Carbon Match: Carbon market update
Wednesday 18 May 2022
At 348 pages, the most succinct summary we've seen is the Green Party's own.
The plan is a broad based aspirational roadmap intended to cover the next 15 years. Its success may span several Governments. But it is backed by serious money today.
To fund the plan the Government has established the Climate Emergency Response Fund (CERF), a multi-year investment of $4.5b into climate change initiatives, funded by revenues from the NZ ETS.
The first allocation of $2.9b will cover the 2022-2025 emissions budget.
Transport, as you might expect, is an area of Big Spend. In that sector, the intent is to make zero-emissions vehicles 30% of light vehicles and reduce the total kilometres light vehicles travel by 20%, by 2035.
It has been allocated an investment from the CERF of $1.2b, and aims to take the equivalent of around 180,000 cars off the road by 2035.
As part of that, a new $569m Clean Car upgrade programme follows on from the already existing Clean Vehicle Discount Scheme, and is an acknowledgement to the need for a "just transition" by providing assistance to lower and middle income households for shifting to low emissions vehicles.
Then, there is $350m for investment in alternative transport services and infrastructure. Other transport initiatives funded will include a vehicle social leasing scheme, behaviourial programmes and a focus on decarbonising the public bus fleet and the freight sector.
In Energy the success of the existing GIDI (Government Investment in Decarbonising Industry) fund, focused on emissions reduction in process heat, is to be leveraged and dramatically upsized, with over $650 million allocated over the four-year Budget 2022 period (2022/23 to 2025/26).
Energy Minister Megan Woods said in her press release that the expanded programme "is estimated to deliver projects that will make up around one sixth or 17 percent of our total emissions reductions required between 2022 and 2025, and around one third or 35 percent of our emissions reductions required between 2025 and 2030, so it is doing some heavy lifting for our climate goals.”
The government will also look at its public procurement approach to explore long term electricity PPAs, with the Minister noting that this could "fundamentally change the electricity landscape, by leveraging the buying power of Government to help unleash new renewable generation".
In addition there is $18m for the development of energy strategy, regulatory framework for offshore renewable energy, and a roadmap for the development of hydrogen.
With respect to Agriculture and land-use, the Government has committed $710 million over four years, again to be funded through the Climate Emergency Response Fund (CERF) to accelerate efforts to lower agricultural emissions, expand the contribution of forestry to reduce carbon, and produce alternative ‘green’ fuels.
Another new research centre is to be established, called the Centre for Climate Action on Agricultural Emissions, focusing on applied research and farmer uptake, partnering with key private sector businesses.
Further details are expected on Thursday, with Budget 2022 initiatives to include $6 million to support the implementation of a He Waka Eke Noa pricing system for agricultural emissions - expected to take place by 2025.
A breakdown of the big Climate Emergency Response Fund spend can be found in the online documents. With 15 Ministers and 18 portfolios having formal responsibilities set out in the 348 page plan, Shaw has repeatedly said that now "every Minister is a Climate Minister."
You can understand the appeal of sharing that very big burden. The Minister and his officials have worked tirelessly on institutional frameworks and legislation designed to make the kitchen of climate change action less political. On that, they seem mainly to have succeeded.
But there are certainly a whole load of chefs. Let's hope for good collective focus and creative, but disciplined, spending. Only then will we see a quality broth.
NZUs are offered from $76.50 on Carbon Match as of writing. Log in for live pricing - Carbon Match - open every weekday 10am-5pm.
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