Appropriation (2024/25 Confirmation and Validation) Bill

Committee of the whole House—Annual Review Debate Climate Change CHAIRPERSON (Greg O'Connor): The Minister of Climate Change is now available for 30 minutes to respond to the members’ questions. Thank you, Minister. CATHERINE WEDD (Chairperson of the Environment Committee) (20:30): Thank you, Mr Chair. I rise to introduce the Climate Change Commission annual review. I’d just like to thank the Environment Committee members for the work on this report—a very hard-working committee. Overall, we were satisfied with the commission’s performance in 2024-25. The commission’s revenue was $14.83 million for 2024-25, and its total expenditure was $16.06 million, resulting in a deficit of $1.22 million. We heard from the commission about its role in providing independent advice for reducing greenhouse gas emissions. Obviously, under the Climate Change Response Act, New Zealand is very committed to reaching net zero emissions of all greenhouse gas emissions by 2050. This was well traversed through our session with the Climate Change Commission. We spoke about the work being done to reduce emissions, and it was positive to hear that emissions reduction technologies have become available and affordable at a faster rate than expected, offering more opportunities to mitigate these effects. The commission also noted that the methodology for measuring emissions in New Zealand has improved since 2019, which was positive to hear. The commission drew our attention to new technologies, such as bolus being developed by Ruminant Biotech, which would inhibit methane production in farm animals. It was really interesting to hear about these new advancements in technology, which, of course, are going to reduce agricultural emissions. The commission said one challenge was ensuring that farmers are supported to deploy the new technologies on farm. We also spoke about the stockpiles of coal in New Zealand and the work being done to transition away from fossil fuels and towards renewable energy sources, which we spoke about, you know, being very sufficient, this transition. Also, we did touch on the monitoring progress to meet the emissions budget, which, of course, was a very topical conversation. The commission published its first emissions reduction monitoring report in July 2024. It also began work on its second emissions reduction monitoring report in 2024-25, which it published in July 2025. The commission’s latest report found that New Zealand is likely to meet its first emissions budget. We also spoke about the consenting regime for renewable energy projects and the barriers that we’re seeing in getting renewable energy projects online faster—it taking too long for the consents. It was agreed that there are opportunities to remove consenting barriers for renewable energy, and of course, this would pose a very positive move to bring renewable energy on a lot faster in New Zealand, with a better consenting regime. We also spoke about transport. The commission said there are opportunities to reduce emissions in the transport sector, especially given that electric vehicle batteries have become cheaper and we’re moving towards more electrification, which, of course, is positive for reducing our emissions. And we heard about trade; we heard that the commission is planning more work to analyse the effects that climate change could have on trade. It was very interesting, during the process, to look at all of the hard work that has been done to meet our climate emissions and reduce those emissions. We are certainly looking forward to the Minister’s responses tonight and to the questions that are presented. Thank you. Hon RACHEL BROOKING (Labour—Dunedin) (20:35): I came into Parliament with the Hon Simon Watts in 2020. When we entered Parliament, of course, the Labour-led Government had already passed the zero carbon Act and established the Climate Change Commission. When Labour was in Government in that 2020 year, we had many, many programmes to decarbonise our economy—that is, to drive emissions down. We had a Climate Emergency Response Fund and the Government Investment in Decarbonising Industry Fund, and an emissions reduction plan with hundreds of different actions within it. In addition, we had in our 2020 manifesto that we would legislate for climate adaptation and do the hard work on working out where people need to move and how that happens. I reference that because it’s become very relevant recently. My question is, though: given that his Government has either watered down those different actions or got rid of them entirely and has not progressed legislation on climate adaptation, does he regret not undertaking these actions that would have decreased New Zealanders’ reliance on foreign fossil fuels? FRANCISCO HERNANDEZ (Green) (20:37): Thank you, Mr Chair. Just following on from the questioning line by my colleague the Hon Rachel Brooking, I’m curious to see a definition of success from the Minister. What does success look like in terms of successful initiatives, in terms of adaptation, and in terms of mitigation? What does success look like for himself, as climate Minister, and for this wider Government? I have some specific question lines I want to ask around the nationally determined contribution, as well. Does this Government intend to meet all of New Zealand’s nationally determined contribution domestically, or is it intended that the contribution be met partly through international contributions? Is the Minister and the Government asserting that it’s going to be met purely through domestic negations? I want to also turn to the Greenhouse Gas Inventory. I want to really applaud the work that the team at the Ministry for the Environment has done in putting that together. I was actually involved in the compilation of the 2023 Greenhouse Gas Inventory; I was listed as a technical contributor there, so I know how much work and how much effort it takes to assemble those things. My question around the Greenhouse Gas Inventory is that, obviously, it’s encouraging to see that the gross emissions of New Zealand have declined a little bit in this period, but I want the Minister to say who he attributes the decrease of that to? Does he attribute that to the success of the previous Government, or does he attribute that to initiatives that the Government set? The debate will take on quite a different tenor depending on who the Minister attributes blame and success to. I want to turn, also, to the national adaptation plan and to the adaptation framework. Please, can the Minister clarify whether the Government still intends the national adaptation plan to still be operational or whether the Minister regards the national adaptation framework to supersede the national adaptation plan? I have some follow-up questions based on that, but those are my questions for now. Hon SIMON WATTS (Minister of Climate Change) (20:40): Thank you very much for those questions and for the introduction from the select committee. Working our way through the questions, “Does the Minister regret taking action in regards to that?” Well, what I don’t regret is the banning of oil and gas which has put us into this situation where we now need to look to import liquefied natural gas (LNG). The good thing about importing LNG is it’s actually less emissions that coal which is, ironically, what the last Government looked to do; they had a strategy of importation of Indonesian coal at the expense of domestic gas at a higher emissions profile. Questions around “definition of success”—well, first and foremost, in regards to mitigation, 2024 had the lowest emissions on record since 1998. So how do you define success? Well, that’s probably a good place to start. In regards to adaptation, we’ve introduced and will be introducing legislation in regards to the national adaptation framework before the election, and that is a significant priority and that is important work across party lines, to be fair, in the context of an enduring framework to deal with one of our most significant issues. In regards to the targets, this Government is committed to all of the climate change targets, both domestic and international, and we do have a focus on domestic emissions reduction first and foremost. In regards to attribution of success—what Government? Well, surprisingly, on this side of the House, we actually attribute success and progress in this country to New Zealand households and businesses. They’re the ones who are doing the hard work, they’re the ones that are reducing emissions—not, with respect, the 120 or so of us sitting in this room—households and businesses; Kiwis. So that’s who I attribute success to around emissions reduction. And the adaptation plan is the major focus for us as we move forward. Hon PRIYANCA RADHAKRISHNAN (Labour) (20:41): Thank you, Mr Chair. My colleague Rachel Brooking in her introductory comments to the session, talked about some of what the previous Labour Government had done in this space in terms of addressing climate change. I’ve got a few questions for the Minister around one specific scheme, which is the Clean Car Discount. That was, of course, the scheme that was put in place to reduce transport emissions by subsidising low emissions vehicles. We know that that’s led to a significant increase in the uptake of electric vehicles as well, and a 14.4 percent reduction in average carbon dioxide emissions from new and used imports before the scheme was scrapped by this Minister’s Government back in 2023. I want to know whether the Minister regrets scrapping the Clean Car Discount scheme, a decision that his own officials have said will add 1.1 to 2.2 million tonnes of carbon dioxide to New Zealand’s roads by 2050. Simon Court: Makes plant grow. Hon PRIYANCA RADHAKRISHNAN: That is from the Ministry of Transport’s data. So if the members opposite want to say that’s not true, I’m not sure what mis- and disinformation they’re wanting to spread. In addition to that, the Ministry of Transport’s own advice has clearly pointed to the fact that the costs of scrapping this particular scheme are double the benefits of the scheme. So I would like to know from the Minister why he made the decision to override his own officials’ advice on this and whether he has received any other advice to this point. Also, the Climate Change Commission has said that cheaper EV batteries means that there are real opportunities to cut transport emissions, and I’d like to know from the Minister what he’s doing to capture them. Hon RACHEL BROOKING (Labour—Dunedin) (20:44): I’ve got two different lines of questioning that I’ll go down. The first is in response to the Minister’s response, and that is that, apparently, everything would be fine; we would have no reliance on foreign fossil fuels if there wasn’t a ban on exploration. So I want to know if the Minister has any advice saying that, one, and two, if he understands that there is a difference between exploration and actually finding and then taking that fossil fuel. Secondly, wouldn’t electrification, instead of exploring and then finding and then recovering a fossil fuel, be quicker? Then my last question on this line is: does he agree with Simon Court from the ACT party who appeared to be saying, in heckling just before, that an increase in carbon dioxide emissions is somehow positive because it makes plants grow? I think that is what he was saying. Does Minister Watts agree with that? Those are my mitigation, decarbonisation questions. Shifting, now, to adaptation but, in fact, I’m not; these questions are about flood plains and building new buildings on flood plains. It’s not about the tricky issue that a managed retreat or anything like that would need to deal with, where there’s existing housing on flood plains but when, in fact, this Government is enabling more building on flood plains. So some questions there: one, where is the promised national flood map? Secondly, I want to know if he agrees with what the Prime Minister said in answer to John Campbell on Morning Report on Monday 13 April. John Campbell said, “Around 675,000 people or 14 percent of the population live in areas prone to flooding. What have you got for them?” The Prime Minister responded, “Well, again, that’s why we’ve got to work on a national flood plan, national adaptation framework.” Then he said some other things and then he said, “Make sure we’re not doing dumb stuff, for example building back into flood plains.” It’s that statement that I’m interested in, Minister: not doing dumb stuff, for example, building back into flood plains. Because we have just seen the fast-track approval of an enormous, enormous development of over 4,000 houses and a number of retirement homes and all sorts of other things at Sunfield, which everybody acknowledges is on a flood plain. So how does that statement of the Prime Minister—we’re not doing dumb stuff, for example, building back into flood plains—make any sense when this Government’s fast track has just approved an enormous development of new houses in a flood plain? Hon SIMON WATTS (Minister of Climate Change) (20:47): Thanks for those questions. In regard to the points around the clean car or EV subsidy, this Government has focused and is focusing on a least cost approach versus what was, in effect, a ute tax by the prior Government. The emissions trading scheme is the key tool in which we use for emissions reduction and our focus as a Government is around enabling infrastructure. So you would have seen the announcements around EV charging network, which is a key issue around people’s concerns around ability to charge those vehicles. In regard to the flood map, the work is under way. We have commissioned a party to prepare those maps. It will be ready, in terms of the first part of that, by the end of this year, the beginning of next year. In regard to the preparation of adaptation plans, the legislation that we’ll be looking to pass will require local government to prepare adaptation plans in high risk areas which will mitigate the key issues. In regard to energy, well, the reality is, when you don’t look for something, you don’t find it and that’s the reality with what happened with the last Government around stopping oil and gas exploration. We now have less and not sufficient molecules to run industry and also make electricity in a dry year. Coal is not sufficient to cover us in a dry year. That’s why we need to import liquefied natural gas (LNG). We did consider 11 other options in regard to covering that dry year risk. You cannot do anything via renewables in the size and scale of energy required to cover that dry year risk, which is in winter, which surprisingly doesn’t have as much sun as summer. That’s the reality of why we’re focusing on LNG importation. We need that solution now. If we have a dry year next year, the ability to cover that because of the reduced amount of gas we have will mean that 2024 was an easy ride. That’s because of the legacy of the last Government. FRANCISCO HERNANDEZ (Green) (20:49): Thank you, Mr Chair. Just wanted to follow on the questioning by the Hon Rachel Brooking around the issue of whether the fossil fuel exploration makes the country more resilient and makes the price of energy cheaper in New Zealand, when we do drill. Is the Minister aware that in the United States of America—which is one of the biggest oil drillers and oil explorers in the world; they’re one of the people that produce the most fossil fuels—that the gas prices have increased by 35 percent since the beginning of the Iran war and in New Zealand, which is not, at all, a big producer of fossil fuels, that gas prices have only increased by 20 percent? So it’s somewhat, I guess, incorrect to assert that just because a country is creating its own fossil fuels that they’re somehow not still dependent on an international market. But as the members opposite are perfectly aware, fossil fuels are actually an international good so the price of it is still set internationally. Just because we grow agricultural products here in New Zealand hasn’t stopped our food from being really expensive and the price of our groceries going far, far too high—higher than it should be. My second point is on the issue of the national adaptation framework: is the Minister concerned that by moving to the national adaptation framework, they’ve, essentially, abandoned the initiatives that were supposed to be in the national adaptation plan? That is, is the Minister concerned that the national adaptation framework, laudable as it is in its work to produce flood mapping—rural initiatives that were highlighted in the national adaptation plan in the first place, so wouldn’t it have made more sense to just continue on with the existing national adaptation plan and not scrap a lot of the initiatives that were actually in that instead of starting from scratch and just going with the national adaptation framework? Again, we do support the flood mapping, but it is only one dimension of the work that was already in the national adaptation planning. I believe I’m coming to the end of my five-minute allocation, but thank you for the consideration, Minister. SIMON COURT (ACT) (20:51): Thank you, Mr Chair. Minister, I’m interested in your views on how we might ensure that New Zealand’s major industries that are emissions intensive and trade exposed are supported through this difficult time where energy prices have risen significantly, whether it’s natural gas, that many of them depend on, or electricity, which many of them depend on. Many of them have converted from gas or other petroleum hydrocarbon fuels, including coal, into more sustainable energy production. But, of course, if you’re one of the half-dozen industries in New Zealand, like cement manufacturing, steel manufacturing, aluminium, or fertiliser manufacturing, making ammonia-urea fertiliser from natural gas in Taranaki, which supplies somewhere around 25 to 30 percent of all of the nitrogen fertiliser used on New Zealand’s farms. Well, somebody else could bring that product in from overseas, and they don’t pay a carbon price if it’s made in Vietnam, if it’s made in China, or if it’s made in Malaysia or Indonesia. So Minister, I’m interested in what your views are on how these industries might be supported both now and in the future, given that it’s highly unlikely that their competitors in those countries will ever face a carbon price. New Zealand has done its part by setting targets and working hard to meet them for emissions budgets, putting a price on carbon through the emissions trading scheme (ETS). But in the end, it seems that some of these industries will be faced with costs, particularly when it comes to the cost of carbon or buying electricity that factors in a carbon price if it’s thermal electricity produced from gas and coal. These additional costs, not faced by competitors overseas, mean that it may become, in the future, uneconomic to manufacture these important industrial products in New Zealand—cement, steel, aluminium, and fertiliser. Of course, fertiliser has never been so vital when our international supply chain is interrupted, as it has been because of America’s important action in the Middle East to secure the sea lanes and deny the ability of the Iranian regime to obtain a nuclear weapon. Sometimes, New Zealand just has to roll with geopolitical events, whether we’re prepared for them or not. So I think it’s clear: it’s never been more important that New Zealand have its own manufacturing base to manufacture these important commodities whether they be aluminium, steel, urea fertiliser made from natural gas and, of course, many other industries that depend on burning coal or gas or producing carbon dioxide as an emission. So Minister, I’m interested: how do you think New Zealand, the Government, and the regulatory system should support these vital industrials now and into the future? Hon SIMON WATTS (Minister of Climate Change) (20:55): Thank you. I just want to come back to the questions in regard to the gas situation in New Zealand. I want to be really clear that this is not a price issue; this is a lack of molecules issue. We do not have the gas—sufficient gas—to run the industrials that Under-Secretary Court was referring to; that’s the problem. And because we don’t look and stopped looking for gas for six years, surprisingly we haven’t found any. That is the reality. We have 25 percent less gas today than what we had one year ago in this country. It is a fundamental and critical issue for this country and the only feasible option, in the short term, is the importation of liquefied natural gas. Now, Under-Secretary Court raises the point: we want to protect those industrial businesses that are manufacturing in New Zealand because, the reality is, if they shut down and close and we import cement, for example, and the emissions profile of cement made overseas is significantly higher in terms of global emissions than what it is making it here at home. And so the mechanisms to support those industries, first and foremost, need security of supply of the fuel they need to make the product, which is gas, which we are moving our way through, and we also need medium- and long-term solutions, as well. But the reality is, if you do not have the fuel, which is our problem as a country, then you cannot make electricity, you cannot make glass, you cannot make steel, and you cannot deal with the reality of the geopolitical pressure that you are in. Because if the fuel and the supply chain shut and you haven’t got domestic production, you do not have options and, therefore, you do not have security, in terms of national security, and that’s why energy security is national security. STEVE ABEL (Green) (20:57): Thank you, Mr Chair. I wonder, Minister, if you can respond to the glib and trivialising comments of Simon Court, who thinks that the existential challenge of humanity is merely a good way to help make plants grow. And I wonder if you have reflected on the— Simon Court: What? STEVE ABEL: That’s what he said: “Carbon dioxide makes plants grow.” I wonder if you have reflected on the fact that the biggest threat to the production of food over the coming century is climate change and extreme effects of it. A couple of specific questions, Minister: are you aware that there are still thousands of new households having gas put into them for their appliances and for their hot water? I wonder: what is the wisdom of allowing new-build houses and buildings to be reticulated with fossil gas given the supply issues and given there are things that are more urgent that we need to use the remaining gas we have with? The other comment you made, Minister, was about “If we start looking for oil and gas, we’re not going to find any.” Well, is the Minister aware that from 2007 there was a steady decline in our gas supply and every major oil and gas company in the world came and had a look here and found nothing before the ban came into place in 2018? So why would you be spending $200 million on subsidising gas exploration, when you could be spending that money on decarbonising? That’s a question: why are you spending $200 million— Ryan Hamilton: We haven’t spent it and it’s a current investment. You’re welcome. STEVE ABEL: Why are you not co-investing on renewables—why you not co-investing on renewables? Final question, Minister: are you aware, on the question of cement, that our local cement manufacturers, who have to pay the emissions trading scheme (ETS), are currently being undercut by imported cement that doesn’t have to pay the ETS? And what are your strategies for dealing with that? CHAIRPERSON (Teanau Tuiono): Members, our time with the Minister of Climate Change has ended.