New Zealand’s second emissions reduction plan

Setting targets and establishing cross party support

Simple to understand

Overly simplistic.
Takes no account that Gross emissions are more important as every kg of CO2 released to atmosphere is a kg that has to be removed to get CO2 back from 420ppm to more sustainable long-term 300ppm.
Using Nett reduction is an asymmetric risk approach and increases the risk that we will overshoot due to reduction efforts being less successful for example increased temperature slowing tree growth or causing wildfires that reduce the stored carbon back to atmosphere or CCSU technology developments taking longer to scale.

Non-Forestry removals from seawater using kelp
Forestry to remove waste wood products
Increase the strength of the ETS and allow prices to increase
International aviation and shipping which is outside ETS but is a real world emissions source that could be targeted to reduce their global 8% contribution while improving and making our export more resilient to trade tariffs and consumer preferences shifting.

Growing of kelp for CO2 sequestration for costal iwi.
Restoration of wetlands and peat bogs for CO2 sequestration.
It would also form part of the climate adaptation approach reducing impacts of storm surge and sea-level rise and flodding

Maori have ability to contribute and benefit from their
-historical knowledge of land and sea environments in terms of what floods where, erodes etc
-land and marine holdings for use in sequestration via kelp farming or restoration of wetlands and forestry planting both short rotation energy crops, medium forestry and long term native forestry.

Unknown

Starting earlier and getting ahead of the curve creates opportunities to bank credits now for the unknown and unforeseen in the future.
For example should forestry not sequester as much CO2 as expected or there is an unexpected forest fire that releases the emissions then having started earlier and delivered above targets enables these future risks to be mitigated and not create additional liabilities.

Not being as aggressive on transport is a missed opportunity to improve our energy security by reducing reliance on offshore fossil fuel logistic supply chain, protect our tourism and export sector from customer preference change and, improve health outcomes due to better noise and air pollution outcomes.
The lack of looking at the co-benefit upside for benefits to other parts of Govt expenditure is a shortcoming of just focusing on the sector concerned from emissions CO2 benefit only.

The simplest item would be to let the price rise.
The next would be to introduce a more aggressive sinking lid approach and ensure that at each auction any unsold units were removed from the pool

Using only the ETS means until the last piece of fossil fuel is removed from the electricity sector the cost of all electricity will be higher than it needs or should be. This will create an ever increasing disincentive to electrify transport and process heat as the cost of electricity will be higher than it should be.

Allow ETS to rise.
Remove all unsold units at each auction
Reduce units allocated to trade exposed industries over a 15-20 year timeframe

Encourage native planting in riparian and hard to access locations close to waterways
Increase the use of more diversified structural timer stocks
Don't allow construction or plantings on high value farm land

Do not allow the purchase of offshore ETS units

If encouraging private investment the Government can not allow the tax payer to be used to underwrite the risk of a private investment in a technology or approach that may release the emissions at a latter date. The liability must remain with the private investor until at least 2060

Electricty regulatory structure has limited scope to look outside the sector with a focuses only on benefit to electricity end consumers. Any business should be able to take into account the wider Government and society investments of improved health, and environmental outcomes from reduced pollution and better living environments. Eg lower cost to health system.

Reconsenting of existing infrastructure is required rather than taken as of right. Eg hydro schemes, repowering of existing windfarms

Regulatory and consenting environments present cost effective and fast upgrades from occurring as ability limits electrical capacity, must have voltages same, can not increase dimensions of structures by more than 15%.

You have ministers actively rolling back standards and policies that increase efficiency in related areas eg building.

The price of electricity is driven by the last piece of fossil fuel burnt in the system. This drives up wholesale rates which means the cost benefit of switching to electricity is reduced.

Removal of ETS funds from being used to directly provide credit to consumer/business to install higher capital cost lower operating cost solutions, ie GIDI fund or similar

Provide a low carbon fuel consumption mandate to create a market pull. Suggest targeting marine fuels and aviation sector to limit exposure to trade barriers from countries. Suggest a minimum SAF uplift requirement for all international airlines departing NZ so as not to create uneven playing field. Commence 2029 to provide lead in.
Suggest that CCSU from geothermal stations, Steel mill, Golden Bay cement, Aluminum smelter be targeted as point source of CO2 for use with eFuels.
There is sufficient CO2 from 4 geothermal power stations to produce 300,000T of Methanol for Merask shipping uplift contract.

Be very clear that CCSU liability remains with the CCSU provider until at least 2060 and does not fall to taxpayer. The developer should pay remediation so we do not repeat the oil well issues where taxpayers are paying for disestablishment and clean up.

Allow accelerated depreciation of 10 years for new assets commissioned to meet uplift mandates by 2030, and 15 years for mandates by 2035.

The target is too low.
Need to utilise the lower band as the target and look to over achieve so as too build headroom as the likely hood that CCSU and forestry will deliver all of the reductions is low. It also provides a hedge against unexpected items such as forest fires releasing the sequestered carbon

To lower the cost of network upgrades and the cost of the charger themselves, ensure that high capacity enroute chargers comes with batteries so more chargers can fit within the existing network companies system constraints and still provide high capacity charging

Modify the Fringe Benefit and GST tax rates so that no more tax is collected on BEV as the equivalent ICE vehicle. This will be Nett tax neutral.
The rationale is that only one vehicle (bus, van, truck) will be sold. The cost of the ICE vehicle will be $X with the tax collected from it being $Y. A more expensive BEV would generate more tax but only if it is sold. If the extra capital cost of the BEV can not be offset by the lower running costs the BEV vehicle will not be purchased and an ICE vehicle will instead with a commensurate lower tax benefit to government.
The objective is to increase sales of BEV therefore charging BEV vehicles only the tax that would apply to the equivalent ICE vehicle makes it revenue neutral for the government, and encourage the change.
Don't overcomplicate it. work in blocks of $5-10k for identifying equivalent vehicle

Assist in establishing key enroute high capacity charging locations where driver stopping and changes would occur today.

The largest opportunity for using SAF in aviation and shipping is protecting our international export markets and income.
Tourists may not come to NZ on holiday if they are worried about CO2 sustainability of long distance flying. This would directly impact our $5B tourism sector and the $7B high value time dependent product export sector that relies on aircargo on the outbound flight.
Wider identification of health benefits from reduced air pollution in and around ports and airports.

Ensure that a SAF fuels uplift mandate applies to all international aircraft departing NZ to create a pull market and encourage the establishment of a SAF/eSAF market so manufacturers will invest

Ensure that any SAF production does not use land/feedstock/water that competes with food production or other exports. For example bio feedstocks must only come from existing waste streams eg woody debris from forestry

Reduce CO2 allocations to trade exposed industries to encourage them to accept CCSU on their sites to be used as a feedstock to SAF production

Use of ETS funds to provide funding to medium transport sector $3-15T trucks. There are approximately 60,000 vehicles that consume the most diesel and produce about 3% of the Gross emissions. These vehicles do short distances <150km per day and spend a lot of time in stop start and idling modes. Providing a direct rebate combined with the FBT and NETT tax charge as described earlier could accelerate the replacement of these vehicles.
Having a mandatory scrapping of these vehicles at 20 years from date of manufacture would also accelerate their replacement.

Resistance to change

Thinking that the country owes their sector where as other sectors such as gaming, entertainment, software as a service, horticulture, biomedical have a greater upside and lower risk of being bypassed by technological advancement such as synthetic proteins etc

Support of methane inhibators

Bring them into the ETS

Maximum reduction of methane per $ expended.
Target methane inhibitors

Mandating methane reduction targets

Increasing cost of methane in ETS

Recognition of tree planting on their land for any forestry or wetland created from 2000

Cost of impact over lifetime of gas

Must roll agriculture into the ETS as our trading partners markets will close to us without it.

Government owned land that is erosion prone or in waterways should be planted in native trees
Govt provides seedlings, private labor is provided

Automatic consents to remove waste woody biomass and transport to biochar production or SAF feedstock facilities

BioChar and SAF production facilities are automatically allowed consent to process woody biomass waste.

All woody waste from harvest is to be removed and used either as SAF bio feedstock or used to create biochar and used to condition and improve soils

Government could provide support for trial of electric harvester and loading equipment

Use of CCSU to collect CO2 emissions at point sources to be used as a feedstock for low carbon liquid fuels in aviation and marine applications. With an extensions for additional production for rail and Electricty sector dry winter cover.

Use of BioChar to sequester carbon in soils and provide a soil conditioner

Expansion or recreation of wetlands

Cost

Lack of existing market for CO2 from CCSU

Pre approval of certain applications such as reverting wetlands or application and use of biochar.

Ability to provide excess liquid fuels production as a Electricty Dry Winter fuel storage stock pile.

Wetland reinstatement provides protection from sea level rise, flooding and storm surge.

Risk that CCSU will leak and the tax payer is on the hook rather than the developer

cost and transport of feedstock

Mandate landfills to capture and burn for electrcity and heat landfill gas

Initial higher capital costs vs lower running costs.
Address via the tax system making effect the same

Insulation and heat pump grants for low income households