A range of climate change programmes had to be delayed or scaled down after the environment ministry got less than it asked for in Budget 2021, Marc Daalder reports

Efforts to rein in the over-subsidising of large industrial polluters and a law that would enable a managed retreat from flood-prone coastlines were delayed because funding for them wasn’t received in Budget 2021.

These were just two of several parts of the climate change work programme delayed or scaled down as a result of the failed Budget bid, according to a June Cabinet paper from Climate Change Minister James Shaw.

“I have had to make significant changes to the climate change work programme to fit within the appropriation for this financial year,” Shaw wrote in the paper, which was proactively released by the Ministry for the Environment (MfE) in December.

Shaw had sought $23 million in funding for MfE but had only received the bare minimum of $6.45m to keep the lights on and existing programmes going. The decision left “an $11.2m shortfall for what is needed to deliver the climate change work programme in 2021/22 that was agreed by Cabinet, and signalled for decision within the coming financial year”.

Shaw told Newsroom: “Obviously, I’m going to be disappointed when a funding decision or anything else means a delay to action on climate change. But since then we’ve made $4.5 billion dollars available for climate action, thanks to the changes we’ve made to the ETS. Dollar for euro, as a portion of GDP, that puts us on a par with Germany – which I think is something to celebrate.”

A spokesperson for Finance Minister Grant Robertson declined to comment for this article, saying it was for Shaw to respond. However, the spokesperson did note that this year’s Budget is slated to bring major investment in climate policies via that $4.5 billion fund, alongside the release of the Government’s Emissions Reduction Plan.

This isn’t the first time Shaw and Robertson differed over spending on climate. In May 2020, Shaw wrote a letter to Robertson saying a round of stimulus due in July of that year “represents this country’s one and only chance to respond to the climate crisis at the scale required, before the window of opportunity closes to remain within 1.5C of global warming”.

In the end, little of the cash went to climate. Most was held back for future Covid-19 outbreaks, around $2 billion covered increasing cost pressures and just $1.1b was spent on new initiatives, like waste infrastructure and three waters reform.

“When it comes to the climate crisis, the Ardern Government talks big but spends small. These Cabinet papers show that the climate crisis is barely a priority for this Government,” Greenpeace Aotearoa agriculture campaigner Christine Rose told Newsroom.

“It’s shocking to see that Cabinet funded only around a quarter of the budget required to deliver on necessary climate change action despite advice from the Minister of Climate Change that much more was needed. Climate change is here and now, an existential threat, but the Ardern Government is no different from previous governments, failing at the first hurdle, to prioritise funding and action to address the climate crisis.”

One of the key policies delayed as a result of the failed Budget 2021 bid was an effort to reform the Government’s industrial allocation programme. This scheme sees the Government grant free carbon credits to large greenhouse gas emitters and exporters to help them compete with international rivals that don’t face a carbon price. The settings are out of date, however, meaning that more than $100 million in carbon credits is over-allocated each year.

The chief recipients of these excess subsidies are the Tiwai Point Aluminium smelter, which earned nearly $60 million in carbon credits above what it was meant to in 2020, according to a Newsroom analysis. Pulp and paper producer Oji Fibre Solutions and NZ Steel each received more than $30 million in additional carbon credits that year as well.

Reforms of the allocation scheme are expected to rein in the over-subsidising of emitters. Many of the carbon credits that would no longer be freely allocated could instead be auctioned by the Government for a profit. The extra cash received in a single year from those auctions would likely more than cover MfE’s $11.2 million shortfall. Instead, these reforms were delayed by a full year.

The environment ministry also had to step aside from its lead role in coordinating the Government’s plan to be carbon neutral by 2025 as a result of the under-funding. That role was instead to be split between the Energy Efficiency and Conservation Authority and the Ministry for Business, Innovation and Employment.

Shaw said the programme was still making strides.

“Since its establishment in November 2020, the programme has made significant progress and is driving change across government. All 39 agencies part of the programme have begun measuring their emissions, and the first tranche of agencies are required to report from the current financial year,” he said.

“Due to Budget outcomes, the focus has been more policy orientated than secretarial, but MfE continues to provide guidance and tools to meet CGNP requirements and provide tailored support to ensure the success of the programme.”

The Climate Change Adaptation Act, which was meant to be progressed alongside the rest of the reforms to the Resource Management Act, has instead been pulled out and put on a slower track.

Shaw said it would still be introduced within the current Parliamentary term.

“The issues the CCA will address are complex and technical, so it’s important the policy is thoroughly tested with experts and those likely to be affected – we need go get it right from the start,” he said.

Work to secure access to international carbon markets to help New Zealand fulfil its emission reduction pledge under the Paris Agreement was scaled down because of the failed Budget bid. Shaw said this was “not expected to impact New Zealand’s overall ability to meet our [Paris target]”.

Marc Daalder is a senior political reporter based in Wellington who covers climate change, health, energy and violent extremism. Twitter/Bluesky: @marcdaalder

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