What does the wellbeing budget mean for climate change and the environment?

One of the key goals of the Wellbeing Budget was to assist New Zealand’s transition to a low-emissions economy and meet the 1.5 degree ambition of the Paris Agreement. So does it deliver?

Overall thoughts?

The stick of the Zero Carbon Bill seems bigger than the carrot provided through the Wellbeing Budget

 Key points:

• The initiatives announced under the Transform the Economy budget priority focus on the right areas: 

1. Agriculture: Land-use improvements will be funded through the $229m Productive and Sustainable Land Use package
2. Transport: Freight and public transport gets a significant boost with a $1 billion investment in redeveloping KiwiRail over two-years and additional funding for the Crown’s share of forecast cost increases to build Auckland City Rail Link
3. Forestry: Additional funding is provided to support the One Billion Tree Programme

• Focus on Taranaki with $27 million to set-up a R&D hub for new low-emissions technology to assist with a just transition to a low-emissions economy
• Initiatives are supportive of the findings of the Environment Aotearoa Report 2019 and improving overall environmental impacts, with the Productive and Sustainable Land Use package focussing on water quality and soil degradation, in addition to climate change.

What’s missing: 

A large carrot for reducing emissions in the agriculture sector

The recent announcement of the inclusion of agriculture into the NZ ETS through the Zero Carbon Bill, means costs of farming are likely to increase and impact competitiveness. A large incentive package or R&D budget to assist farmers in offsetting these cost increases may have been expected. While the Productive and Sustainable Land Use package provides $229 million to assist farmers improve land-use and environmental outcomes, there looks only to be around $11.7 million dedicated to R&D for emissions reductions in the agriculture sector. 

Funding to accelerate the electrification of New Zealand’s transport network does not seem to be a major focus.

Initiatives for new electrification projects appear minimal. Auckland City Rail Link receives additional funding to support forecast project cost increases and $35 million is committed to maintaining electric freight services between Hamilton and Palmerston, but these are not new or additional projects. The significant funding announcement relating to KiwiRail look to mainly fund replacement of rolling-stock and upgrade the current network. Although this will reduce GHG emissions in the short-term through efficiency improvements from newer technology, it questionably locks out longer-term reductions that will be required to reach the Net Zero goal.

The recommendations of the Productivity Commission’s Low-Emissions Economy report to invest in initiatives to accelerate the conversion of passenger vehicles to EVs and to upgrade the electricity network to accommodate increasing electricity demand, were also not featured in the budget. 

Without a significant shift in the transport sector to electrification, the cost of meeting the emissions reductions set under the Zero Carbon Bill will increase and will further increase the pressure on sectors with less options for decarbonisation, such as agriculture.

What’s interesting?

Collaborative, cross-ministerial approach

The Productive and Sustainable Land Use package looks to weigh a range of environmental benefits that come from better land-use management; balancing water quality, climate change and soil erosion. This looks to be evidence of the collaborative and cross-ministerial approach taken to develop the Wellbeing Budget and appears to have incorporated the findings from the Environment Aotearoa 2019 Report, regarding the significant degradation of water and soil quality.  

Action on adaptation and resilience

There is funding for several smaller initiatives relating to adaptation and resilience, including upgrades to weather forecasting and warning systems and responses to natural disasters and emergencies. These are key improvements required by all communities as climate related disasters increase, such as wildfires, severe storms and drought.

What might be a sign for the future?

Initiatives relating to waste management are small, $20 million over four years, but flag a rapidly increasing issue. With China’s recent ban on importing a range of recycling waste streams, pressure on landfills and recycling facilities have increased. This is causing significant disruption in the waste supply change. The announced waste initiatives provide product stewardship programs for tyres, lithium batteries and refrigerants and investment into biological waste technologies. This acknowledges a growing problem that we may hear more about in coming years through increased waste levies (as proposed by the Tax Working Group), as the environmental costs of waste disposal start to hit home.