Taking action for a more secure economy
Reflecting the importance of the challenge that lies ahead, the Government has identified addressing climate change as a key area of focus for Budget 2022. The $2.9 billion climate change package for Budget 2022 is an important first step toward implementing the Emissions Reduction Plan and meeting the first emissions budget.
The abatement impact of the policies and measures in the Emissions Reduction Plan has been quantified as 95Mt - 228Mt across the first, second and third emissions budget periods, reflecting a range of low to high policy impact of policies and measures. The investments we have made through the CERF in Budget 2022 are estimated to drive 52 - 70% of this abatement. As initiatives funded through the CERF are implemented and further developed, we are likely to see even greater abatement achieved from the investments we are making in Budget 2022 than our current modelling has identified. We will also make further investments in Budget 2023 that will help us drive our emissions even lower and provide greater support to meeting our first, and future, emissions budgets. In the first emissions budget period, ERP policies and measures have been quantified to drive 5.4Mt - 11.9Mt of abatement of which funding from the CERF in Budget 2022 is estimated to support 21 - 34%.
For context, the first emissions budget caps emissions at 290Mt over the period 2022-2025. Modelling suggests that actions in the ERP will reduce emissions from a projected level of 301.5Mt to a range of 289.6Mt - 296.1Mt. The numbers make it clear that not only will the investment we make through the CERF in Budget 2022 support important abatement to help us meet our first emissions budget, but it will play an enduring role supporting significant abatement that will allow us to meet our second and third emissions budgets as well. The climate actions funded at Budget 2022 recognise the current pressures New Zealanders face as global energy prices remain high following Russia’s illegal invasion of Ukraine. That is why they focus on partnerships between the Government, businesses and iwi to take the lead on the actions required, while providing households with greater choices and access to options for engaging in climate action under our first emissions budget. This allows all New Zealanders to progressively become involved in the climate response, and benefit from the investments we are making.
Most importantly, the actions we are taking will improve New Zealand's economic security by moving us towards energy independence and reducing our reliance on volatile global oil markets. Our regions will become more secure and better able to deal with extreme weather events through investments in climate infrastructure. And households will have greater ability to reduce their costs through better transport options.
-  This figure is based on an assumption that the Tiwai Point Aluminium Smelter remains open.