MEDIA BRIEFING: CONFIRMED CLIMATE CHANGE POLICY
Thursday 17 October 2002: Embargoed until 12.30pm
The NZ Government has confirmed a policy package to enable New Zealand
to meet its obligations under the Kyoto Protocol.
SUMMARY
In April 2002 the Government released a preferred policy package on climate
change for consultation, which took place in May and June 2002. Following
assessment of the results of consultation and further policy analysis the
preferred policy approach has been substantially confirmed, with some
clarification and refinement.
Key changes from the preferred policy package are:
 raising the cap on government liability for deforestation to 21 million
tonnes of carbon dioxide equivalent, to avoid perverse incentives to
deforest in the commitment period;
 a decision that the government will provide incentives for the
establishment of permanent protection forest sinks;
 proposed amendments to the Resource Management Act
 some specific voluntary policies for synthetic gases, targeted at the
type of gas and its use.
In addition, officials are to examine whether any further policy may be
required to encourage small and medium size businesses to participate in
emissions reduction.
BACKGROUND
New Zealand signed the United Nations Framework Convention on Climate
Change in 1992 and its subsidiary agreement, the Kyoto Protocol, in 1998. In
February 2002 the Government agreed in principle to ratify the Protocol,
which is expected to come into force internationally in 2003.
Parliament's Foreign Affairs, Defence and Trade Committee has considered a
National Interest Analysis of ratification and reported back in May 2002 with a
majority recommendation to ratify.
In May 2002 the Government introduced to Parliament the Climate Change
Response Bill, which will provide the statutory basis for ratification. The Bill
was reported back to Parliament from the Foreign Affairs, Defence and Trade
Committee on 14 October 2002. Once the Bill is passed the Government will
be in a position to ratify the Kyoto Protocol. This is expected to occur later this
year.
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INTERNATIONAL POSITION
To date 94 countries have ratified the Kyoto Protocol including the 15 member
states of the EU, Japan, Norway, Iceland and a number of Eastern European
countries. Developed countries that have ratified now total 37.1% of 1990
developed country CO2 emissions. This will shortly rise to 40.1% with
Poland’s Parliament having recently approved ratification. The Kyoto Protocol
will enter into force following ratification by the Russian Federation, probably
next year.
CONSULTATION RESULTS
Throughout May 2002 a series of 49 meetings was held in main centres
throughout New Zealand on the preferred policy package:
 3 national meetings in Auckland, Wellington and Christchurch
 13 meetings for local government
 13 meetings for special interest and business groups
 11 meetings for agricultural and forestry groups
 8 regional and one national hui.
In addition, several thousand consultation packs were mailed to stakeholders.
Submissions closed on 14 June 2002. 1118 submissions were received,
including around 800 form submissions from Greenpeace supporters.
Reports on consultation are available on the Climate Change website,
www.climatechange.govt.nz
In summary, consultation revealed a reinforced understanding of the need to
do something about climate change but no real consensus on how and over
what time frame to respond.
On balance, stakeholders appear to understand and generally accept the
policy direction. Many have said they agree or generally agree with the overall
approach of the policy package. Where they disagree, or generally disagree,
this reflects views on both sides of the debate.
Environmental and community groups are concerned that the policy relies too
much on sinks, has provided too many concessions to industry and does not
adequately set New Zealand on the appropriate path to lower emissions.
Some businesses, farming groups and farm foresters are still concerned
about ratification in advance of some of New Zealand's major trading partners
(e.g. Australia and the USA), and also about policy issues - the emissions
charge, sinks policy and potential future changes in government policy (e.g.
second commitment period charges on non-CO2 gases).
A common theme across stakeholders was the need for the policy to be
balanced and fair and a desire for more information about key details, such as
revenue recycling, to enable better judgement of the merits of the policy.
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ADJUSTMENTS TO THE PREFERRED POLICY PACKAGE
Following consultation the preferred policy package has been confirmed with
some refinement and clarification.
Forest sinks
Change to the deforestation liability cap
The Government proposed to retain deforestation liabilities arising under the
Kyoto Protocol from forest conversion to other land uses.
This was widely welcomed by the forestry, agricultural and Maori
communities. There were concerns, however, about the proposed quantitative
limit (or cap) on the extent to which the Crown would accept liability: 5% of the
expected annual harvest volume during the Protocol's first commitment period
(2008-2012). Stakeholders thought that this cap might encourage foresters to
deforest early before the cap was breached. Maori were particularly
concerned to know what the Government’s response would be in the event
that the cap was reached or appeared likely to be breached.
Based on the limited data available on deforestation the Government is
confident that the proposed 5% cap would be sufficient to allow forest owners
to make changes in land use at historical rates. However it accepts that
setting a deforestation cap too low could encourage foresters considering
deforestation to ‘get in early’ before the cap is reached, promoting
deforestation unnecessarily.
The cap has been increased to 21 million tonnes of CO2 equivalent
(approximately 10% of the forests expected to be harvested in the first
commitment period). This represents 20% of expected sink credits and 40%
of possible surplus credits once growth in other emissions have been
covered.
For forest investors and landowners, the possibility of a future deforestation
liability is something they should consider when renegotiating lease
agreements or considering replanting harvested forests from now on.
Deforestation does, however, work against New Zealand's interests in
meeting its Protocol obligations and is contrary to Government policy of
encouraging sink creation. If significant deforestation occurs at levels above
expectations, the Government will consider its policy options to manage
emissions within the cap, including:
 how deforestation rights within the cap will be allocated
 how to monitor and enforce the deforestation cap
 what actions the Government will take in the event that the cap is
exceeded.
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Incentives for permanent forest sinks
The Government has agreed that there should be a mechanism to encourage
the establishment of permanent protection forest sinks.
One option is for land owners to receive ‘returns’ in proportion to the carbon
sequestered by a given forest stand, in return for covenanting and managing
the land to create a permanent protection forest. Forest owners would receive
such returns only after the amount of carbon sequestered had been measured
and verified. All costs and risks associated with the release of the carbon from
a stand would be borne by the landowner. Such a regime would not require
the Government to set aside funds to provide incentives. To the extent that
the Crown’s administration of such a scheme incurred costs, these could be
recovered by retaining a proportion of the value of sink credits generated.
Officials are to report to ministers by March 2003 on details for
implementation of such a mechanism.
Another option that received broad public support was to use sinks revenue to
fund the legal protection and management of newly regenerated forest areas
(e.g. the costs of covenanting and fencing) where the forest owners did not
seek any payment for the carbon sequestered. Existing mechanisms such as
the QEII National Trust, the Nga Whenua Rahui and Nature Heritage Funds
could have a role.
Officials are to report on this option, also, by March 2003.
Other issues under examination are:
 possible generic initiatives relating to sinks that would improve the
returns from forestry, reducing the risk of deforestation and generating
new sink credits;
 options for establishing additional forests on ‘Kyoto compliant’ Maori
land, through a joint venture investment approach.
Resource Management Act changes
The Government has agreed to amend the Resource Management Act to:
 remove the ability of regional councils to consider effects on climate
change when making a rule in a plan in relation to a discharge-to-air
from any industrial or trade premises activities; and
 remove the ability of regional councils to consider effects on climate
change of discharge-to-air activities when making a decision on a
resource consent application.
Councils will retain the ability to have regard to effects of activities on climate
change when carrying out other functions and duties under the Resource
Management Act.
The proposed changes recognise that climate change is a global and national
issue and that there is a need for clear and consistent treatment of activities
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between regions. They are expected to result in cost savings for councils and
resource consent applicants.
During consultation, councils and industries involved in discharging
greenhouse gases supported an amendment to the RMA. A common theme
was that an amendment would regularise what is already common practice.
Government has signalled that prioritising energy efficiency and the use of
renewable forms of energy, and managing the effects of climate change
(“adaptation”) are matters that may also require amendments to the Act.
Energy efficiency and renewable energy under the RMA
During consultation on the draft National Energy Efficiency and Conservation
Strategy there was some concern expressed that energy efficiency and the
production of energy from renewable sources are often not appropriately
prioritised in resource consent processes. The Ministry for the Environment is
looking at whether the RMA should be amended to achieve the goals of the
strategy with respect to energy efficiency and renewable energy, specifically:
 the appropriateness, adequacy and clarity of councils’ mandate in
these areas under the RMA
 the appropriateness, adequacy and clarity of the guidance given to
councils in these areas by the RMA
 whether councils’ current practice under the RMA in relation to energy
efficiency and renewables is best practice.
Adaptation to the effects of climate change
It is important that local authorities plan for the effects of climate change, such
as any rises in sea levels. Officials are considering whether such planning is
also a matter requiring an amendment to the RMA. The work will include:
 surveying the extent to which local authorities have explicitly
considered the effects of climate change, what the barriers to their
considerations have been, and what risks any lack of planning may
create
 providing practical assistance to plan for the effects of climate change
and choose suitable adaptation responses, through networking,
information, guidance notes, best management practices and other
non-binding mechanisms
 consulting with local authorities about the need for, and extent of, any
strengthening of the legislative mandate.
Cabinet is due to receive advice by 30 November on whether amendments
are required to further support climate change policy. The Government will
seek to have any amendments enacted within 12 months. Transitional
arrangements already agreed to are that:
 there should be no effect on existing resource consents where the
consent holder has already given effect to the consent, and
 for existing RMA plans, rules relating to the control of the effects on
climate change of greenhouse gas emissions from industrial and trade
premises become null and void.
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There will be targeted consultation with Local Government New Zealand and
other key stakeholders over any proposed amendments to the RMA on
renewable energy and energy efficiency, and adaptation.
Additional policies for small to medium size enterprises
A concern has been raised through the consultation process that the
proposed policies, particularly Negotiated Greenhouse Agreements and
Projects, are biased towards larger firms.
Officials will report back by mid 2003 on any further policy that may be
required to encourage small and medium size businesses to participate in
emissions reduction and whether additional policy is needed to mitigate
possible effects on small businesses of an emissions charge.
Policy for synthetic gases
The preferred policy for synthetic gases did not cover all uses of synthetic
gases. Following discussions with industry, the final recommended policy for
particular uses synthetic gases is:
 Voluntary handling, education and recovery programme for
refrigeration and insulation uses of HFCs and PFCs, linked with
Montreal Protocol programmes
 No requirements for HFCs in aerosols, including aerosol cans, asthma
puffers and fire extinguishers, for health and safety reasons
 Industry will work together and share information to limit leakage of
SF6. A full industry proposal will be provided to Government by mid
February 2003.
Policy for synthetic gases will be reviewed in 2005.
FURTHER DEVELOPMENT OF THE POLICY FOUNDATIONS
The confirmed policy package includes more developed policies for public
awareness, business opportunities and the partnership for local Government.
Public awareness and education programme
Public awareness and education for long-term behaviour change are an
important component of the climate change policy package. The need for
greater public information and education was strongly affirmed during
consultation.
A preliminary three-part programme has been developed for public awareness
and education, to take place between October 2002 and June 2004.
Research and planning will be undertaken between October 2002 and March
2003. Initiatives to raise public awareness will begin in November 2002 and
increase from July 2003.
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Business opportunities programme
Climate change policy is designed to position the New Zealand economy for
longer-term economic growth while meeting Kyoto Protocol obligations.
Many countries and international organisations are focusing on building lowemission economies and this will increasingly affect the competitive position
of New Zealand business. Developing and implementing innovative
technologies and practices will be essential.
Research and consultation undertaken by the Ministry of Economic
Development and the New Zealand Business Council for Sustainable
Development suggests there are significant climate change related business
opportunities for New Zealand firms and industries. These opportunities arise
particularly for businesses whose products have low associated emissions,
who can reduce both emissions and costs, and whose products, technologies
or services can reduce emissions and/or costs for other firms.
Advancing the uptake of business opportunities
There is a risk that firms and industries may respond too slowly to the market
changes, and to incentives to make efficient climate change related
investments. Successful uptake of innovation technologies and practices will
require:
 mainstream business to realise the implications for global markets;
 access to and co-ordination of climate change information sources;
 integration between private and public sector programmes and
initiatives.
The work programme for business opportunities for the next year includes:
 investigating the role of government in assisting the development of the
climate change support industry;
 identifying sectors where improved coordination between private and
public sector initiatives assist the uptake of opportunities and
developing proposals;
 reviewing programmes currently available to firms across government
and investigating how these can be better integrated.
Local Government partnership
Government has agreed that a local government partnership should be
established. Modelled on the international Cities for Climate Protection
programme, it is likely to be managed and delivered by a secretariat housed
in Local Government New Zealand. The secretariat would service councils
participating in the calculation, management and reduction of community
emissions, and act as a conduit for climate change information relevant to
councils and communities.
The partnership will:
 foster information sharing between councils, and between local and
central government;
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encourage councils’ commitment to reducing greenhouse gas
emissions;
facilitate the delivery of key climate change related strategies such as
the National Energy Efficiency and Conservation Strategy, the National
Waste Strategy and the New Zealand Transport Strategy.
Officials are working to develop the structure of the partnership and complete
formal agreements on delivery and responsibility between key groups.
During consultation, many councils expressed support for the partnership as
long as adequate funding and resources were available. There was also
broad acceptance of the Cities for Climate Protection model as long as it was
tailored to the New Zealand context.
CORE POLICIES: NEXT STEPS
Negotiated Greenhouse Agreements
The forward work programme for NGAs includes:
By end of the year:
 finalising the competitiveness-at-risk (CAR) criteria for determining
whether a firm is eligible to negotiate an NGA and the process for this,
following discussions with interested parties
 determining the appropriate institutional arrangements for NGAs
 preparing an analysis of the resourcing requirements
By early-mid 2003:
 finalising the NGA model, following discussions with interested parties
 developing a standard process for negotiating NGAs
 developing a legislative framework for NGAs
Projects
The forward work programme for Projects will include:
By late 2002:
 undertaking a review of how Project programmes are implemented in
other countries, to determine best practice (to inform targeted
consultation late 2002 - early 2003);
 determining the appropriate institutional arrangements for Projects;
 preparing an analysis of the resourcing requirements.
By early-mid 2003
 developing the detail of a Projects programme on matters like dollars or
units, additionality, eligibility, etc. (This would include targeted
discussions with interested parties);
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reviewing the need for legislation, if any (beyond the requirement to
amend the Climate Change Response Act to make provision for entityheld emission units in the national registry).
By mid-2003:
 developing a model Projects agreement;
 preparing for a first full Project round early in financial year 2003/04,
assuming entry-into-force of Kyoto Protocol.
Research on Agricultural emissions
The preferred policy approach is for the majority of the research to be funded
by the sector organisations to avoid the need for separate farmer levies. This
would also ensure that the agriculture sector makes a significant contribution
to addressing its very large methane and nitrous oxide greenhouse gas
emissions, even though it is not being asked to pay a charge on those
emissions.
Sector groups and the government are now working together and making
good progress towards developing a prioritised research strategy for
agricultural emissions research. This strategy is expected to be completed in
the first quarter of next year and includes close co-operation with Australia.
The Minister Responsible for Climate Change and the Minister of Agriculture,
following the completion of the prioritised research strategy and industry
negotiations will report back to Cabinet by early-mid 2003 on:
 the proposed research strategy;
 the proposed funding, ownership and governance arrangements,
including Government oversight and review arrangements, for
implementing the research; and
 any proposed Government contributions to the research, including the
mechanism to fund any contributions.
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