ckm submission to the Ministry for the environment Second Emissions Reduction Plan.

Introduction.

This is a submission of Climate Karanga Marlborough to the MfE consultation document regarding the government’s Second Emissions Reduction Plan (ERP2).

Climate Karanga Marlborough (CKM) constitutes a growing group of over 140 citizens in Marlborough, who are concerned with bringing the realities of climate breakdown to the people of Marlborough in particular, and to the wider society in Aotearoa New Zealand in general. Our goals include assisting elected representatives and their officials to pursue policies designed to limit the deleterious effects of rapid climate change, and to help New Zealanders adapt to its consequences, while providing a social support network for the increasing numbers of people who share our concerns.

CKM asked one of its suitably qualified members to prepare a response to the consultation document with the support of an editorial team. We are hopeful that the Government and the Minister concerned will pay due notice to this response and will add more emissions reductions programs in preparation for ERP3 and net zero 2050. Yet, we are also fearful, in view of how the ERP2 document appears to ignore the advice of the Climate Commission itself, that the Government may simply be going through the motions of consultation.

The following CKM submission foregoes the questionnaire, and the limitations it imposes on our response, and focuses specifically on the credibility of the emissions reduction proposals. We have then added some more general comments.

Submission.

    1. In summary, we do not find the emissions reduction plan presented in the consultation document and technical appendix to be accurate,
credible and in the best interests of New Zealand’s long term emissions reduction targets.

    2. This submission is presented in three sections, addressing different deficiencies in the plan (here referred to as ERP2).  These sections
address the following:
              a) Inaccuracies and errors in text, calculations and methodology
              b) The inadequacy of proposed new emissions reduction proposals to reduce emissions to the extent estimated in the plan
              c) The long term consequences of these inadequacies on our country’s ability to meet the emissions reduction targets legislated in the
                  CCRA.

Inaccuracies and Errors.

    3. Firstly, we bring to your attention an important mis-match between statements in the consultation document and the technical annex (page 8):

The consultation document (page 32):

“We expect measures proposed for ERP2 to reduce net emissions over the second budget period. Modelling of key ERP2 complementary policies, such as Electrify NZ, enabling a network of 10,000 electric vehicle (EV) charge points and introducing agricultural pricing, suggests they could provide reductions of about 4.11 Mt CO2-e during the second budget period and about 13.5 Mt CO2-e during the third budget.”  

The technical annex (page 8):

“The Government has made proposals for new policies, including the roll-out of 10,000 electric vehicle (EV) chargers, reductions in barriers to consenting renewable electricity generation (as part of the Electrify NZ strategy), limits on land-use change to forestry from more productive land-use classes and the introduction of agriculture emissions pricing by 2030. However, these proposed policies have not been fully designed or implemented as at the date of the development of the interim emissions baseline (and therefore, in accordance with the definition of the baseline, are not included). The impacts are still to be fully estimated but some initial estimates of the effects of these policies are included in this annex.”

The emphasis in bold in both statements is ours, included to highlight the contradiction between these two statements.  

To add to the confusion, footnote 8 under Table 0.1 of the consultation document states: “CCUS estimates were modelled separately from other key ERP2 policies, which used the Emissions in New Zealand model”.
So, which is it?  Were the emissions reductions from new policy proposals modelled or weren’t they?  If the results were modelled, where are the model parameters?  Or, does the consultation document mislead the reader as to the certainty of the 4.1 Mt CO2-e emissions reduction in ERP2 due to the new policy proposals by saying that they were modelled when they actually were simply estimated?  This needs to be clarified in the consultation document.

    4. The 4.1 Mt CO2-e value for expected emissions reductions due to new policy proposals (calculated in Table 10 of the technical annex) does not include the +0.2 Mt CO2-e emissions due to the planned revision to the clean car standard in technical annex Table 11.  The actual value in Table 10 and in the consultation document, page 32, should be 3.9 Mt CO2-e.  

We note that a correction made to the technical annex in July 2024 actually removed the added emissions from the revision of clean car standard from Table 10 and put it into a separate table (Table 11).  Why was this done?
 
    5. The final tally of emissions in ERP2 in Table 13 of the Technical Annex (and repeated in Figure 2.2 of the consultation document) shows that the ERP2 emissions “with new measures” is 3.8 Mt CO2-e below the ERP2 interim baseline.  Where did this emissions reduction number come from?

If it is a more precise calculation of the 3.9 Mt CO2-e calculated from Technical Annex Tables 10 & 11, then it should be stated as such.  If it is an error, it should be corrected.
 
    6. Regardless of this minor discrepancy, the ERP2 emissions reduction expected from new policy proposals is an optimistic estimate rather than a realistic one.  The 4.1 Mt CO2-e value is the sum of the higher end of “up to -1.3” and “up to -1.1” in the two Waste categories in Technical Appendix Table 10 and consultation document Table 0.1.  

This perhaps justifies the use of the phrase “could provide reductions” in the paragraph copied above from page 32 of the consultation document, but using this value for ERP2 emissions reductions is in conflict with the treatment of uncertainty in the interim baseline in the technical annex.   The projection of uncertainty for the interim baseline relies on both a statistical treatment of historical deviations and on sensitivity analyses.  The results show high, mid-point and low estimates of interim baseline values.  

Why were not similar, high-mid-low values estimated for the emissions reductions from the new policy proposals? It is clear from the calculations that these emissions reductions are at the high end of what is expected.  For consistency with baseline methodology, as well as for straightforward intellectual honesty, these ranges should be estimated (or preferably modelled) and reported in the final ERP2.

    7. In conclusion, there is every indication from the consultation and technical annex documents that the Ministry has attempted to present a more certain and optimistic case for the emissions reductions expected from the government’s new policy proposals than is actually warranted.  The errors discussed above all point in this same direction – towards higher emissions reductions due to the new policy proposals.

We would expect the Ministry to at least get the technical language and mathematics right in such an important document, and to present the results in an honest and unbiased way.  There is an issue of public trust here that should be paramount in the Ministry’s mind.

New Emissions Proposals.

    8. Table 0.1 in the consultation document and Table 10 technical annex show estimates of the impact of new policy proposals on ERP2 and ERP3, summing (optimistically, as discussed above) to 4.1 Mt CO2-e (or more correctly 3.9 Mt CO2-e, when changes to the clean car standard are added).  Three proposals account for the great majority of the ERP2 emissions reductions: carbon capture, utilisation and storage (-1.4 Mt CO2-e), waste minimisation fund (up to -1.3 Mt CO2-e) and organic waste and landfill (up to -1.1 Mt CO2-e).  These provide up to -3.8 Mt CO2-e of the overall 4.1 Mt CO2-e emissions reduction optimistically estimated for ERP2.  Let’s discuss how realistic each these three emissions reduction proposals are, one at a time.

Carbon Capture, Utilisation and Storage.

    9 Carbon capture, utilisation and storage is not a technology.  It has been around for a long time.  It is apparent, however, that plans for CCUS in New Zealand are still in their infancy.  Note the following paragraph from consultation document page 84 under non-forestry removals:

“The Government recognises carbon sequestration can occur through biological, geological, oceanic, chemical and technological processes. Alongside forestry, the Government sees other forms of removing emissions, such as wetland restoration, on-farm vegetation, coastal vegetation management, marine ecosystems, carbon mineralisation, carbon capture, utilisation and storage, ocean fertilisation, direct air capture and bioenergy with carbon capture and storage as opportunities to reduce net emissions that may become viable in the future”.

Indeed, the government’s plans for CCUS appear to be in very early stages of implementation.  Consultation document Appendix 2: Proposals for the second emissions reduction plan lists the following in the description of the proposal for CCUS:  “Consult separately on options to remove barriers to using CCUS”.

Considering that the proposal is still in the consultation stage, it is quite premature to assign it 1.4 mt CO2-e removals between 2026 and 2030.  

    10. Another obvious problem with CCUS is cost.  A 2023 Wood Beca report, referenced in the consultation document, evaluates the suitability of CCS at two Taranaki fields; the onshore Kapuni field and the offshore East Maui field.  These are two projects mentioned in the consultation document as likely candidates for the installation of CCS.  The report concludes that the Class 5 (-50%/+100%) cost estimate for CCS for the onshore Kapuni field is $30-110 per tonne CO2.  They do not state a cost estimate for the offshore Maui East field, saying only, “… that the cost of executing an offshore CCS project is expected to be much higher than onshore.”

The NZU price trend assumed in the ERP2 consultation interim baseline has a peak of $75 in 2028 declining to $50 by 2035, starting at roughly $50 today. It is unlikely that industries will invest in CCS with these low expected NZU prices.  They would be wiser to just pay for the emissions credits.

    11. A third and perhaps more pressing problem for CCS at the Kapuni and Maui fields is declining gas production and the risk that the Methanex methanol plant, which takes nearly half (45%) of the nation’s natural gas production, might close due to lack of gas supply.  Already, one of Methanex’s three methanol plants (Waitara Valley) has been shut down due to insufficient gas supply.  If the other two Methanex plants close, there would be little incentive for field operators for investment in long term gas supply upgrades.  The market risk would be too high.

In a gas supply and demand study to the Gas Industry Company dated December 2023 (and referenced in the consultation document) Ernst & Young state:  “In all the scenarios considered, the best estimate of commercially viable future natural gas production (known as 2P reserves) is estimated to be insufficient to meet demand at some stage between 2025 and 2027. Even if production from 2C resources, which are not currently commercially viable, comes online the results still show natural gas production from all sources as being insufficient to meet demand at some stage between 2028 and 2034.”

Field operators will be hesitant to install expensive new kit, such as CCS facilities, that will soon be under-utilised.

Note the definition of “2C” resources from Ernst & Young: “Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, by the application of development project(s) not currently considered to be commercial owing to one or more contingencies.” (p150). In other words, 2C resources require favourable economics, additional investment and an appetite for risk.  Will the gas field operators invest more in today’s uncertain gas market environment?

We’ve heard just this month that Methanex has suspended methanol production at its remaining two Taranaki plants until the end of October in order to sell its gas supply to Contact Energy and Genesis Energy.  The gas is needed for electricity generation, to make up for low hydro storage and limited gas supplies for electricity generation this year.  Methanex expects to earn more from selling the gas than it would from methanol production.  As gas supplies continue to decline, Methanex will have more incentive to sell its contracted gas supply and cease methanol production.

    12. In conclusion, it appears highly unlikely, based solely upon economics, that CCS (or CCUS) will be installed at a gas field in the ERB2 (or ERB3) time frame.  The emissions reduction from CCS (or CCUS) is very uncertain.

Waste minimisation fund.

    13. This policy proposal is listed as reducing emissions by up to 1.3 Mt CO2e during ERP2.  Yet it is nothing more than idea at this stage.

    14. There appears to be no new funding to support the suggested infrastructure upgrades.  New funding is mentioned as being from an increase in the Waste Disposal Levy, although a recent report by MfE on the new levy (Supplementary Analysis Report: Waste Minimisation (Waste Disposal Levy) Amendment Bill 2024, dated 15 May 2024) only recommends new central government funding for contaminated sites and emergency waste disposal.  Some new funding will be available to councils, per the 50% funding split between central and local government but it is up to councils to decide where the local council portion will be spent.  

    15. We acknowledge that the increase to the Waste Disposal Levy and intention to use some of the Waste Minimisation Fund to support programs to capture and destroy landfill methane and divert organic waste to other uses, will reduce emissions.  Without a better description of funding level, industry participation and modelling, however, it is difficult to verify what that reduction will be.  The ministry needs to present evidence in support of the emissions reduction claims for this policy proposal.

Organic waste & landfill gas capture.

    16. This proposal also seems to be in the very early stages of development.  The purpose of the proposal, from page 91 of the consultation document is as follows:

“The government proposes engaging with industry on how we dispose of and manage organic waste streams in landfills.  Further analysis and research would be needed to determine which policy and/or regulation changes would be most effective and efficient to reduce our landfill waste emissions”

The consultation document shows up to 1.1 Mt CO2e emissions reduction in ERP2, although the government hasn’t even started to consult on this proposal yet.  

    17. The 1.1 Mt CO2e emissions reduction stated for improved landfill gas efficiency appears to come from some very preliminary calculations.  Page 92 of the consultation document states:

“For example, initial modelling suggests that a scenario of a 7 per cent increase in LFG capture efficiency across New Zealand’s disposal facilities with LFG capture systems in place, combined with LFG capture expansion to all class 1 facilities, may have an abatement potential of up to 309 kt CO2-e per year up to the end of the second emissions budget period (2030) and further abatement during subsequent periods.”

This is followed by the footnote:

“Provisional modelling estimates that in the remaining NDC period (2024–30) this could achieve up to 1.1 Mt CO2-e and from 2024–50 up to 6.1 Mt CO2-e per year.”

There is no analysis that suggests that a 7% increase in landfill gas efficiency is even possible within reasonable budgetary limits.  Passing regulations to “make it so”, as suggested in the consultation document, could put a heavy burden on councils to spend significantly more on landfill gas capture infrastructure.

Also note that the footnote states that the emissions reduction of up to 1.1 Mt CO2e would be for the remaining NDC 2024-30 period, which is 7 years, and not 2026-2030 for ERP2, which is 5 years. Is the 1.1 Mt CO2e reduction for 7 years or for the 5 year ERP2 period?

    18. Another way that emissions from landfill will appear to be reduced by the new ERP2 proposals is by changing the assumptions to the interim baseline.  Appendix 1 of the technical annex shows that the ERP2 baseline assumptions for landfill gas were changed between the earlier 2023 baseline and the new interim baseline used in the ERP2 calculations.  

In the earlier baseline, municipal facilities without existing landfill gas capture facilities were modelled to have 20% gas capture efficiency starting in 2027, rising to 39% by 2028 and 59% by 2050.  In other words, it was assumed that small municipal landfills without existing gas capture facilities would gradually add them.  This is consistent with municipalities progressively looking to reduce their ETS liabilities due to fugitive landfill methane emissions.  It is also consistent with a recognition of steadily improving waste management, stated on page 89 of the consultation document:

“Since 2022, the WMF has supported infrastructure projects that divert organic materials from landfill, process organic waste or otherwise improve resource recovery, particularly for organics.
New Zealand’s domestic resource recovery systems are improving – in terms of infrastructure for our cities, districts and regions…”  

However, the interim baseline used for ERP2 assumes no additional landfill gas facilities will be added between now and 2050 and no additional emissions reductions will occur without the new proposals.  

The upshot of this is that all new landfill gas capture systems installed between now and 2050 will be assumed to be due to the government’s new policy proposal, rather than by municipalities naturally tightening down on their landfill gas emissions.  Again, no modelling results or parameters are presented to illustrate the effect of the changing baseline.

Alignment with future emissions reductions.

    19. It is disheartening to see that the long term projections of emissions presented in this plan show that we will exceed the ERP3 target, the 2050 methane target and 2050 net zero long-lived gases target.  It is clear that the government needs additional emissions reduction programs in order to fulfil its obligations to the CCRA.  The list of emissions reduction programs discontinued by the government fills more than a page in Appendix 3 of the consultation document.  The government needs to urgently develop and implement replacement initiatives if it is to meet the legislated requirements of the CCRA.

    20. We note in the technical annex document, Figure 19, that native afforestation is predicted to fall to nearly zero from 2025 onward.  This is an area where a little bit of government incentive could make a big impact on Maori communities owning marginal land, to the nation’s biodiversity and to the nation’s carbon removals needed for net zero emissions in 2050 and beyond.  We urge the government to put the nation’s long term biodiversity and emissions reduction targets in front of mind and incentivise native afforestation in some form.

Conclusions.

    21. CKM is convinced that in declaring climate change to be an economic issue the Minister is burying his head in the sand in order not to see the disastrous effects of climate change already upon us and not to hear any advice contrary to what his mind has already made up. This does not constitute an approach to climate change. Rather it constitutes wilful avoidance.

    22. As a community group concerned especially about what measures must be taken locally to mitigate and adapt to climate change, CKM regrets the total lack of clear leadership from central government. In 2015 and again in 2017, Local Government Mayors and Chairs, as part of LGNZ, called for central government leadership in climate change. In laying out 3 case studies of the process of local climate adaptation in August 2020, LGNZ highlighted the lack of clarity in leadership from the incumbent government in the matter of climate change. On 10 July this year the Public Health Communication Centre published a briefing by 4 leading academics on the “incoherence” of the present government’s climate change policy.
 
    23. In withdrawing funds and resources from governmental policies and departments protecting the environment and from non-governmental organisations and community groups working for the environment, this government is actively working against Nature and for the forces that are poisoning the planet and furthering climate change.

    24. In working primarily on a net admissions approach based on commodifying climate concerns in terms of money, without clearly reducing real-time carbon emissions, central governments have been, so-to-speak, bargaining with the Devil. Now, in the face of evident ongoing and, in several cases, irreversible effects of climate change, the present government is bargaining with extinction itself, a losing battle. Like it or not, we will not live forever! Let us just not take everything else with us!

    25. Whilst there is always room in every sector for emissions reductions, it is foolish to rely on technological fixes that generally require further injections of fossil-fuelled energy. Overall, the government must consider how to apply energy descent measures.

    26. Until the government (kawanatanga) actually support Māori and iwi (tino rangatiratanga) as per Te Tiriti o Waitangi, seeking "Māori and iwi-led action to reduce emissions" is a pretence. The majority of so-called Māori land, particularly in the form of compensation for loss, is the legacy of colonisation, leaving iwi and hapū with the least productive land, where pine planting has been seen as the most "economic use" of the land. Yet, even within such limits, funding for comprehensive pest control and the application of biodiversity credits could provide "an option for Māori economic survival in their homelands and for active kaitiakitanga." The lack of coherence in the present government’s policies perpetuates the worst outcomes of colonisation.

    27. Finally, we note that "Waste removal", in its widest sense, is not a sub-paragraph of carbon emissions limitation, it is the fundamental underlying problem of our general approach to climate change. Nature wastes nothing. "Waste not, want not" should underlie our approach to climate change. As yet, we are still throwing our slops out the window, regardless of where and on whom they land. – “Gardyloo!"