The Government has offered $600m more for Air New Zealand, one of the country’s top five emitters, without requiring any sustainability moves, Marc Daalder reports
As thousands of New Zealanders rallied for decarbonisation around the country on Friday, the Government quietly announced it was making another $600 million available to Air New Zealand in high-interest loans.
This extension came with no climate-related conditions, despite a report by New Zealand researchers in February which labelled the March 2020 $900 million loan facility for the national air carrier a “lost opportunity to lock in the transition to a low-emissions economy”.
Nina Ives, a PhD candidate at AUT and one of the researchers who tallied up the climate impacts of 56 different energy-related stimulus projects for Energy Policy Tracker, said the decision was “disappointing”.
“It made sense to do it at the time. We’re such a small, isolated country far from anywhere else. Tourism is such a big export earner for us and we’re also severely trade exposed. I have sympathy for the Government doing what it did initially,” she said.
“We needed to get Kiwis home and we needed to keep supply routes open so we could get essential things like medicine from other countries. However, it’s pretty obvious now that this Covid crisis is going to be a long-term thing and it’s disappointing that the Government has decided to continue doing the same thing.”
Lack of green strings a “lost opportunity”
Air New Zealand is one of the country’s top five emitters, releasing 3.93 million tonnes of greenhouse gases into the air in 2019. Despite sustainability initiatives which have improved the fuel efficiency of flights, the company’s growth has outpaced those gains and its annual emissions have risen by a third since 2011. The carrier’s emissions did fall significantly in 2020, to 3.18 million tonnes, but that was as a result of reduced flights during the pandemic.
Ives and David Hall, of AUT’s The Policy Observatory, found in their work for Energy Policy Tracker that the Government’s provision of the $900m loan facility for Air New Zealand was its most expensive energy- and climate-related policy commitment. A separate $600m bailout for the airfreight industry was the country’s second most expensive stimulus project.
When that bailout was extended by $172m in March, it was criticised by researchers and the Green Party. Greens transport spokesperson Julie Anne Genter told Newsroom at the time that she was disappointed by the extension.
“We agree with the Government’s support to the aviation sector at this time, given it is obviously hugely important in terms of getting freight in, maintaining the industry and retaining jobs,” she said.
“However, these bailouts need to come with strings attached. In this situation, this should involve things like companies having emission reduction plans in place and living wage for employees and contractors. In the long-term, we need to move to a carbon neutral supply chain with alternative fuels for the aviation sector and developing higher-speed regional rail here in Aotearoa, as we have proposed.”
She said the same comments applied to the Air New Zealand extension as well. However, Newsroom understands that the Green Party didn’t push for climate strings on either of these extensions and it remains unclear whether they were notified of them ahead of time.
NZ ‘middle of the pack’
Ives said Energy Policy Tracker researchers in other countries had identified greener airline bailouts. Air France, for example, received an NZ$11.64 billion bailout in exchange for commitments to reduce emissions and test biofuel blends – although these conditions were not legally binding. Austria’s aid and loans to its national carrier came with emissions reduction stipulations, a price floor on new tickets and a requirement to end domestic flights that cover existing rail routes.
“This was an example of no kind of conditions or strings being attached to that policy, it was just a loan facility with no requirement on Air New Zealand to do anything differently,” she said.
A spokesperson for Finance Minister Grant Robertson, who announced the extension, declined to comment on the lack of climate strings but pointed Newsroom towards the letter of expectation that accompanied the decision.
In the letter to Air New Zealand board chair Dame Therese Walsh, Robertson writes that one of the Government’s six “enduring expectations” for the company is for it to “demonstrate its commitment to environmental sustainability, including engaging with the development of new aviation fuels for New Zealand”. The letter does not mention the words “climate” or “emissions”.
Overall, New Zealand’s energy-related stimulus sat “in the middle of the pack, with room to improve for future policy”, Ives and Hall found. Two fifths of the money went unconditionally towards fossil fuel projects (like the Air New Zealand loan facility) while just 14 percent was earmarked for unconditionally clean energy projects.
“Nearly $2 billion was spent on clean energy, but only one quarter of this was unconditional. Big ticket items like wind farms are absent,” Ives and Hall wrote.
National Party climate change spokesperson Stuart Smith said he was comfortable with the lack of “green strings” attached to the loan extension.
“If someone had a wonderful suggestion that Air New Zealand are not doing, then I’d like to hear what it is. But from where I’m sitting, anyway, I think Air New Zealand are doing quite a lot around the sustainability issue,” he said.
“The technology just isn’t there to put an electric plane up in the air. Patience is the right thing rather than trying to saddle Air New Zealand with conditions on their support funding that would really weaken that support package. Ultimately, I think at the moment we’re in a position where we’re in survival mode in lots of ways. Air New Zealand have been supported to get flights and air freight in and out of New Zealand and that’s absolutely vital.”
Ives agreed that some of Air New Zealand’s work was essential, but said the opening of the trans-Tasman bubble would see a return to less essential emissions.
“With this travel bubble opening up now with Australia, I find it interesting because lots of the flights that are going to occur will be tourism-related. It feels like an even bigger missed opportunity to think about how do we rework our tourism sector so that it’s not so fossil fuel-reliant?” she said.
“There’s this concept climate ethicists have talked about: The difference between subsistence and luxury emissions. Subsistence emissions being those which are necessary for survival, so maybe emissions associated with agriculture and food production or electricity use for heating. Then luxury emissions are those ones that aren’t so necessary, so taking your car out on a long Sunday drive.
“I’d imagine quite a few of these emissions associated with travel back and forth across the ditch will be tourism-related and therefore more luxury emissions than those essential ones.”