Wellbeing Budget 2022

A Secure Future

The Climate Emergency Response Fund

Climate change is one of the most pressing long-term challenges facing New Zealand. To respond effectively to the challenge, we will need to make significant investments across multiple Budgets. To address this, the Government established a Climate Emergency Response Fund (CERF) in 2021.

The CERF was initially established with a 'down payment' for our climate spending: $4.5 billion of cash proceeds from the Emissions Trading Scheme (ETS), based on the Treasury's Half Year Update 2021 forecasts of proceeds over the period from 2022/23 to 2025/26.

In Budget 2022, the CERF has supported a $2.9 billion spending package. Charges against the fund were also made to support international climate finance commitments under the Paris Agreement, and the Government Investment in Decarbonising Industry Fund, totalling $865 million operating.

In the Budget Update, Treasury has updated its forecasts for ETS cash proceeds from 2022/23 to 2025/26. The forecast proceeds have increased by a total of $800 million over the forecast period, and Cabinet has agreed to use this increase to top up the CERF. This leaves $1.5 billion remaining in the Fund.

Table 6 - Climate Emergency Response Fund

Table 6 - Climate Emergency Response Fund
$billions 2022/23 2023/24 2024/25 2025/26 2026/27
CERF at establishment ←         4.5     →                          
Budget 2022 spending package and pre‑commitments ←     - 3.8     →                          
Increase to ETS cash proceed forecasts ←     + 0.8     →                          
CERF after Budget 2022 ←        1.5     →                          
Additional forecasts ETS revenue at Half Year Update 2022   ←           TBC         →                          
Indicative CERF at Budget 2023   ←     1.5 + TBC     →                          

Source: The Treasury

However, the Government will continue to review the size of the CERF, as demonstrated in the table above, we expect to increase the CERF with additional forecast ETS revenue at the Half Year Update in December 2022. We may also increase the CERF from other funding sources, particularly as we review its scope ahead of the Government's National Adaptation Plan, which is expected to be published later in 2022.

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