The chances of meeting climate targets are "finely balanced" – and the Prime Minister's policy bonfire is set to make things worse
Three quarters of the 301 actions highlighted in the Government's first Emissions Reduction Plan are tracking well, according to an internal progress report obtained by Newsroom under the Official Information Act.
Despite this, achievement of the first two emissions budgets was already "finely balanced" at the end of 2022 and the subsequent policy bonfire when Chris Hipkins became Prime Minister is set to complicate matters further.
The document is the first in a series of reports from an interdepartmental executive board on climate change, consisting of the heads of 10 different agencies including the Ministry for the Environment, Treasury and the Ministry of Business, Innovation and Employment. They will come every six months, with the report released to Newsroom dated February 2023 and covering progress until the end of last year.
READ MORE: * Plenty of carrots but few sticks in climate plan * Climate Commission warns of fossil-fuelled NZ in 2050 * Government to keep petrol cheap and dirty
"Six months into the implementation of ERP1, agencies report implementation of actions are mostly ‘on-track’ and there have been some early successes. However, emerging risks reflect the size and scale of the challenge to deliver what is an ambitious programme of work," officials wrote in a briefing which accompanied the report.
Of the 301 actions, 221 were rated green, 64 were amber, one (the biofuels mandate scrapped by Hipkins) was red, and 15 were grey as they had not yet received funding. Ten actions have been completed.
"The increased costs of living, as well as recent weather-related events have thrown up some big challenges, as well as other things like labour market pressures. But, despite all the disruption the majority of the 300 actions in the ERP are tracking in green, not orange or red. That is a huge achievement given the circumstances," Climate Change Minister James Shaw told Newsroom in a statement.
"Our goals remain ambitious and long-term progress needs to be seen over a longer period than just six months. However these regular reports are part of an important process that provides frank advice on what is working and where we need to make adjustments if necessary, in order to meet our climate goals. In this case it identified a few areas where we need to concentrate our focus, as is to be expected."
Early successes included over-performance of the clean car discount, a $3 billion issuance of green bonds and the rapid stand-up of the Centre for Climate Action on Agricultural Emissions. The latter programme is a joint venture with big agribusinesses and had already allocated $16 million for research by December 2022.
Big risks were highlighted too. Spending from the Climate Emergency Response Fund was slow to get out the door, with only a fraction allocated across the second half of the year compared to expectations.
"While spending can take time to ramp up, this pace is an indicator of risks to delivery of actions," officials warned.
Five critical actions had been delayed by up to six months and six critical actions had been delayed by more than half a year. The public service was facing capacity pressures given the scale of the programme and "significant bottlenecks" at stages like Cabinet approval have further worsened things.
The removal of the biofuel mandate was specifically mentioned as a cause for concern, even though it occurred outside the scope of the report. The lack of the mandate leaves a 7.1 to 9.9 million tonne hole in the emissions plans out to 2035 and there's relatively little that can be done in the transport space to patch it up. Transport is now no longer expected to meet its sub-sector target during the first emissions budget, nor will the sector goal of reducing the emissions intensity of fuel by 10 percent by 2035 be accomplished.
The latest projections available to the board showed the achievement of the first two emissions budgets was already "finely balanced" before the biofuel mandate was scrapped and New Zealand is not currently on track to meet the third budget. The Climate Change Commission advised in April that the second budget also won't be met without additional changes.
"More widely, the focus on managing cost-of-living impacts has highlighted the urgency and importance of having a need for a clearer strategy to manage the impacts of abatement policies on vulnerable sectors of society," officials wrote.
In the report, the loss of emission reduction opportunities because of the focus on handling cost-of-living impacts was described as a "programme-level risk". Besides the biofuel mandate, the report singled out the Government's decision to ignore the Climate Commission's advice on Emissions Trading Scheme settings in December as harmful.
That decision "means we have less contingency or 'insurance' available to manage any overshooting of the budgets". The interdepartmental board said it would look to identify other levers that could be pulled to address shortfall in emissions cuts.
It expects to focus in its next report on a handful of priority areas, including reforms to the Emissions Trading Scheme, progress on getting people out of cars, He Waka Eke Noa, the energy strategy, the development of the second emissions reduction plan and efforts to address distributional impacts of climate policy without weakening ambition.
