Second Emissions Reduction Plan

The Government’s second Emissions Reduction Plan, which covers the period 2026-30 (Second ERP), was released on Tuesday 10 December 2024.   The focus of an ERP is ‘how’ the country will reduce emissions in line with the Emissions Budgets.

The First ERP remains in place until 31 December 2025 (which is the end of the first emissions budget period).  As such, the Government has also recently amended the First ERP to reflect this Government’s approach to meeting the first emissions budget ‘in the most cost effective way’.

The Second ERP outlines 8 key policies that the Government says will have the greatest potential emissions savings over the next 5 years:  

1. Enabling more renewable energy projects through Electrify NZ   
2. Recognising carbon capture, utilisation and storage in the NZ ETS  
3. Targeting a network of 10,000 EV charging points by 2030   
4. Introducing agricultural emissions pricing systems by 2030 and incentivising the uptake of new technologies  
5. Exploring private-sector partnerships to plant trees on Crown-owned land which has low conservation value and low farming value
6. Introducing a regulated product stewardship scheme for refrigerants from 2025  
7. Leveraging the Waste Minimisation Fund to enable resource recovery systems and infrastructure to process organic waste  
8. Improving organic waste management and landfill gas capture to increase landfill gas recovery rates  

The latest emissions projections indicate that NZ is on track to meet the first emissions budget for the period 2022-25, even with the changes in policy.  As a reminder, the first emissions budget required a reduction of 290Mt CO2-e.  The second and third emissions budgets require reductions of 305 Mt CO2-e  and 240 Mt CO2-e  respectively.

The Second ERP states that in 2025 the Government will:

• Deliver legislation and policies for biotech, carbon capture and storage, and refrigerant gases to support mitigation and further progress towards our emissions goals.
• Update the co-investment approach for electric vehicle charging infrastructure.
• Explore opportunities to partner with the private sector to decarbonise industry and plant trees on Crown-owned land.
• Update New Zealand Emissions Trading Scheme (NZ ETS) settings for 2026–30.
• Strengthen NZ ETS market governance and other measures, to support a credible market.
• Progress work on an adaptation framework that will set out the Government’s approach to sharing the costs of preparing New Zealand for the impacts of climate change.
• Announce our second Nationally Determined Contribution under the Paris Agreement on climate change.
• Clarify the Government’s understanding of the methane component of the 2050 target, based on the independent Methane Science and Target Review and advice from the Climate Change Commission | He Pou a Rangi.
• Set the fourth emissions budget for the period 2036–40, giving New Zealanders certainty of long-term direction.

The plan sets out policies and actions that will help reduce net emissions across different sectors. This update focuses on energy, building and construction, transport, agriculture and forestry.

You can find the full plan here:  New-Zealands-second-emissions-reduction-plan-202630.pdf.

Energy

Under ‘Energy’ the Government has listed the following key actions and policies:

• Delivering Electrify NZ to help achieve a goal of doubling renewable energy (including reducing consenting times). Electrify NZ is the work programme to support private investment in electricity generation and networks.
• Enabling energy efficiency and a smarter electricity system.
• Enabling carbon capture, utilisation and storage.
• Enabling woody bioenergy.

‘Carbon capture’ is the process of trapping carbon dioxide produced by burning fossil fuels and storing it in a way that prevents it from being released into the atmosphere.

‘Woody bioenergy’ is a renewable energy source that uses wood from trees and shrubs to generate electricity, heat and liquid fuels.

What’s changed?   The Second ERP policies focus on broad, system-wide energy transitions, such as expanding renewable energy, improving infrastructure and adopting advanced technologies. In contrast, the first ERP policies emphasised practical, community-focused measures and targeted energy efficiency, affordability and infrastructure readiness to directly benefit households, businesses and local communities.

Building and Construction

Buildings contribute to around 12% of domestic GHG emissions. The Government lists its key actions and policies in this sector as:

• Expanding voluntary energy performance ratings for non-residential buildings.
• Making it easier for people to retrofit their buildings to improve energy efficiency.
• Improving emissions data for building products, materials and buildings.

What’s changed?  These policies provide practical, focused actions to support energy efficiency, particularly for retrofitting and non-residential buildings. This is in contrast to the first ERP policies, which addressed broad, systemic changes to reduce emissions across the building sector, focusing on regulations, innovation and long-term shifts.

Transport

In 2022 transport was responsible for 17.5% of New Zealand’s gross GHG emissions, with more than 90% of transport emissions being from road transport. New Zealand has the 5th highest per-capita transport emissions among developed countries. 

The Government’s key actions and policies in this space include:

• Facilitating EV charging
  • The Government is planning a network of 10,000 public charging points by 2030; including fast chargers every 75 kilometres along most of the state highway network.
  • Facilitating private investment of electric vehicles by making the installation of public EV charging points a permitted activity under the Resource Management Act 1991.
  • The Government will co-invest in public charging points with the private sector.
• From January 2027, regular fuel excise duty and road user charges will increase.
  • The entire light vehicle fleet will transition to road user charges.
• The Government has launched the Low Emissions Heavy Vehicle Fund (LEHVF) to promote innovation and offset the cost of hundreds of heavy vehicles powered by clean technologies.
• Reviewing regulatory barriers to decarbonising heavy vehicles.
• The Government has established Sustainable Aviation Aotearoa, a group of private sector and government agencies supporting the decarbonisation of the aviation sector.
• Increasing reliable and accessible public transport, especially in the larger cities.

What’s changed?  As most people will be aware, the Government scrapped the previous Government’s successful Clean Vehicle Discount Scheme as part of it’s initial ‘policy bonfire’.  It also terminated draft legislation which would have implemented a sustainable biofuel mandate.  The policies in the Second ERP provide a more direct focus on EV charging and decarbonisation of heavy vehicles, compared to the First ERP which arguably covered that focus and extended the focus to rapid adoption of low-emissions vehicles and more focus on sustainable transport options and access. 

Agriculture

Agriculture makes up about ½ of New Zealand’s total emissions. You can read an earlier article about pricing agricultural emissions here:  Pricing Agricultural Emissions | Articles | Cooney Lees Morgan.

The coalition government has been clear that  efforts to reduce agricultural emissions must support farmers to produce emissions-efficient products and not cause ‘leakage’ (where production shifts to other parts of the world).

The Second ERP proposes  a ‘multi-pronged approach’ to reducing emissions without undermining profitability, involving:

• The Government investing over $400 million to accelerate the development and commercialisation of mitigation tools and technologies to reduce on-farm emissions.
• The New Zealand Agricultural Greenhouse Gas Research Centre is funding research into ruminant methane, nitrous oxide and farm systems to reduce emissions.
• Implementing a fair and sustainable pricing system for on-farm emissions by 2030.
• Reviewing methane science and targets.

A system for pricing on-farm emissions has been pushed out 2030, with the Government clearly focusing on science and technology to provide solutions to help reduce on-farm emissions. 

Forestry

Forestry and wood processing are still seen as key industries to help support New Zealand’s emissions reductions.   

Key actions and policies include:

• Restoring price stability and confidence in the ETS to give certainty to forestry.
• Limiting whole-farm conversions to ETS forestry to protect highly productive farmland.
• Exploring partnering with the private sector to plant trees on Crown-owned land.
• Improving the consenting framework for wood processing.
• Ensuring the Wood Processing Growth Fund continues to support commercial investment.

The coalition Government is clearly relying on the ETS to be a major policy lever to drive emissions reductions, and rather than prioritising reducing emissions at source (as per the First ERP and the Climate Change Commission’s advice).  It is clearly also relying on emissions removal (through exotic afforestation) to help meet the Emissions budget. 

EPA Regulatory Compliance Priority for 2024-25 – HFCs in Refrigerants

In addition to routine compliance monitoring and responding to reports of non-compliance, incidents and enquiries, the Environmental Protection Authority (EPA) undertake planned activities in focus areas representing a higher degree of regulatory risk, potential of harm to people and the environment, and the integrity of the regulatory scheme.

We recently attended the Environmental Compliance Conference in Wellington, where Jackie Adams from the EPA provided an update on some of the work the EPA is currently undertaking. 

One area of priority focus for 2024-25 is the hydrofluorocarbon (HFC) participant obligations under the ETS.

In New Zealand, potent synthetic greenhouse gases (HFCs) are primarily used as refrigerants. Refrigerants are an essential component of air-conditioning and refrigeration technology; found in almost all heat pumps, dehumidifiers, refrigerators and freezers.  Because they are not consumed as they are used, emissions are mostly the result of leaking equipment and improper disposal. Currently, there are limited regulatory levers to pull and manage the sale, management and disposal of these gases in an environmentally responsible way. As such, there is an issue with improper disposal and degassing of synthetic greenhouse gas-containing equipment.

However, in July 2024, the Minister for the Environment accredited Cool-Safe as a product stewardship scheme, designed to improve sector management for refrigerants and other synthetic gases. The scheme’s purpose is to increase the safe recovery and destruction of synthetic refrigerants. It is essential that all synthetic refrigerants are contained and safely destroyed whenever an old refrigeration, air conditioning unit or other synthetic refrigerant-bearing equipment comes to the end of its useful life. As such, the recovery and destruction of synthetic refrigerants will no longer come under the voluntary product stewardship scheme, but rather a government backed scheme.

You might be surprised to learn that some people are illegally importing cheap (and sometimes contaminated) HFCs for use in equipment like heat pumps, air conditioning and refrigeration units and some medical devices.  In December the EPA seized HFC gases valued at more than $1 million in a joint operation with New Zealand Police and New Zealand Customs Service investigating illegal imports.  You can read more about the seizure here:

https://coolsafe.org.nz/news/the-environmental-protection-authority-epa-has-seized-1-million-of-hfcs

There is more to come on this, but it is important to remember that anyone importing bulk HFCs needs a permit under the Ozone Layer Protection Act and must be registered as a participant in the ETS. Bulk HFCs are containers of new or recycled HFC gas in an unprocessed form, alone or in a mixture.

If you are offered bottles of HFCs at significantly lower than market price, you are encouraged to contact the investigations team at the EPA. 

NZ’s First Major Greenwashing Case Still Heading Towards Trial – Consumer NZ Inc v Z Energy Ltd

We previously reported on NZ’s first major greenwashing case – where  three NGOs – Consumer NZ, The Environmental Law Initiative, and Lawyers for Climate Action NZ Inc – have filed a complaint against Z Energy Ltd, the largest petroleum retailer in New Zealand and the second largest greenhouse gas emitter. They are seeking declarations from the High Court that Z Energy has breached the Fair Trading Act by misleading New Zealanders with its public messaging. This is the first significant greenwashing case in New Zealand.

We understand that Z Energy applied to the Court for an order requiring the plaintiffs to provide ‘further particulars’ of the claim. These particulars predominantly relate to:

• the definition of the advertising campaign;
• the link between specific advertisements/public statements and the pleaded representations;
• the facts that support the allegations that the representations were false; and
• the link between each particular representation and the particular falsification.

The High Court held that some technical amendments were required to the statement of claim as a result of its judgment; but that the next stage in the proceedings (the discovery process) should not be held up; and that the parties should proceed to settle the categories of tailored discovery as soon as possible.  We will keep you updated as this case progresses through the courts. 

Milieudefensie v Shell

In a landmark ruling on corporate climate responsibility, the Netherlands Court of Appeal in Milieudefensie v Shell overturned a previous decision by the District Court that had ordered Shell to significantly ramp up its emissions reduction efforts.

The District Court had concluded that Shell had a legal obligation to reduce its greenhouse gas emissions as part of its responsibility to protect citizens from the impacts of climate change. It ordered Shell to reduce its emissions by 45% relative to 2019 levels by 2030. However, the Court of Appeal overturned this specific emissions reduction target, disagreeing with the lower court's approach.

While this ruling may be disappointing for campaigners who brought the case, the Court of Appeal did provide important insights into corporate climate responsibility. The Court affirmed the 2021 conclusions of the lower court regarding the connection between climate change and human rights law. It referenced various national and regional climate-related judgments, stating that “there can be no doubt that protection from dangerous climate change is a human right”. The Court also emphasised that while the primary responsibility to combat climate change lies with governments and legislators, companies like Shell may also have an obligation to take action to mitigate climate change.

The Court's reasoning was influenced by international frameworks such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises—both non-binding, "soft law" instruments. These frameworks link corporate responsibility for human rights impacts with the need to address climate change. As a major oil and gas company, Shell has a "special responsibility" to reduce its greenhouse gas emissions. However, the Court concluded that this responsibility should not be enforced through a specific legal target, as had been ordered by the District Court. 

What does this mean for global litigation?

Climate change is a global issue, and courts worldwide are increasingly influenced by international case law. Although this decision applies only in the Netherlands, it has broader implications as a precedent-setting judgment. The judgment highlights carbon-intensive industries’ potential vulnerability  to legal claims, even when remedies sought may seem ambitious. It also signals that compliance with minimum legislative requirements may no longer suffice in mitigating legal risks related to carbon emissions.

This decision is particularly significant, aligning with a broader trend in climate litigation where courts hold companies accountable for contributing to climate change mitigation, at least under Dutch law. However, the Hague Court of Appeal clarified that existing EU climate regulations do not impose specific emissions reduction rates on individual companies as a matter of law.

As set out in our earlier update, in New Zealand the Supreme Court in Smith v Fonterra unanimously allowed an appeal against a strike out application, and has reinstated all cause of action to proceed to trial. 

The Supreme Court was not prepared to strike out the claims summarily and held (at [169]) “whether the respondents’ actions amount to a substantial and unreasonable interference with public rights [which] remains a fundamental issue of fact for trial.”

In relation to the ability of the common law to develop to meet the challenges associated with climate change the Supreme Court noted (at [156]):

The common law has not previously grappled with a crisis as all-embracing as climate change. But in the 19th and early 20th centuries it had to deal with another existential crisis, albeit one of lesser scale, when the industrial revolution dramatically enlarged the risk of accidents through the mechanisation of factories, transportation and mining.

We will keep you updated on these proceedings. 

International Court of Justice currently hearing matters relating to Advisory Opinion Sought by Vanuatu on climate change obligations

On the 2^nd December, the International Court of Justice (ICJ) commenced hearings in the Advisory Opinion proceedings on the obligations of states in respect of climate change. The Republic of Vanuatu has spearheaded the initiative to present this issue to the ICJ, seeking clarification on States' obligations regarding climate change, particularly in relation to small island nations that are susceptible to climate change impacts. An unprecedented number of States and international organisations will participate in the proceedings.

While New Zealand supported the campaign from Pacific youth and the Vanuatu government to request the advisory opinion, it has aligned itself with developed and high-emission nations in the proceedings. These countries argued that the existing UN climate change treaty and the Paris Agreement are sufficient, asserting that international law does not impose significant additional obligations on nations to reduce GHG emissions. In contrast, island nations and other vulnerable countries have presented a different interpretation in their submissions to the ICJ. They argued that polluting nations have violated international law and should be held accountable, potentially through compensation.

On 22 March 2024, New Zealand submitted a written statement in response to the Advisory Opinion. It concluded that the Opinion asked for by the States, will be essential to ensuring that all States are clear about what their obligations are, and how those obligations operate to enable States to achieve their stated collective objectives in responding to climate change. The statement touched on the severity of climate change, and the complexity and scale of the response that it demands. However, it also wrote clearly that in relation to the current state of international law “New Zealand does not consider that international human rights law imposes a generalised obligation on states to mitigate climate change through emissions reductions and removals”.   It also noted that while member states are acting to achieve outcomes that will be in the interests of present and future generations when they discharge the obligations to protect the environment, international law doesn’t currently prescribe any specific legal consequences with respect to future generations.  Ultimately the statement concludes that climate change is an issue that is unprecedented for the complexity and scale of response demanded at all levels.  It notes that this requires effective co-operation; demands policy response from governments; and behavioural change by individuals.  It also requires an international legal response capable of embracing the complexity and range or factors.  It notes the challenges that states have grabbled with through decades of negotiations, and that “The resulting legal framework in the climate change treaty regime is accordingly adaptive to this context. This opinion that States have asked of the Court by an unprecedented consensus will be essential to ensuring that all States are clear about what their obligations are, and how those obligations operate to enable States to achieve their stated collective objectives in responding to climate change.”

The full version can be found here Written statement of New Zealand.

New Zealand produced  further written comments on 14 August 2024. The comments sought to identify the broad areas of common ground and addresses some key issues where there is a divergence in view among States. Ultimately, the comments accentuated that the Court’s vital task in this Advisory Opinion is to clarify the obligations on States to protect the climate system and other parts of the environment from anthropogenic emissions of GHG. While States have a range of co-existing obligations that bear on their response to climate change, the Court is urged to interpret those obligations in a holistic and mutually supportive way, consistent with the principles of systemic integration.

The full written comments can be found here Written comments of New Zealand.

On 9 December 2024 New Zealand representatives provided oral submissions to the ICJ. The submissions touched on the direct and immediate threat to global security and prosperity that anthropogenic climate change poses. No part of the globe is immune from the adverse impacts of climate change, and New Zealand sits on the front line of it. Moreover, Pacific countries are particularly vulnerable, with climate change posing a threat to their livelihoods, security and well-being. The submission stated that through this advisory opinion, the Court has a historic opportunity to bring clarity and coherence to international climate change law. In doing so, the Court can be of great assistance, both to States in implementing their obligations and taking action under the Paris Agreement such as the Implementation and Compliance Committee.

The full oral submission can be found here CR 2024-46.

Update on CLM’s Sustainability Journey

At Cooney Lees Morgan, we are on our own sustainability journey to reduce our carbon footprint. In September 2023 CLM moved all waste paper bins from under desks and introduced strategically placed sorting stations throughout the office. These stations included designated bins for landfill, recycling, paper (security destruction), food scraps, glass and batteries. This is just one of many internal challenges designed to encourage us to reflect on our personal impacts and identify areas where we can make improvements.

CLM has also partnered with the Tauranga City Council’s Resource Wise initiative. Resource Wise is a programme aimed at supporting and helping businesses, schools and organisations reduce waste and enhance sustainability practices. Within just one year, CLM achieved an outstanding milestone, progressing from the lowest to the highest grade in the programme and attaining Green status in September 2024.

The timing of CLM’s waste management overhaul coincided with the introduction of new nationwide recycling standards, which required swift adjustments. While waiting for the council’s official guidelines on food scrap disposal, CLM took the initiative to proactively introduce its own organics collection, encouraging staff to develop the habit of separating organic waste. Our next objective is to go beyond waste diversion by focusing on reducing soft plastics and other types of waste.

Over the past 12 months, CLM has partnered with Tadpole, an external organisation assisting in measuring our Base Year carbon footprint and developing a decarbonisation roadmap. The 2024/2025 year will serve as our baseline, enabling us to measure and report on our carbon reduction progress moving forward.

We look forward to building on this momentum in 2025 and beyond, further advancing our efforts to create a more sustainable and environmentally conscious future. By continuing to innovate and collaborate, we aim to make a lasting positive impact for years to come.

A special thanks to our summer clerk, Vanessa Williams, for her help drafting this update.   

Latest Update:   20 December 2024