The New Zealand government needs to act "urgently" to meet emissions reductions targets over 2026-35, including amending its emission trading scheme (ETS), the country's Climate Change Commission (CCC) has warned.
The centre-right coalition government's plans are "insufficient" to meet the 2026-30 and 2031-35 greenhouse gas (GHG) emissions reductions goals of 50pc and 51-55pc below 2005 levels respectively, the CCC said on 25 July in its monitoring report for emissions reductions.
The country is on track to meet its 2022-25 emissions reduction goal of 39pc from 2020 levels, which the CCC said was primarily due to a change in how emissions are measured.
New Zealand needs to adapt the NZ ETS for it to be effective from 2026. The net emissions cap — the targeted level of net emissions the government seeks to achieve from sectors covered by the NZ ETS — is expected to reach zero in the late 2030s, and the scheme is not incentivizing significant gross emissions reductions. These issues need to be addressed before the government releases the third emissions budget in 2029 for the country to meet its 2050 net zero goal.
It may also be "too late" for planned NZ ETS incentives for carbon capture, utilisation and storage (CCUS) because of declining reserves and the uncertain outlook for gas, making investment uneconomic, the CCC said.
Other policies need to be introduced to compliment the NZ ETS, the report found, focusing on the agriculture, renewable energy and transport sectors.
Emissions from the transport sector could be reduced by incentivising the use of zero emissions heavy vehicles, making low-carbon fuels and sustainable aviation fuels more accessible, and increasing EV batteries, especially for larger vehicles.
NZ's jet fuel market is expected to grow, according to the government's draft national fuel security plan. Air New Zealand must use a 10pc blend of sustainable aviation fuel (SAF) with traditional jet fuel to meet its GHG reduction target of 20-25pc by 2030 from 2019, it said in May.
In 2023, agricultural emissions accounted for 53pc of New Zealand's gross emissions. Further reductions are in part reliant on technologies, such as a methane-reducing capsules, that do not have certain timelines. This could be helped by focusing on high-value, low-emissions land uses. The government plans to implement agricultural emissions planning by 2030. Legislative changes were made last year to keep the agricultural sector out of the NZ ETS.
The government announced rules to limit the conversion of farmland to forests late last year but the CCC is uncertain of this policy's impact.
"How this policy will affect afforestation rates and the NZ ETS incentive for gross emissions reductions is uncertain," it noted.
