Building our resilience to climate change and its impacts
While rebuilding after recent extreme weather events is still front of mind for many New Zealanders, looking ahead to enhance our capacity to anticipate, withstand and respond to future climate impacts is also critical.
Not all communities in New Zealand have reliable access to affordable energy. Remote areas and offshore islands in particular can face barriers connecting to the electricity grid and higher risk of energy outages from natural hazards such as earthquakes, storms, and floods. Residents in many of these areas also pay higher-than-average energy prices and are most exposed to severe weather events that can cause power outages, which will become more intense and more frequent with climate change.
Distributed renewable energy generation close to the point of consumption can significantly reduce energy costs for these areas, while building community resilience to climate change and its impacts. Budget 2023 provides $50 million for distributed renewable energy projects that will enhance the energy resilience of low-income and energy-insecure communities. This funding will help to address the distributional impacts of climate change, in addition to building resilience to its impacts and helping to reduce emissions. On top of this, Budget 2023 supports a $10.7 million investment to reduce diesel generation and establish a renewable energy system on the Chatham Islands, helping to further mitigate emissions and high electricity costs faced by residents.
Supporting areas at risk of climate hazards is also important to building resilience to climate change and its impacts. Repeated severe floods in the Westport area have demonstrated its high vulnerability and exposure to the effects of climate change and the significant challenges it faces in adapting. Evidence also suggests that the community is at high risk of future floods, with climate change expected to increase their frequency and severity. That is why Budget 2023 will provide $22.9 million to increase Westport’s resilience to future flooding. This funding will help to build structural flood protection for the Westport urban area, strengthen planning to manage future flood risk and support activities to build the resilience of exposed properties and neighbourhoods. In this way the Government can support locally led climate solutions, the lessons from which can be drawn on to support other areas facing similar challenges.
Budget 2023 further provides $24.7 million to improve our data on both the impacts of climate change and adaptation and mitigation responses taken in New Zealand. It also provides $19.9 million to support resilience to climate change for iwi, hapū and the wider hapori whānui by expanding both data quality and access. This funding will ensure that these groups have the information they need to make decisions about climate change, adaptation, resource management and resilience of communities.
Budget 2023 also invests $39.2 million in improving the mapping of New Zealand’s coastline and identifying coastal areas at significant risk of climate-related hazards and natural disasters. New Zealand’s people, infrastructure, and numerous environmental assets located near and on the coast are forecast to become increasingly exposed to hazards generated by climate change-induced sea-level rise and more frequent storms and surge events. This initiative will help communities, businesses and local and central government to better understand the risks, plan for and adapt to future climate hazards.
Financing the transition to a low-emissions and climate-resilient economy through Sovereign Green Bonds
The annual funding provided through the CERF is only one mechanism through which the Government is supporting the transition to a low-emissions and climate-resilient economy. Green Bonds are another instrument that the Government uses to provide finance for specific public sector initiatives with climate and environmental benefits, such as energy efficiency, clean transport, natural resource and land use, and climate change adaptation.
The Government launched its Sovereign Green Bond Programme in November 2022 with an inaugural $3 billion issuance that will mature in 2034. New Zealand Debt Management has since issued an additional $600 million, bringing the total up to $3.6 billion as of the end of April 2023. Green Bonds are issued as part of the overall Crown borrowing programme to help finance New Zealand’s climate transition. At least 50 percent of the total Green Bond proceeds will be allocated to current and future expenditures, with the remainder allocated to expenditures from the previous financial year.
The Sovereign Green Bond Programme is another step forward in aligning government assets and expenditures with a low-carbon and climate-resilient future. Projects financed by Green Bonds are subject to additional scrutiny and, over time and as the programme matures, reporting requirements will help to ensure that high-value projects are delivered along with increased transparency around climate outcomes. Budget 2023 expenditures on climate change initiatives are being reviewed for Green Bond Programme eligibility.