New Zealand to meet public sector emissions goals amid updated projections

The New Zealand government announced the country is on track to meet both parts of Target 9 under the Government Targets that aims to reduce emissions in line with the county's emissions budgets as part of its election promise, according to a release March 10.

Target 9 is focused on making sure New Zealand is on track to meet its 2050 net-zero climate change commitments, with total net greenhouse gas emissions of no more than 290 million mtCO2e from 2022 to 2025 and 305 million mtCO2e from 2026 to 2030. Under its nationally determined contribution target, the country aims to reach net zero by 2050 and reduce emissions of biogenic methane by 10% from 2017 levels by 2030.

This announcement emphasizes a change in status on the progress for Target 9 from a 'probable' achievement of targets to being 'on track', due to revised emissions projections published in the Target 9 December 2024 quarterly progress report along with the second emissions reduction plan on Dec. 11, 2024.

Platts previously reported July 31, 2024, that emissions data and projections at the time indicated that New Zealand would be able to meet its first emissions but there was a possibility that the country would fall short of its subsequent emissions budgets in the absence of further policy support.

In the report, projected emissions are 5.9 million mtCO2e below the first emissions budget and 1.9 million mtCO2e under the second emissions budget, thereby boosting confidence that the country is able to achieve Target 9 with the implementation of supporting policies and initiatives in the second emissions reduction plan.

The second emissions reduction plan, or ERP2, spanning 2026 to 2030 was released on Dec. 11, consisting of targeted actions in the highest-emitting sectors including agriculture, transport, energy, and waste. The New Zealand emissions trading scheme and sustainable finance are also covered in this plan.

The plan represented a shift from the previous government's climate approach, which prioritized specific and targeted policy actions. The plan aims to implement the ETS along with additional market-oriented strategies to lower emissions and enable more renewable energy projects through Electrify NZ and recognize Carbon Capture, Utilization and Storage in the ETS.

New Zealand Units are the main tradeable unit in the NZ-ETS, equivalent to one ton of carbon dioxide equivalent emissions. Platts, part of S&P Global Commodity Insights, assessed NZUs at NZ$61.70/mtCO2e, 10 New Zealand cents/mtCO2e higher on the session March 11.

In the follow up to the second emissions reduction plan, the government is currently focusing its efforts on implementing the additional policies that were suggested. The new NDC announced Jan. 30, which covers the period from 2031 to 2035, is expected to reduce emissions to a range of 38.98 to 42.44 million mtCO2e based on New Zealand's Greenhouse Gas Inventory data from 1990 to 2022. This target builds upon New Zealand's first updated NDC, which aimed for a 50% reduction below gross 2005 levels by 2030, equating to an estimated 579 mtCO2e over the 2021-2030 period.

This comes ahead of the first quarterly NZU auction in 2025 slated for March 19. After a year of lackluster auction in 2024 where roughly 7 million units eventually removed from the market, there has been lingering mixed sentiment on whether the upcoming one will clear.