The Zero Carbon Bill Has Arrived

Finally, the long awaited Climate Change Response (Zero Carbon) Amendment Bill has been tabled at parliament.

Yes, it's a bit of a mouthful to say...

So we'll just refer to it as the 'Zero Carbon Bill' to keep things brief.

Why Zero Carbon?

Addressing Climate Change has been a topic that has been largely ignored by previous governments and mainstream media for 3 decades now.

Thankfully, this government has chosen to address climate change, and media coverage of the issue has increased.

The former was initiated as part of the Green Party Confidence and Supply Agreement with the Labour Party, which set to establish an independent Climate Commission and introduce a Zero Carbon Bill to parliament. We cover more of the background of the bill here.

The latter has been the product of international and local protests pressuring governments to act on climate change and is also due to an increase in climate change induced disasters worldwide.

However, the target of zero carbon comes from what the Intergovernmental Panel on Climate Change (IPCC) says is required in order to meet the global target, set under the Paris Agreement to limit warming to 1.5C.

The target in the Zero Carbon Bill is to reduce carbon emissions to net zero by 2050 and biogenic methane by 24%-47% from 2017 levels by 2050, in line with the latest IPCC report.

This was further reinforced by public support as the majority of the 15,000 New Zealanders and organisations who made submissions during the public consultation process were in favor of a net zero carbon target.

What's in the bill?

There are four main sections of the bill that can be summarised as follows:

• The creation of Climate Change Commission: designed to provide independent expert advice and hold the Government to account

• 2050 emissions reduction target: to signal an economy-wide transition

• Emissions budgets: stepping stones to low-emissions New Zealand

• Adaptation: measures to increase New Zealand’s resilience to changing climate

If you're interested in some of the nitty gritty details we'll cover some of them here:

Part 1: The Creation of the Climate Change Commission (CCC)

The bill sets out the establishment of a new, independent Climate Change Commission to provide expert advice and monitoring to help keep successive governments on track to meeting long-term goals.

The bill states that the CCC will "provide a framework by which New Zealand can develop and implement clear and stable climate change policies that contribute to the global effort under the Paris Agreement to limit the global average temperature increase to 1.5° Celsius above pre-industrial levels."

However, it's not yet clear whether that commission would be purely advisory or have some statutory power.

Winston Peters stated in a press release "The Climate Change Commission will not be granted statutory independence in the manner of the Reserve Bank".

So how the CCC will function in practice remains to be seen.

Part 1B, Subpart 1: The 2050 Emission Reductions Target

The target in the Zero Carbon Bill follows a split gas approach.

“Carbon dioxide is the most important thing we need to tackle – that’s why we’ve taken a net zero carbon approach" said Prime Minister Jacinda Ardern.

“Agriculture is incredibly important to New Zealand, but it also needs to be part of the solution. That is why we have listened to the science and also heard the industry and created a specific target for biogenic methane."

"The split gases approach we’ve agreed on is consistent with that commitment."

The legislation states the Zero Carbon Bill (the Bill) will set a new greenhouse gas emissions reduction target to reduce all greenhouse gases (except biogenic methane) to net zero by 2050 and reduce emissions of biogenic methane within the range of 24–47 per cent below 2017 levels by 2050 including to 10 per cent below 2017 levels by 2030.

The split gas approach is inline with latest IPCC report, although the reference year stated in the IPCC report is 2010 and not 2017.

This approach would limit warming to 1.5C with no or limited overshoot.

In order to mandate action towards the 2030 and 2050 targets the government will set 5 yearly emissions budgets.

Part 1B, Subpart 2 : Setting Emissions Budgets

The purpose of this subpart is to require the Minister to set a series of emissions budgets— with a view to meeting and maintaining the 2050 target and provide greater predictability for all those affected, including households, businesses, and investors, by giving advance information on the emissions reductions and removals that will be required.

From 31 December 2021, there must be 3 consecutive Emissions Budgets, 1 current and 2 prospective, in place at any one time.

The Bill states that Emissions Budgets must be met, as far as possible, through domestic emissions reductions and domestic removals. However, this does not rule out the use of international credits so we will see whether they will remain an option.

Part 1C: Adaptation

A national climate change risk assessment must assess the risks to New Zealand’s economy, society, environment, and ecology from the current and future effects of climate change; and identify the most significant risks to New Zealand, based on the nature of the risks, their severity, and the need for co-ordinated steps to respond to those risks in the next 6-year period.

Additionally it states that the government of the day must consider New Zealand’s relevant obligations under international agreements, ie. The Paris Agreement.

What this section does is create a legal mandate for the government to act upon the scientific recommendations of the IPCC reports and look out for New Zealanders when sea levels start rising.

If you want to go even deeper you can read the Bill for yourself here.

Now that we've covered what is actually in the Bill, it's time to look at whether it will actually pass into law.

Who supports the Bill? and who doesn't?

Source: AP

The Zero Carbon Bill was introduced by the governing Labour-led coalition, although it was initiated by the Greens. So it has strong backing from the Greens, and Labour have now given the bill their backing.

While the Bill was being drafted up, it had been reported that negotiations with NZ First had slowed the Bill. In the official press release from Winston Peters it appeared that he must have been pushing back against the methane target, independence/power of the CCC and 'unnecessary advisory groups'. However, in its current form the Bill has backing from NZ First.

National leader Simon Bridges said the party was supportive of the general structure of the Bill and of taking politics out of climate change, but had serious reservations about the methane target itself. So we might expect some push back from National around the biogenic methane targets.

ACT's David Seymour has said he would oppose the Bill. He said New Zealand would not prosper if forced to make significantly deeper emission cuts than its trading partners. He also said the extent to which the Zero Carbon Bill would improve the climate was unclear.

The Opportunities Party have welcomed the Bill, but have shared concern around the reliance on forestry offsets that Parliamentary Commissioner for the Environment Simon Upton pointed out earlier this year; stating 'trees are risky, temporary, and might depress our carbon price'.

Organisations such as Forest and Bird, the Insurance Council, Local Government New Zealand, KiwiRail and Meridian Energy have welcomed the Zero Carbon Bill.

United Nations Secretary-General António Guterres has praised New Zealand's "crucial" leadership on climate change by introducing the Zero Carbon Bill.

There was also criticism that the Zero Carbon Bill does not going far enough. The Greenpeace executive director Dr Russel Norman gave the Bill a 0/10 as there is currently no remedy or relief for failure to meet the 2050 target, meaning there’s no legal compulsion for anyone to take any notice.

Federated Farmers' climate change spokesman Andrew Hoggard said these targets would send a message to farmers that New Zealand is prepared to give up on pastoral farming. "This decision is frustratingly cruel, because there is nothing I can do on my farm today that will give me confidence I can ever achieve these targets." He said the Government was "arbitrarily" targeting businesses based on a "random selection of report" and incomplete data.

He said the 10 per cent target, over a 10-year timeframe, was "unheard of anywhere else on the planet". NZ Beef and Lamb was also "deeply concerned" at the methane targets. The proposed reduction significantly exceeds both New Zealand's and global scientific advice, Beef and Lamb chairman Andrew Morrison said. "The Government is asking more of agriculture than fossil fuel emitters elsewhere in the economy."

As far as whether the Bill will pass into law, the Zero Carbon Bill has now passed it's first reading with 119 votes for to 1 against.

What will be the impacts of this legislation as it stands?

2050 targets will require a nation-wide transition to a low emissions economy. As it stands the most affected sector will be the oil and gas sector. However, the government is working to make it a smooth transition for the fossil fuel industry to move to renewables with its ‘Just Transition Unit’.

The impact on the agriculture sector will also be significant. As dairy is currently the majority of NZ farming it is now responsible for the bulk of negative environmental impacts, it will likely require a complete overhaul. It may no longer make sense to irrigate otherwise unusable land to produce milk powder for China when all the environmental costs including methane emissions are factored in.

Farms used for Beef and Lamb farming have been in decline since the 1990’s and with the increase of vegetarianism, flexitarians and the threat of lab grown meat I would say the threat of their products becoming obsolete is possibly greater than the challenge of meeting the 2050 target.

Transport will also require an overhaul. Currently, transport generates 18.7% of our gross emissions and we will need to move away from fossil fuel based travel in order to meet our 2050 targets. While it will be challenging to shift to electric and hydrogen powered vehicles, this shift will present a range of opportunities for New Zealand businesses.

Contrary to mainstream understanding Electricity accounts for only 5.3% of New Zealand’s gross emissions. This is because 85% of our electricity is already being generated by renewables. The government has a strategy to lift renewable energy output to 100 percent (in years with normal hydro inflows) by 2035. However, 100% renewable doesn’t mean zero carbon. At the moment geothermal power emits GHG emissions, but in relatively small amounts and geothermal is a reliable power source. Technology to reinject all the geothermal extractions, including GHG, is being developed, but is currently still unfeasible in most applications.

To help with the transition to a Low Emissions Economy the government created a $100m Green Investment fund which it intends to invest with businesses in low emissions industries.

What will be required of organisations?

While the legislation does not outline the specific requirements for organisations, the proposed law is based on the United Kingdom's Climate Change Act so we can speculate that the requirements will be very similar. This will likely mean mandatory reporting for publicly traded companies and public sector organisations to central government.

In the UK the principles of reporting are the same as those outlined in the GHG Protocol which was created by the World Resource Institute (WRI). These principles are in line with ISO 140064 reporting standard.

Beyond reporting, there will likely be a requirement for these organisations to offset their reported emissions by purchasing carbon credits from the Emissions Trading Scheme (ETS).

How will it be enforced?

The Bill aims to set the emissions targets into law and force future governments to come up with plans to meet "stepping stone" targets on the way there, with an endpoint target of net zero long-lived emissions in 2050 and a large reduction in biological methane emissions - somewhere between a "provisional range" of 24 per cent and 47 per cent in gross reductions.

The CCC would advise the Government on what these targets should be and how exactly governments should meet them.

The main enforcement mechanism each Government has is envisioned to be the Emissions Trading Scheme (ETS).

The government has recently proposed changes to the ETS, including tougher penalties and higher costs for emitting greenhouse gases into the atmosphere.

There would be harsh financial penalties for defaulting on obligations by emitters, which could be three times the value of carbon costs that were avoided

There would also be fines for non-reporting or under reporting of obligations.

In its proposals, the government also said it wants to publish details of how much greenhouse gas is emitted and how much is removed.

For example, this would tell the public exactly how much carbon dioxide is emitted by each individual company and how much is absorbed by each individual forest.

The government has signalled that the current price limit of $25 for credits from the ETS will be lifted and price of carbon will increase.

How To Get Started

If your organisation‌ isn’t already voluntarily reporting on your GHG emissions, now would be a very good time to start thinking about it. It would make sense to try and get a handle on what your emissions footprint is and what your future financial obligations could be.

It’s worth mentioning, that reporting on GHG emissions is not a task for an accountant nor an untrained sustainability or energy manager.

Even the most basic of GHG reports (Scope 1: Direct emissions) will require some specific expertise to complete if it is to be in accordance with ISO standards.

So it would be highly advisable to begin looking at working with a consultant or adopting a carbon reporting software solution.

Energy TS: Towards Zero Carbon

At Energy TS we are currently working with the likes of Massey University, Hutt City Council, Capital and Coast District Health Board, Contact Energy, and Whangarei District Council who are all tracking and recording their total GHG emissions.

And the good news is… that we have a fully automated software solution: e-Bench® which has all the tools you would need to report on your organisations GHG emissions (and other sustainability measures).

Not only do we help organisations set up their data streams to report in accordance with ISO14064 (the international standard for GHG accounting & verification) but we also provide insights to help you reduce your GHG emissions over time.

“What gets measured, gets improved” – Peter Drucker

Measurement and verification is the first step to improvement. Just like any other Key Performance Indicator (KPI) in your organisation, knowing your GHG emissions will not only allow you to improve your processes to be more cost efficient, but also to be measurably more environmentally friendly.

There’s no doubt that voluntarily reporting on your GHG emissions now will help you be compliant when the Zero Carbon Bill comes into full force, but additionally being able to accurately show reductions in GHG emissions will help differentiate your organisation as sustainable and environmentally conscious.

As an e-Bench® subscriber you would receive monthly energy usage reports like this sample report.

These reports show you the overall energy consumption, cost and carbon emissions for the month.

This allows you to track energy or carbon management initiatives as they are implemented so you can see the savings and know the payback of a project.

To learn how e-Bench® could help you report your GHG emissions, you can book a time to chat with us that suits you schedule: https://www.energyts.com/free-consultation