Wellbeing Budget 2023

Support for today
Building for tomorrow

Domestic and international commitments

New Zealand’s response to climate change balances both our international and domestic commitments to reduce greenhouse gas emissions and avoid the worst impacts of climate change.

Through our Nationally Determined Contribution (NDC) under the Paris Agreement, we have committed to reducing our net emissions to 50 percent below gross 2005 levels by 2030. This reflects our contribution to the global effort to mitigate climate change and limit global warming to within 1.5˚C above pre-industrial levels.

Through the Climate Change Response Act 2002, we have also legislated a number of longer-term domestic emissions reduction targets. These include:

  • reducing net emissions of all greenhouse gases, other than biogenic methane, to zero by 2050
  • reducing biogenic methane emissions by 24-47 percent relative to 2017 levels by 2050 (with an interim reduction target of 10 percent by 2030)
  • meeting our first three emissions budgets (across the period 2022 to 2035) that will act as “stepping stones” towards the 2050 targets.

Our first Emissions Reduction Plan (released May 2022) lays out the Government’s strategy to achieve these targets and, in particular, to meet our first emissions budget (2022 to 2025). It also lays the foundations for plans and policies to meet our second (2026 to 2030) and third (2031 to 2035) emissions budgets. Importantly, the Emissions Reduction Plan shows the range of actions being taken across New Zealand, by those in government, business, and communities to achieve our collective goal of mitigating climate change.

The first emissions budget caps net emissions at 290 megatonnes (Mt) of carbon dioxide equivalent (CO2e) in the period 2022 to 2025 and the second caps emissions at 305Mt CO2e in the period 2026 to 2030. Budget 2022 made an important contribution to achieving these domestic climate targets as well as our international climate commitments, with investments frontloaded to support the implementation of the first Emissions Reduction Plan. The quantified abatement impact of initiatives funded last year has been estimated to drive between 49.46Mt CO2e and 159.6Mt CO2e across the first three emissions budgets.

Budget 2023 builds on this progress, while also positioning New Zealand to better manage and adapt to the risks posed by climate change. Quantified abatement of initiatives funded through the Climate Emergency Response Fund (CERF) in Budget 2023 has been estimated to drive emissions reduction by 4.3Mt CO2e in the first two emissions budgets. Importantly, some investments within the Budget 2023 CERF package will play a critical role in removing barriers to abatement, so actual emissions reductions may be greater. For example, this figure does not include emissions reductions from initiatives such as for expanding electric vehicle (EV) charging infrastructure or additional funding for the Clean Car Discount scheme, since these have indirect impacts that are difficult to quantify with certainty.

The comparatively low abatement impacts in this year’s climate change package relative to last year’s reflect the Government’s decision to make a large initial investment in Budget 2022 in activities that will help us meet our domestic and international emissions targets. Additionally, the criteria for funding through the CERF were expanded this year to include spending on adaptation activities, which will help to reduce the vulnerability and exposure of New Zealanders to the impacts of climate change. This makes comparisons between the climate impacts of the 2022 and 2023 packages challenging, as the benefits of adaptation cannot be appropriately measured by emissions reductions.

Ngā Kōrero Āhuarangi me te Ōhanga – Climate Economic and Fiscal Assessment 2023

In April 2023, the Treasury and the Ministry for the Environment released a joint report on the potential economic and fiscal impacts of climate change on New Zealand. Based on available evidence, the report, Ngā Kōrero Āhuarangi me te ŌhangaClimate Economic and Fiscal Assessment 2023, finds that the economic impacts of climate change are expected to be large, wide-ranging and unevenly felt. In particular, the physical impacts of climate change, such as from more frequent and severe storms, floods, and droughts, are expected to have greater impacts on key economic sectors, such as energy, transport, agriculture, and forestry. The choices and actions that government, businesses and households take now and in the future to mitigate and build resilience to climate change will help determine the size of these impacts for New Zealand.

The report also expects large future fiscal costs from climate change and from our actions to respond to it. Its new analysis finds that meeting our first NDC represents a large fiscal cost, which depends on both domestic and international factors. Domestically, the degree to which we underachieve or overachieve on our emissions budgets will determine the size of the overseas emissions reductions that we will need to invest in to reach our international target. Internationally, market prices will determine the cost to New Zealand of making this investment.

By supporting resilience-building activities and additional domestic emissions reductions to achieve our emissions budgets, investments made in Budget 2023 will help to lower the future economic and fiscal costs of climate change. Maintaining New Zealand’s strong economic and fiscal resilience will be a key factor in meeting the challenges of climate change successfully.

Some impacts of climate change are inevitable due to historic and ongoing emissions and the long-lived nature of many greenhouse gases in the atmosphere. That is why adapting to climate change, by adjusting our systems in response to its expected impacts, is critical alongside our emissions reduction programmes.

Our first National Adaptation Plan (released in August 2022) outlines how the Government plans to manage the risks caused by the changing climate, as a first step towards meeting the longer-term goal of building a more climate-resilient New Zealand. While much of our immediate focus as a Government is still on rebuilding from the North Island weather events, the occurrence of the events is a reminder that we need to enhance our resilience to, and be prepared for, climate hazards before they happen. Budget 2023 invests $167.4 million in building our resilience to future climate events.

Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now


Back to Top