The cost to the country of forcing six corporate defendants to immediately cut their emissions to net zero would be nearly $22 billion, an economic report finds. The cost if that were applied right across the agriculture, energy, steel and mining sectors would explode to $112b.
That’s according to analysis by AUT University economist Dr Niven Winchester, commissioned by Fonterra, Z Energy and Genesis, as evidence to support their case that the courts – or Parliament – should throw out a case taken by iwi activist Mike Smith.
The case has gone all the way to the Supreme Court and judges have thus far refused to dismiss the case – so after lobbying from Fonterra and Z, the Government has agreed to intervene retrospectively.
That’s been controversial: in the justice select committee considering the Climate Change Response (Tort Liability) Amendment Bill on Tuesday afternoon, Green MP Steve Abel accused the firms of lobbying directly to extinguish the democratic right of all New Zealand citizens to hold them accountable for the harms caused by their pollution. “It has the very nasty taint of vested interests influencing New Zealand’s democracy.”
Another critic, Raglan architect David Loughlin, told MPs it sent a message that reducing legal accountability was an appropriate response to increasingly complex environmental challenges. And Dr Oliver Hailes, a law professor at the London School of Economics, said that by retroactively removing plaintiffs’ rights, New Zealand could be legally exposed in international proceedings.
Ministry of Justice officials, too, had advised ministers that retroactive lawmaking could undermine public confidence in the rule of law. “For example, retrospective legislation that favours business certainty can compromise fairness or established legal expectations.”
But addressing the committee, defendants have doubled down on their arguments.
“If the court granted what is being asked, the impacts on Fonterra, our farmers, the dairy sector and the wider economy would be devastating,” said Simon Tucker, Fonterra’s group director of global external affairs. “It’s Parliament that really should be the final arbiter of these massively complicated national issues.”
Z Energy chief executive Lindis Jones told MPs: “New Zealand’s energy transition will not be delivered company by company, or court case by court case. It requires a coherent framework that balances competing interests, weighs difficult trade-offs, and applies consistently across the economy. We already have that framework in the hard-fought-for Climate Change Response Act and the Emissions Trading Scheme.”
Ahead of tabling the Winchester report and other documents, Jones spoke to Newsroom. The economic report demonstrated the litigation’s “catastrophic impact on the New Zealand economy”, he said.
“I just want to be really clear, this is not about the economy versus the environment. There’s going to be a set of choices and trade-offs that need to be made, and we just fundamentally believe that democratically-elected Government is the best party to make those choices, on behalf of New Zealanders. Not judges.”
When it was put to him that the torts law he wants overturned by Parliament had evolved over centuries, Jones defended his characterisation of the civil courts as uncertain and unpredictable. “In terms of the precedent that it sets, which company would be pursued next is unclear. And the impact on the economy and society more broadly is equally unclear. So you might have a tort system, but the effect of that’s massively uncertain.”
Z Energy revealed, in one heavily-redacted briefing, that its financiers have already raised concerns. After the Supreme Court ruled in February 2024 that Smith’s case could proceed, the proceeding was disclosed on a risk register.
Z was approached by Australia-based representatives of one of its financing organisations,
“seeking clarity and assurances” around the potential implications of the judgment. “In particular, concern was raised regarding any anticipated financial implications in light of the Group’s arrangements….”
The fuel firm expressed concern that such questions, and their potential impact on credit risk assessments, would become increasingly frequent and acute as the court case proceeded.
Jones said this week that such uncertainty couldn’t be allowed to continue. “I get that it’s a very distinctive choice for a change in law to be applied retrospectively. But pragmatically, that’s just got to be the case,” he told Newsroom. “If this amendment happened, but it wasn’t applied retrospectively, the case would continue, and the remedies potentially would be applied to Z.
“All that would mean would be that the fuel that we sell would be sold by someone else in the industry, BP or Exxon Mobil. There’d be no reduction in emissions.”
The Legislation Design and Advisory Committee has provided guidance saying retroactive legislation may be an appropriate response to litigation, if it restores an important public interest.
Among the documents was the headline-grabbing briefing and addendum that Z provided in hard copy form to the Prime Minister’s former policy chief, Matthew Burgess, that the Government never disclosed under the Official Information Act.
“I absolutely accept that handing over a piece of paper, at the request of someone in the Prime Minister’s office, is frustrating, and creates an unhelpful impression,” Jones says. “I absolutely get that.”
He says the legal duty of disclosing official information was not on Z, it was on the Prime Minister’s office – and it shouldn’t have been hard to comply. “The document that was handed to that individual was easy to store, and it was a decision for that individual to disclose it and respond to any OIA request.”
One of the documents, disclosing the financiers’ concerns, was marked “commercially sensitive and shared in confidence”.
But Jones said what was important was the substance of what was in the documents. “It’s nothing surprising. There’s nothing that we haven’t said before in public to the court or to the Government.”
The briefing says that if the court case were allowed to proceed, the inevitable appeals could drag on another four years with a “significant impact” for New Zealand businesses in terms of their funding and insurance arrangements, including access to capital, and lender/insurer notification requirements.
It might seem unlikely that any court would agree to the remedy sought by Smith: that the six defendant companies be immediately required to reduce their emissions to net-zero.
But Jones said the case had been proceeding through the courts since 2019, and the company had to treat it as a real risk. “The fact that this case is sustained in the High Court and it has been to the Supreme Court. We have to take it seriously.
“It absolutely creates massive uncertainty, not only for the defendants, but for whoever might come next. And it’s actually bigger than that.
“If we set the precedent that we’re going to attempt to manage New Zealand’s emissions case by case, the level of uncertainty and the economic impact, and frankly, the lack of effectiveness that promises – it’s bigger than this court case. It actually goes to effectiveness of New Zealand’s overall climate response.”
But the courts had initially been asked for a more gradual remedy. If a court ordered Z Energy to cut its emissions to net zero in 2050, in line with New Zealand’s national targets and in accordance with the remedy Smith first sought, would that be so hard?
Z Energy is a member of the Climate Leaders Coalition, whose mantra is “accelerating our transition to a zero carbon”. Indeed, Jones’ predecessor Mike Bennetts chaired the coalition.
So the fuels company had previously set a target to reduce its operational greenhouse gas emissions by 42 percent, from 2019 to 2029. Those are defined as the domestic operational emissions over which the company has the most control or influence – that is, emissions it says it can take meaningful action to reduce.
This includes all Z’s Scope 1 and 2 emissions, and Scope 3 emissions from employee business travel, waste to landfill, and fuel used in domestic road transport for fuel distribution.
It says it achieved that target by 2025, with operational emissions of 17,204tCO2-e, representing a 51 percent reduction from the 2019 base year. So it set a new replacement target, of 13,900 tCO2-e, a further 20 percent reduction from 2024 to 2030.
It plans to do that through improving fuel efficiency in road transport, reducing electricity consumption, and reducing waste to landfill. The firm also plans to investigate the use of renewable diesel as well as market-based methods such as renewable energy certificates.
Despite that progress, Jones said that even the lesser finding that Z Energy and the other defendants had acted unlawfully would have enormous repercussions.
At that point, any claimant might try their luck in court. “Who knows what climate litigation would exist at that point in time, given how quickly it’s moving? Absolutely, that’s a real risk to Z’s ability to deliver energy security and energy at reasonable prices for New Zealanders.”
Z Energy is a partner of Newsroom. However, this interview was conducted and the article written without reference to that partnership. Z had no input into the questions, nor into the article as it’s written, nor any visibility of the article prior to publication.
