A Summary of Climate Change Commission’s Draft Advice to Government

On 31 January, the Climate Change Commissions released its much-anticipated advice to government. The advice aims to guide policy development and covers the first 3 five-year budget periods, through to 2035.

The contents are not currently mandated, but it is likely that much of the advice will end up being used to formulate policy, at local and national levels.

The 800-page document is open to consultation until 28 March 2021. We’ve read the details so you don’t have to; here is a summary of key aspects of the recommendations:

Fuel and energy use in buildings

Aotearoa needs to decarbonise its energy while improving the energy efficiency of buildings.

• Commercial and public buildings have an opportunity to improve energy efficiency by 30% by 2035 through improved insulation and better control of energy use.
• Such buildings can quickly transition away from coal to alternatives such as biomass which could use existing boilers. The advice assumes that by 2030 coal use in commercial and public buildings will be eliminated.
• It is not intended that heating systems would have to be scrapped before the end of their useful lives. The advice recommends all new space heating or hot water systems installed after 2025 be either electric or biomass powered. For existing buildings, the phase out needs to begin in 2030 and no further natural gas connections to the grid, or bottled LPG connections would occur after 2025.

Process heat:

• The initial focus should be to phase out the use of coal in boilers both by avoiding installation on new coal boilers and by promoting the conversion of existing coal boilers to low emissions energy sources.
• In the third budget period (2031-2035), the focus should move to reducing the use of natural gas in boilers.
• Given the long life of boilers, businesses should factor these intentions into long term asset plans.

Industrial processing and production:

Currently, the opportunities to reduce emissions from emissions intensive industries are not clear, so the initial focus should be on innovation.

Light vehicle fleets:

Two key actions are recommended to reduce emissions by light vehicle fleets:

• shift to walking, cycling and public and shared transport,
• and promoting the uptake of electric vehicles (EVs).

Refrigerants:

• HFC (hydrofluorocarbon gases) based refrigerants are already managed under the Waste Minimisation Act as a listed priority product. The Commission suggests the HFC import restrictions be further extended, and that good practice for reducing leakage and fugitive emissions be mandated.

Electricity:

There are three key areas of focus: Renewable energy, energy efficiency and demand side management.

• Renewable energy: For some businesses, adding solar panels may become a more cost-effective option over coming years. There may be other ways for businesses to promote more renewable energy in the electricity grid through market drivers such as renewable energy certificates.
• Energy efficiency opportunities are largely likely to be linked to buildings and facilities infrastructure improvements.
• Demand side management: Some of the excess energy generation capacity is needed to manage peaks in electricity load. If businesses can manage their electricity demand to fluctuate less, or use more electricity during off-peak periods, this helps NZ’s energy infrastructure to cope better.

Business Travel:

Business travel in New Zealand largely comprises road and air travel.

• To reduce emissions from staff commuting. businesses should enable and encourage the use of public transport, walking/cycling, and working from home.
• Under the Climate Change Act, international aviation and shipping are not included in the emissions budgets - this will be reviewed in 2024. Domestic aviation targets have not been discussed in detail beyond promotion of low carbon aviation fuels.

Freight:

• Medium and heavy vehicles are expected to be slower to electrify than light vehicles as the current battery technology does not allow for the greater daily distances they need to travel.
• Of the trucks imported in 2030, 15% of medium trucks and 8% of heavy trucks are expected to be electric. By 2035, these would increase to 84% and 69% respectively. Emissions from freight can be reduced by switching some freight movements from road to rail and coastal shipping.

Waste:

• The focus areas for reducing emissions from waste are through improving landfill management including landfill gas capture, and reduction in the amount of waste generated (especially organic waste).
• Businesses can contribute to this by good waste management practices, recycling, and avoiding creating waste for others in the supply chain (for example, by consideration of packaging and end of life disposal options for products manufactured).

Agricultural emissions:

• The advice recognises that reducing methane from agriculture currently has significant challenges. It recommends that a focus on innovations (like methane inhibitors) continues, while other opportunities to reduce emissions (like farming practices to improve animal performance) are implemented in the short term.
• Some conversion of agricultural land to horticulture and other purposes may also occur. The broader energy efficiency and emissions removals measures recommended in other areas of the advice are also likely be applicable to agricultural businesses.

Removals:

• There are risks associated with the permanence of carbon emissions removals using forestry, especially as climate change exacerbates forest fires, heavy winds, storms, droughts, pests, and pathogens. New native forests can be established on steeper, less productive land to provide an enduring source of carbon removals, helping to offset residual long-lived greenhouse gas emissions from hard-to-abate sources.
• Exotic plantation forestry continues to have a role to play in removing carbon dioxide, particularly until other more enduring sources of carbon removals, such as native forestry, can scale up. The deep reductions in gross emissions in our scenarios means the 2050 target could be met with a significantly smaller area of new exotic forestry than would occur under current policy settings.
• As well as planting new forests our path would need to reduce deforestation, which is still a considerable source of emissions in Aotearoa. The advice assumes that no further native deforestation will occur after 2025.

Offsetting/Voluntary action:

• The current design of the ETS (Emissions Trading Scheme) means that voluntary action outside the ETS has the outcome of increasing the ETS cap, which does not promote strong action from ETS participants.
• The Government is advised to explore options for enabling voluntary mitigation and clarify the types of claims that can be made about it in Aotearoa. This should aim to encourage the private sector’s desire for voluntary climate action.

Conclusions

1. The proposed emissions reduction pathway is achievable and will need widespread action and long-term decision-making in all sectors of New Zealand business.
2. Emission targets must be treated as the minimum. The recommendations do not push boundaries, which leaves room for organisations to go above and beyond and show leadership.
3. Toitū carbonzero and carbonreduce certified organisations are well set up to be leaders in the transition to net-zero and can rest assured that they are moving in the right direction.
4. Net zero cannot be achieved with just forestry and removals – reducing emissions is key.
5. It will become increasingly important to consider whole of life GHG emissions in business decision making, particularly when making decisions about assets that will last a long time.

Get involved and have your say.

The advice is currently open to consultation until 28 March and we highly encourage all organisations to do their part and make a submission.

If you need inspiration, sign up for this upcoming webinar where our team will go over our own submission and talk you through how we are approaching it.