encourage Standard and Clean Car Discount do not New Zealanders to buy light EVs prompt enough supply of ZEVs ► the Low Emissions Transport Fund ► extending heavy EV exemption from (scope and funding increased from 2021). road user charges, which will encourage Co-funding will help industries and groups businesses to buy heavy EVs. We are to demonstrate and adopt low-emissions looking to amend current legislation (the transport technology, vehicles, innovation Road User Charges Act 2012) to expand and infrastructure the duration of the exemption and bring ► the Clean Car Discount (implementation in differential charging based on fuel underway), which will encourage or emissions New Zealanders to buy cleaner vehicles, ► decarbonising public transport to reduce by addressing the high upfront cost emissions and improve air quality in towns with incentives. In early 2022, a charge and cities. We have committed to requiring on high-emitting vehicles will apply at only zero-emissions public transport buses point of first registration in Aotearoa, to to be purchased by 2025, and to a target discourage purchase of decarbonising the public transport bus ► the Clean Car Standard (to be implemented fleet by 2035 in 2022), which will support a cleaner ► the New Zealand Rail Plan, which lays out a vehicle fleet by improving the efficiency 10-year vision to increase investment and of imported new and used light vehicles. resilience in the rail network It will be strengthened over time 46 Aotearoa New Zealand's long-term low-emissions development strategy ► coastal shipping investment, which Long-term strategy allocates $30–45 million from the We will support central and local government, National Land Transport Fund to identify communities and businesses to work together opportunities for coastal shipping to reduce emissions and build a healthy, safe and promote a shift to this lower- and accessible transport system. We will also emissions mode take opportunities to improve the wellbeing of ► acceding to Annex VI of the International New Zealanders. Convention for the Prevention of Pollution from Ships (MARPOL). Aotearoa will ratify Actions include: this in 2022 and apply new measures to ► reducing reliance on cars and supporting reduce ship emissions. We have agreed to people to walk, cycle and use public prepare a national action plan to reduce transport maritime emissions, and to research ways ► rapidly adopting EVs (and low-emission to speed the uptake of alternative low- and fuels) zero-carbon fuels for shipping ► decarbonising heavy transport and freight. ► ensuring planning helps to reduce car dependency by leveraging opportunities associated with resource management reform and the Urban Growth Agenda.

However, broader and deeper changes are needed to quickly shift the transport system to a zero-emissions pathway. Aotearoa New Zealand's long-term low-emissions development strategy 47 Energy and industry CONTRIBUTION TO OUR LONG-TERM VISION ► energy supply is secure, resilient and reliable throughout the transition Aotearoa has a highly renewable, and beyond net-zero emissions energy system. ► energy systems support economic Energy is accessible and affordable development and productivity growth, and supports the wellbeing of all in line with the transition. New Zealanders. Energy supply Components to manage through this is secure, resilient and reliable. transition include: Energy systems support economic ► managing the phase-out of fossil fuels, development and productivity including by: growth that align with the transition > ensuring reliable energy supply for to a low-emissions future. industry as well as residential and other consumers State of play > supporting the phase-down of domestic The energy and industry sectors are fossil fuel production following the essential for the economy and the lives of ending of new permits for offshore oil New Zealanders. They provide electricity to and gas exploration light and heat homes and workplaces, and the heat that powers manufacturing and industry. > ensuring a just transition for affected businesses, employees and communities Their performance affects the cost and quality of many goods and services we use on a daily ► encouraging investment in new renewable basis, and the competitiveness of businesses. electricity generation and infrastructure, and large-scale energy storage In 2019, these sectors made up 26 per cent of total gross emissions. These emissions are ► assisting New Zealanders to engage in the projected to decrease by 22 per cent from energy system through household and local 2019 levels by 2025, 21 per cent by 2030 technology solutions, including efficient and 21 per cent by 2035.13 management of energy resources ► increasing the availability and use of low- Key challenges emissions fuels As these sectors transition over the next ► supporting the pathway for transition 30 years, we must ensure that: for other sectors, such as transport, and ► energy remains accessible and building and construction. affordable to support the wellbeing of all New Zealanders

13 The stationary energy emissions projection is from the Ministry of Business, Innovation and Employment’s (MBIE’s) updated Electricity Demand and Generation Scenarios (EDGS). Since the release of the EDGS in 2019, MBIE has included the impact of the COVID-19 pandemic in the 2021 projection. This will be published in Energy in New Zealand 2021 (forthcoming). The non-energy emissions projection for industrial processes and product use is provided by the Ministry for the Environment. 48 Aotearoa New Zealand's long-term low-emissions development strategy What we are doing now ► developing national direction to phase out We are well positioned to tackle emissions in coal boilers for low–medium temperature the energy and industry sectors because of process heat by 2037 the high level of renewable electricity, but ► accelerating renewable electricity by: we must do more. > investigating options to manage ‘dry We must move to a more renewable year’ risk and move towards 100 per electricity system as we head towards the cent renewable electricity through the 2050 target. Accelerating the rollout of New Zealand Battery Project renewable electricity generation will be a significant factor in replacing fossil fuels > reviewing planning instruments to speed development of renewable electricity in other sectors. ► encouraging the uptake of energy The Government has an aspirational target of efficiency through product regulations and 100 per cent renewable electricity by 2030. programmes, such as Warmer Kiwi Homes This will be reviewed in 2025. It will allow time for more information on solutions to the ► developing A Vision for Hydrogen in ‘dry year’ challenge to be identified through New Zealand to outline potential uses of the New Zealand Battery Project. hydrogen, funding demonstration projects and building international partnerships. The NZ ETS is an important tool to help reduce emissions in these sectors. A rising Long-term strategy carbon price discourages fossil fuel use and encourages investment in energy efficiency We will continue to: and fuel-switching. ► accelerate renewable electricity and prepare the electricity system for future Other measures aim to reduce emissions in needs and technologies, including large- areas that are not responsive to emissions scale energy storage pricing, to unlock co-benefits or to address the distributional impacts of the transition. ► improve the uptake of energy efficiency and demand-side management measures The Government’s Renewable Energy Strategy Work Programme has guided work to ► help businesses and industry to decarbonise energy and industry, including by: decarbonise ► assisting industry to decarbonise through ► encourage development and use of the Energy Efficiency and Conservation low-emissions energy sources, such as Authority’s business support programmes, bioenergy and hydrogen and the $70 million Government ► manage the phase-down of fossil Investment in Decarbonising Industry Fund fuels, including in electricity generation, to drive the uptake of energy efficiency manufacturing and industry, and and fuel-switching in buildings.

Aotearoa New Zealand's long-term low-emissions development strategy 49 Building and construction CONTRIBUTION TO OUR LONG-TERM VISION materials and waste (known as embodied emissions). Under this approach, most Building-related emissions are building-related emissions are accounted significantly reduced and, in doing for in the energy, industry, waste and so, we see other benefits from transport sectors. better homes and buildings, such We are using the ‘consumption’ approach as as improved health, economic and it provides opportunities to reduce emissions social outcomes. across the whole economy. The sector is making an important What we are doing now contribution to the net-zero target Transformational change of both the system and to higher living standards for and sector is required to lower emissions and improve building quality. We must also help New Zealanders. the sector to address other challenges, such as workforce and supply shortages. In Aotearoa, State of play housing affordability is an issue that actions Building-related emissions can be quantified to reduce emissions must address. in two ways: the ‘consumption’ approach and The Building for Climate Change programme the ‘production’ approach. is the main platform to reduce emissions from Under the production approach,14 in 2018, the sector. Regulations under consideration buildings generated 4 per cent of the nation’s include: long-lived emissions, mainly from fossil fuels. ► mandatory reporting and caps to improve Under the consumption approach,15 the the operational efficiency of all new sector contributes about 15 per cent of buildings, which could include caps for Aotearoa’s long-lived emissions. Across a carbon emissions, fossil fuel and water use building’s lifespan, about half of the emissions ► mandatory reporting and caps to reduce are generated by the energy used to heat, whole-of-life embodied carbon emissions cool and otherwise run buildings (known as in all new buildings operational emissions). The other half relate ► changes to the New Zealand Building to building materials and processes used across a building’s lifespan for construction, Code to strengthen energy efficiency renovation, deconstruction, transport of requirements, enhancing the Building Code changes consulted on earlier in 2021.

14 A production approach takes account of emissions at the point where they are ‘produced’, that is, when human activity leads to the emissions being released into the environment. For example, emissions from coal used to generate electricity for a building are accounted for at the power station (in the energy sector). In contrast, emissions from coal used directly in a boiler in a building are accounted for at the building (in the building and construction sector). This is the international standard for greenhouse gas reporting. 15 A consumption approach takes account of emissions at the point where they are ‘consumed’ and includes all the emissions from a product or service across its entire supply chain. For example, this would include all the emissions from extracting materials for use in a building product, through to their manufacture and end use in a building. This approach includes any related transport, energy, waste or other emissions produced from the point of extraction to their final use. 50 Aotearoa New Zealand's long-term low-emissions development strategy The proposed regulatory changes would We are focused on reducing emissions be complemented by measures that increase in a way that realises co-benefits for consumer demand for and industry supply New Zealanders, where possible. Buildings of lower-emissions and more climate- that are better insulated, drier and warmer resilient buildings. require less energy to operate and contribute to improved health, economic and social These could include initiatives that build outcomes for the families and whānau living in on existing low-emission actions across them. Medium- and higher-density buildings, the sector. They could also encourage supported by planning and transport early adopters to start reducing their networks, can reduce building-related emissions now, before potential regulatory emissions while connecting communities and change occurs. improving social and individual wellbeing. We are using government property portfolios and procurement roles to reduce building- Long-term strategy related emissions and send a signal to the We will further implement policies and actions rest of the sector. For example, Kāinga Ora – through programmes such as Building for Homes and Communities has pilot projects to Climate Change, and continue to leverage the show how to build lower-emissions, quality Government’s property and portfolio roles. housing developments at scale. This will: Certain government office buildings ► make buildings more energy efficient to run must meet third-party energy efficiency ► reduce whole-of-life carbon emissions requirements. All agencies must use the from buildings Sustainable Construction Procurement guidelines when procuring construction ► produce resilient buildings, suitable for projects. the changing climate where they are built We are partnering with industry through ► reduce emissions in other parts of the the Construction Sector Accord to jointly economy, including energy and industry, address long-standing challenges, including waste and transport. climate change. The Accord’s three-year We will continue to work with the sector transformation plan is changing behaviour to and Tiriti partners to continue an equitable lift overall performance, make a safer, better- transition for workers, including creating skilled and more productive industry and jobs that contribute to high-quality, low- share good practice. This collaboration will emissions construction. help us to make an equitable transition.

Aotearoa New Zealand's long-term low-emissions development strategy 51 Waste CONTRIBUTION TO OUR LONG-TERM VISION What we are doing now Aotearoa has a circular economy Existing initiatives include: that keeps materials in use for ► the National Environmental Standards for Air Quality (introduced in 2004), which as long as possible and has reduced manage discharges to air of greenhouse waste emissions in line with gases (mainly methane) from large landfills, the 2030 and 2050 targets for requiring these sites to collect and destroy biogenic methane. methane emissions ► the Waste Minimisation Act 2008, which State of play aims to reduce the environmental harm Waste sector emissions (of which 92 per cent caused by waste and to provide economic, are methane) account for around 4 per cent of social and cultural benefits gross greenhouse gas emissions; 81 per cent ► the waste disposal levy (since 2009), which are from solid waste disposed to landfill. raises revenue for promoting and achieving waste minimisation. It increases the cost Key challenges of waste disposal to recognise the costs Per person, Aotearoa is among the highest of waste to the environment, society and disposers of municipal waste in the OECD. the economy This is due to a relatively high amount and ► the Waste Minimisation Fund (established broad geographic spread of waste from our 2010), which supports projects that may urban areas and primary industries, combined reduce emissions from waste with the abundance and low cost of landfills. ► the NZ ETS (since 2013), which Transitioning to a circular economy will require prices emissions from municipal waste a major shift in consumption behaviours and disposal facilities. development of enabling policies, resource recovery systems and infrastructure. Significant data gaps exist for some waste types, including from construction and demolition, and farm fills. 52 Aotearoa New Zealand's long-term low-emissions development strategy Collectively, these measures have reduced Long-term strategy waste emissions over the past 15 years, We will: but we need to take further action. We have recently: ► apply circular economy principles, refresh the waste strategy and update legislation ► adopted a waste work programme to accelerate the transition to a low-emissions ► substantially improve our systems, enable circular economy. From 2021, it will build behaviour change at many levels and the foundations for a transformed waste increase investment in infrastructure system. This includes a long-term waste through measures that: strategy and a waste infrastructure > reduce the waste produced plan, new waste legislation and improved waste data systems, in line with > reduce the organic waste sent to landfill by diverting it to beneficial uses emissions budgets ► increased the rate of the waste disposal > enhance the capture of landfill gas. levy and expanded it to cover more classes To contribute to the biogenic methane targets, of landfills. This will further incentivise we are also working on future proposals to and increase funds available for waste limit or ban some or all organic materials minimisation, including resource recovery disposed to landfill, by 2030. infrastructure ► announced development of regulated product stewardship schemes for six priority products: plastic packaging, tyres, electrical and electronic products, agrichemicals and their containers, refrigerants and farm plastics. These schemes shift responsibility for a product’s lifecycle from communities and councils to producers and consumers. This will reduce emissions and support our wider circular economy objectives.

Aotearoa New Zealand's long-term low-emissions development strategy 53 Fluorinated gases CONTRIBUTION TO OUR LONG-TERM VISION What we are doing now Aotearoa has net-zero emissions Existing initiatives include: from refrigerants, while enabling ► ratifying the Kigali Amendment to the the electrification of heating and Montreal Protocol; 2020 was the first year of the phase-down of HFCs imported to access to heating and cooling for Aotearoa in bulk under this amendment all New Zealanders. ► making imports of F-gases subject to the NZ ETS. Also, goods and vehicles State of play containing HFCs or perfluorocarbons Fluorinated gases (F-gases) made up about (PFCs) are subject to a levy. This is linked to 2.5 per cent of total emissions in 2019. the price of carbon and is updated annually F-gases are mainly used as refrigerants for to reflect NZ ETS costs heating and cooling, and are dominated ► a regulated product stewardship scheme by HFCs (92 per cent of F-gas emissions). for refrigerants, which we are co-designing They are potent greenhouse gases, with with industry. Producers and sellers may global warming potential (GWP) hundreds be required to join an accredited scheme. or thousands of times greater than CO2. Manufacturers, importers, retailers and HFC refrigerants contribute a hugely users would have to take responsibility disproportionate amount to global emissions. for the emissions from refrigerants. The While HFCs are a small proportion of our Ministry for the Environment will consult total emissions, new technology could have on the regulations in 2022. a significant impact, including an estimated Together, these measures are expected to 35 per cent reduction by 2035. result in a 31 per cent reduction in HFC emissions by 2035. Key challenges Refrigerants are vital for everyday Long-term strategy refrigeration, heating and cooling systems. We will need to coordinate our move to Emissions reductions from F-gases are led sustainable heating and cooling technologies by our commitments to the Kigali Amendment, with other factors, including energy efficiency, which requires the phase-down of bulk health and safety, and cold-chain stability. HFC imports. We must promote good industry practice and go further than our commitments under the Kigali Amendment by: ► implementing regulated product stewardship for refrigerants ► considering further import controls. 54 Aotearoa New Zealand's long-term low-emissions development strategy Agriculture CONTRIBUTION TO OUR LONG-TERM VISION If farmers had not improved efficiency, emissions would have increased by an Agricultural emissions are reduced, estimated 30–40 per cent since 1990. in line with the biogenic methane targets for 2030 and 2050. Key challenges The Paris Agreement recognises the The sector supports the health of our importance of safeguarding food security and land, water and living systems, and ending hunger. We must reduce agricultural produces nutritious food and high- emissions in a way that does not threaten quality natural fibres for domestic food production and builds resilience to the impacts of climate change. and international markets. At present, there are limited options to reduce State of play biological emissions without significantly affecting production. These include on- Aotearoa has a unique emissions profile for a farm practice change and land-use change. developed country. Emissions from agriculture Implementing existing mitigation practices make up 48 per cent of gross greenhouse gas requires behaviour change and upskilling emissions, the largest of any sector in the farmers and growers at a national scale. New Zealand Greenhouse Gas Inventory. Further investment in mitigation technologies, This reflects the economic importance of the such as methane inhibitors, vaccines and primary sector. genetics, is needed to unlock more ambitious Of these agricultural emissions, over emissions reductions. 77 per cent are biogenic methane emitted The primary sector also provides a livelihood from livestock. We have adopted a split-gas for many rural and regional communities, as emissions reduction target to reflect the well as iwi and Māori who have significant different warming potential of short-lived investments in pastoral farming. A significant gases, such as methane, compared with long- challenge will be to mitigate the potential lived gases, such as CO2 and nitrous oxide. economic and social impacts of the climate Total agricultural emissions increased by transition on farmers, businesses, iwi and 17 per cent between 1990 and 2005, and Māori, and rural communities. have been relatively stable since then. Improvements in on-farm efficiency and productivity have lessened the impact of increasing emissions, even as overall production has grown. Greenhouse gas efficiency in farming has increased about 1 per cent per annum over the past 25– 30 years.

Aotearoa New Zealand's long-term low-emissions development strategy 55 What we are doing now Through the GRA, Aotearoa helps developing The He Waka Eke Noa – Primary Sector regions to build capacity across many Climate Action Partnership is a partnership countries to measure and manage agricultural between the Government, the primary sector emissions. This initiative is one way we show and Māori to measure, manage and reduce global leadership in areas where we have agricultural emissions. The Climate Change specific expertise. Response Act 2002 sets a series of milestones for this partnership, including implementing Long-term strategy farm-level pricing for agricultural emissions We will reduce agricultural emissions in line from 2025. The partnership also has pre-2025 with our climate targets. This will require milestones to help farmers know their total widespread changes in farm practice, new annual emissions, and to have written farm technologies and continued investment. plans to measure, manage and reduce these. Such changes will involve: Agricultural greenhouse gas research. ► pricing agricultural emissions to encourage The Government and industry have invested farmers to reduce emissions in research and development to improve ► investing in research and development to productivity and reduce emissions. Domestic accelerate the availability of new mitigation research is supported through a range of practices and technologies programmes including the New Zealand ► expanding extension and advisory services Agricultural Greenhouse Gas Research Centre, to help farmers gain the knowledge and the Sustainable Food and Fibres Future resources they need to measure, manage fund, the Sustainable Land Management and reduce their emissions and Climate Change research programme, the Greenhouse Gas Inventory Research ► enabling the transition to low-emissions Fund and the Pastoral Greenhouse Gas land use. Research Consortium. We will take a holistic approach to the Aotearoa champions international research changes underway across the primary sector on agricultural emissions through the Global to reduce our impact on the climate and Research Alliance on Agricultural Greenhouse protect our waterways and biodiversity. Gases (GRA). The GRA has 65 member We will maintain our reputation as one countries from all regions, involves over of the world’s most sustainable providers 3,000 scientists, and partners with global of high-value fibres and nutritious food, organisations to find shared solutions to while supporting the global shift to more reduce agricultural emissions. sustainable production. 56 Aotearoa New Zealand's long-term low-emissions development strategy Forestry and nature- based solutions CONTRIBUTION TO OUR LONG-TERM VISION State of play Forests and forest products Forests cover about one-third of Aotearoa. contribute to a more productive, This includes over 8 million hectares of indigenous forest, of which around 2.5 million sustainable, inclusive and resilient hectares is on private land and around Aotearoa. 2.1 million hectares is exotic plantation forest. Forests offset gross emissions and In 2019, forested land alone offset almost 27 per cent of gross emissions. provide products and bioenergy that displace emissions-intensive Forests play a critical role in meeting our climate targets and provide a renewable alternatives. resource to support our transition to a low- We have leading, sustainable forest emissions economy. Forestry is an important practices and create innovative, economic sector and source of employment, and diverse forests enhance soil conservation, sought-after forest products. water quality and climate resilience. Our Native forests are at the heart of native forests are central to maintaining and work to preserve and promote enhancing the native biodiversity of Aotearoa, and are of significant cultural and recreational indigenous biodiversity; they also value. They also have an important role in provide a long-term carbon sink. providing a long-term carbon sink. Māori are empowered as kaitiaki For Māori, the land represents whakapapa (guardians) and lead innovation (genealogy) and heritage, and Māori have that meets their aspirations. significant interests in forests and forestry as kaitiaki, land and forest owners, and workers. Our goal is to empower Māori Māori are well positioned to contribute to and and all key stakeholders with the lead developments in forestry for production, skills, knowledge and resources conservation and cultural purposes. The to ensure we maximise opportunities Government has a commitment to partner to grow the role that forests with and protect Māori and iwi knowledge, interests, values and taonga under Te Tiriti and wood products play in our o Waitangi. nation’s future.

Aotearoa New Zealand's long-term low-emissions development strategy 57 We have recently entered a period of net Other initiatives support the contribution afforestation, after nearly two decades of low of forests and forest products to a range levels of afforestation and net deforestation. of outcomes, including our climate targets. Government policy, including the NZ ETS and In particular: One Billion Trees Programme,16 has been a ► afforestation grants and incentives, major driver of this increase. such as those under the One Billion We need a considerable area of new forest to Trees Programme, have helped drive meet our climate change targets, even with afforestation and have wider benefits such significant reductions in gross emissions: the as erosion control and Māori development Climate Change Commission’s projections ► the Government is setting up a planning would see more than 1.2 million hectares of and advisory service within Te Uru Rākau | new forests (exotic and native) from 2022 New Zealand Forest Service to support to 2050. delivery on priorities for forests and A significant area of lower-productivity forest products pastoral land has been identified as being ► a forestry and wood processing industry suitable for new afforestation. This includes transformation plan is being developed about 1.5 million hectares that could be and will investigate how to enhance suitable for planting production forestry and forestry’s contribution to the bioeconomy. 1.2 million hectares for new permanent forest, It will consider options to provide a more due to steep, erosion-prone land. consistent supply of wood fibre and to attract investment in the production of What we are doing now low-emissions wood products and biofuels The NZ ETS is an important driver of ► the Aotearoa New Zealand Biodiversity afforestation, alongside environmental Strategy aims to promote and protect drivers, log prices and the availability of both biodiversity and the carbon stored in affordable land. Reforms have made it easier indigenous vegetation to participate in the NZ ETS and improved incentives for afforestation, while recent ► the Fit for a Better World – Accelerating changes to price controls (for 2022 to 2026) Our Economic Potential roadmap sets out provide for a new carbon price pathway to actions to transform the forestry sector incentivise reductions in gross emissions. and refocus our tree-planting partnerships. 16 The One Billion Trees Programme, established in 2018, is a 10-year programme that aims to increase tree planting across Aotearoa. This is being achieved by replanting existing forests, establishing new forests through grants, joint ventures and partnerships, and making the recent changes to the NZ ETS to more strongly encourage afforestation. Funding for grants and joint ventures, which kickstarted the programme, has closed to new applications and the broader programme is continuing to keep us on track to meet the goal of establishing one billion trees by 2028.

58 Aotearoa New Zealand's long-term low-emissions development strategy With rising carbon prices,17 a priority is to ensure NZ ETS settings support the sequestration needed to meet our targets without delaying emissions reductions in other sectors. We must also encourage the right amount, type and location of forests, to deliver the sequestration we need to meet our targets and support wider socio-economic and environmental outcomes. Long-term strategy We will: ► balance forest sequestration with emissions reductions from other sectors, for a cost-effective, equitable and timely transition ► provide overarching strategic direction and policies that ensure forests and forest products support a range of outcomes, including biodiversity and sequestration ► work in close partnership with Māori and key stakeholders, including territorial authorities and land owners, to develop and implement forestry policies. 17 Under NZ ETS price control settings from 2022, the auction ‘price floor’ is at $30 and the cost containment reserve trigger is at a price of $70. Aotearoa New Zealand's long-term low-emissions development strategy 59 Equitable transition Our low-emissions pathway includes steps to partner with Māori, protect the economy, communities and livelihoods, and share the benefits among all New Zealanders. CONTRIBUTION TO OUR LONG-TERM VISION Long-term strategy We have successfully moved to We will: a low-emissions and climate- ► meet each of the emissions budgets resilient Aotearoa in a way that through a coherent strategic package is fair and equitable and upholds that comprises a mutually supportive and balanced combination of emissions pricing, Te Tiriti o Waitangi. well-targeted regulation, tailored sector policies and direct investment State of play ► enable an equitable transition for Māori The Climate Change Response Act 2002 by upholding the principles of Te Tiriti, provides the framework for managing actively partnering with Māori on national the transition through a system of strategies, and embedding Māori values targets, emissions budgets and emissions and knowledge into our climate response. reduction plans. We will also support tangata whenua to Emissions reduction plans must include decide on and implement their own actions a strategy to mitigate the effects of the ► continue to build strong partnerships transition on employees and employers, with businesses, unions, workers, local regions, iwi and other Māori, and wider government and civil society to take communities, including funding for any action on climate change mitigation action. ► help firms and households reduce their Committing to an equitable transition emissions footprint, promote new business aligns with other government objectives, and job opportunities, and support including building closer partnerships with workers, households and communities Māori, future-proofing the economy and through the transition. protecting livelihoods. We are identifying where our plan will present the greatest challenges, and how we can assist communities, households and businesses to prepare for and manage the impacts of the transition. At the same time, we must take the opportunities that the transition brings, share the benefits and strengthen the social licence for the transition.

Aotearoa New Zealand's long-term low-emissions development strategy 61 Next steps We will publish the first three emissions budgets in May 2022. The remaining sections of the emissions reduction plan will also be published in May 2022. These will provide detailed information about the steps that Aotearoa will take to reduce emissions and increase its carbon sinks in the first budget period (2022–2025). Consultation is underway to inform these policies, which will put us on the path to meet the next budgets and our long-term emissions goals. 62 Aotearoa New Zealand's long-term low-emissions development strategy Glossary 2050 target Set in the Climate Change Response Act 2002, this target requires: ► emissions of all greenhouse gases (except biogenic methane) to be net zero by 2050 ► emissions of biogenic methane emissions to be 24–47 per cent below 2017 levels by 2050 (and 10 per cent by 2030). abatement The reduction or removal of greenhouse gas emissions. adaptation Actions to respond to the effects of a changing climate. anthropogenic Originating in human activity. Aotearoa A Māori name for New Zealand. bioenergy Energy produced by living organisms. biofuel Fuel produced from organic material – often plants or animal waste. biogenic methane All methane emissions produced from the agriculture and waste sectors (as reported in the New Zealand Greenhouse Gas Inventory). carbon sequestration Any reservoir that absorbs more carbon than it releases, thereby lowering the or carbon sink overall concentration of carbon dioxide in the atmosphere. Examples include forests, vegetation, peatland and the ocean. circular economy An economic system based on designing out waste and pollution, reusing products and materials, and regenerating natural systems. Climate Change A Crown entity that gives independent, expert advice to the Government on Commission climate change matters and monitors progress towards the Government’s mitigation and adaptation goals. climate resilience The capacity of social, economic and environmental systems to cope with a hazardous event, effect, trend or disturbance caused by climate change, including by responding or reorganising in ways that maintain their essential function, identity and structure, while also maintaining the capacity for adaptation, learning and transformation. CO2 Carbon dioxide. CO2-e Carbon dioxide equivalent. Used to describe and compare different types of greenhouse gases, by comparing their warming potential to that of CO2. Aotearoa New Zealand's long-term low-emissions development strategy 63 decarbonise Reduce greenhouse gas emissions, for example, through the use of low-emissions power sources and electrification. embodied emissions Emissions associated with the production of materials and construction processes throughout the lifespan of a building, including during construction, renovation, ongoing use and demolition. emissions Greenhouse gases released into the atmosphere, where they trap heat or radiation. emissions budget The cumulative amount of greenhouse gases that can be emitted in New Zealand over five-year periods prescribed in the Climate Change Response Act 2002. Three successive emissions budgets must be in place at any given time.

emissions reduction A plan that sets out the policies and strategies to meet emissions budgets by plan reducing emissions and increasing removals. A new emissions reduction plan must be in place before the beginning of each emissions budget period. EV Electric vehicle. F-gases Fluorinated gases; mainly used as refrigerants for heating and cooling. fossil fuels Natural fuels formed in the geological past from the remains of living organisms, for example, coal and natural gas. When used as fuel, these emit greenhouse gases. greenhouse gases Atmospheric gases that trap or absorb heat and contribute to climate change. The gases covered by the Climate Change Response Act 2002 are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). gross emissions New Zealand’s total emissions from agriculture, energy, industrial processes and product use (IPPU) and waste sectors as reported in the reports required under the United Nations Framework Convention on Climate Change, the Kyoto Protocol, and the Paris Agreement. While Tokelau’s gross emissions are also included in the New Zealand Greenhouse Gas Inventory, they are not included for the purposes of emissions budgets or emissions reduction plans. hapū Kinship group, clan, subtribe. hydrofluorocarbons A category of human-made greenhouse gases often used in refrigeration, air (HFCs) conditioning and other processes. iwi Tribe, large group descended from a common ancestor. 64 Aotearoa New Zealand's long-term low-emissions development strategy kaitiaki or Guardian or guardianship, stewardship, for example, of natural resources. kaitiakitanga linear economy The predominant economic system globally, following the model of ‘take-make- use-dispose. low-emissions, An economic and social system that has moved away from the use of fossil fuels low-carbon and adopted low-emissions energy sources and processes, and consequently produces minimal greenhouse gas emissions. mātauranga Māori Māori knowledge systems and worldviews, including traditional concepts. mitigation Human actions to reduce emissions by sources or enhance removals by sinks of greenhouse gases. Examples of reducing emissions by sources include walking instead of driving, or replacing a coal boiler with a renewable electric-powered one. Examples of enhancing removals by sinks include growing new trees to absorb carbon, or industrial carbon capture and storage activities. Mt CO2-e Metric tonnes of carbon dioxide equivalent. NDC Nationally determined contribution. Each Party to the Paris Agreement must define its contribution to the long-term temperature goals set out in the agreement, in the form of an NDC. net emissions Net emissions are made up of gross emissions combined with emissions and removals from the land use, land use change and forestry (LULUCF) sector, as reported in the reports required under the United Nations Framework Convention on Climate Change, the Kyoto Protocol, and the Paris Agreement. For the purposes of emissions budgets and emissions reduction plans, this excludes Tokelau’s emissions.

net zero A target of completely negating the greenhouse gas emissions produced by human activity. This can be done by balancing emissions and removals or by eliminating the production of emissions in the first place. NZ ETS New Zealand Emissions Trading Scheme. offshore mitigation Emissions reductions and removals that occur outside New Zealand, or overseas- based incentives to reduce or remove emissions (for example, by the pricing of emissions through participation in an overseas emissions trading scheme). operational emissions Emissions from operating a building. Aotearoa New Zealand's long-term low-emissions development strategy 65 organic waste Wastes containing carbon compounds that are capable of being readily biologically degraded, including by natural processes, such as paper, food residuals, wood wastes, garden and, plant wastes, but not inorganic materials such as metals and glass or plastic. These, and excluding hazardous substances. Organic wastes can be decomposed by microorganisms into methane, carbon dioxide, nitrous oxide, and simple organic molecules (plastic contains carbon compounds and is theoretically organic in nature, but generally is not readily biodegradable). Paris Agreement A legally binding international treaty on climate change mitigation, adaptation and finance, adopted by 196 Parties in Paris and signed in 2016. One of the goals of the Paris Agreement is “holding the increase in global average temperature to 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels”. perfluorocarbons These are organofluorine compounds containing only carbon and fluorine. Some (PFCs) of them are potent greenhouse gases. product stewardship A scheme in which a producer, importer, retailer or consumer takes responsibility for reducing a product’s environmental impact. tangata whenua The people of the land, local indigenous people. Māori are tangata whenua. taonga Treasure, anything prized – applied to anything considered to be of value, including socially or culturally valuable objects, resources, phenomenon, ideas and techniques. Te ao Māori The Māori world. Te Tiriti o Waitangi The Treaty of Waitangi. Note: While these terms are used interchangeably, we or Te Tiriti acknowledge that the English version and te reo Māori translation are separate documents and differ in a number of respects. transition The shift to a low-emissions, sustainable economy and way of life. whānau Extended family, family group. Zero Carbon Introduced by amendments to the Climate Change Response Act 2002 in 2019, Framework this is a legislative framework to enable the transition to a low-emissions and climate-resilient Aotearoa. This includes a statutory 2050 target, provision for emissions budgets and emissions reduction plans, together with national climate change risks assessments and national adaptation plans. 66 Aotearoa New Zealand's long-term low-emissions development strategy Aotearoa New Zealand's long-term low-emissions development strategy 67