The biggest climate announcements in Budget 2021 are of policies and initiatives yet to come, Marc Daalder reports
Climate Change Minister James Shaw may have underplayed his hand when he told Newsroom last week that big climate funding would have to wait for future Budgets.
Budget 2021 debuted with several significant climate change announcements. However, the most important ones involved new sources of funding that have yet to be allocated and an electric vehicle (EV) policy with no details.
Shaw hailed the Budget as laying the foundations for climate action.
“Our Government has committed to building a low-carbon future for Aotearoa New Zealand and today’s Budget takes us a step closer towards delivering on that promise,” he said.
The two biggest pots of cash - about $300 million a piece - went to the New Zealand Green Investment Finance (NZGIF) fund and the mysterious EV subsidies.
NZGIF partners with the private sector to invest in reducing emissions. Its first investment - working with Wellington’s Centreport cut emissions - was announced in 2020. Its $100 million founding budget has now been topped up by an additional $300 million.
No press statement accompanied the EV policy and officials could only point to a cryptic line in the annex of the Budget document: “This initiative will build demand for buyers of zero- and low-emissions vehicles. This funding will enable Waka Kotahi to implement the system, and is being held as a tagged contingency while design work is completed.”
Finance Minister Grant Robertson revealed more details in his speech to Parliament, indicating the fund could implement policies suggested in last week’s Ministry of Transport report on reaching net zero emissions.
“As indicated in the consultation document released last week there is a need for a more rapid move sustainable vehicles if we are to have any hope of reaching our goals,” he said.
Rail transport was also the focus of major investment. A facility to assemble rail wagons will be built in Dunedin at a cost of $85 million.
Some 60 new trains and 1900 new wagons will be purchased with more than $700 million, and most of the wagons would be built at the new Dunedin facility.
Another significant announcement related to the Emissions Trading Scheme (ETS). Funds raised through the novel auction mechanism, which debuted for the first time in March, will be recycled into future emissions-reducing policies, Robertson said.
Shaw estimated this would result in $3 billion in climate-fighting funds over the next five years.
The first ETS auction raised $171 million for the Government. With the auctions taking place quarterly and carbon prices only likely to rise, that would imply an ongoing fund of $684 million a year, at minimum.
“Such a chance is only possible because of the changes this Government has made to the ETS - and it will be a game-changer,” Shaw said.
Farmers will also receive more cash to prepare them for their own entry into the ETS in 2025.
Agriculture Minister Damien O’Connor said a $37 million investment in a “national integrated farm planning system for farmers and growers” would help up to 40,000 farmers measure and price their on-farm emissions. The money will also train farm advisors to further aid in that process.
“We’ve set a clear objective for agriculture in He Waka Eke Noa for 100 percent of farms to have written plans to measure and manage emissions by December 2024. As the saying goes, what gets measured, gets done,” O’Connor said.
Another $24 million will boost research and development efforts targeted at reducing agricultural greenhouse gas emissions.
Energy and Resources Minister Megan Woods said $120 million would help retrofit and insulate 47,700 more homes. This does double duty in improving the health of low-income homeowners and reducing emissions from energy wastage.
Woods also said the Government’s Low Emissions Vehicles Contestable Fund, which has provided money for EV charging stations around the country, would be reformed into a Low Emission Transport Fund. This would expand its focus to aviation and maritime emissions and alternative fuels like biofuels and hydrogen would be eligible for funding.
