New Zealand Scraps Clean, Green Policies to Boost Economy
Source: The DairyNews
New Zealand's reputation for environmental stewardship is facing significant challenges as the government rolls back several key environmental reforms to revitalize a struggling economy.
This shift comes under the leadership of Prime Minister Christopher Luxon's centre-right coalition, which took power last year. Among the controversial measures are the reversal of a ban on oil and gas exploration, a five-year delay in pricing agricultural emissions, and encouragement of increased mining activities.
This policy shift aims to bolster New Zealand's export-driven economy, which saw a meager growth of just 0.3% in the year leading up to March 2024, marking the lowest growth rate since the COVID-19 pandemic began. The current account deficit stands at 6.8% of GDP, underscoring the economic challenges the country faces. With exports accounting for nearly a quarter of New Zealand's economy, the government sees these measures as essential to economic recovery.
Economic Imperatives
Resources Minister Shane Jones articulated the urgency of the economic situation, describing it as "arguably the worst" he has witnessed in his adult life. He emphasized that reviving the mineral sector is a necessary response to the brutal economic realities.
The agricultural sector, including fishing, plays a critical role in New Zealand's economy, contributing 5% to GDP and representing about 80% of total exports. Farmers, who were pivotal in Luxon's election victory, argued that the environmental policies being reversed would have rendered dairy and meat production prohibitively expensive.
While these policy reversals have been welcomed by farmers and businesses, they have drawn sharp criticism from environmental groups. Nicola Toki, CEO of Forest and Bird, condemned the government's approach as shortsighted, warning that it jeopardizes the long-term prosperity of future generations for short-term economic gains.
Environmental Concerns
The rollback of environmental policies comes amid broader signs of waning commitment to climate goals. Air New Zealand recently abandoned its 2030 emissions target, citing delays in new aircraft deliveries and high costs of environmentally friendly fuel. The opposition Green Party expressed concern that the government's low ambition on climate change could lead other companies to follow suit.
A recent report from the government Climate Commission highlighted significant risks to New Zealand's ability to meet its 2030 and 2035 emission reduction targets. The report noted that any shortfall in domestic emission reductions would necessitate increased offshore mitigation, which Treasury estimates could cost up to NZ$23.5 billion ($14 billion).
Government Response and Criticism
In response to these challenges, the government has pledged to implement a comprehensive climate change plan that includes increased tree planting, boosting renewable energy supply, and investing in cutting-edge emission reduction technologies. Climate Minister Simon Watts reaffirmed the government's commitment to meeting the 2030 target but acknowledged that more efforts are needed to achieve the 2035 target.
"The Government is committed to meeting our climate change targets, but the way in which we do this will be different to former New Zealand Governments," Watts said. "This Government is using a least-cost approach to meet our climate targets. We will not shut down sectors that are boosting our economy and exports."
Despite these assurances, environmentalists argue that these measures are insufficient. Sara Walton, co-director of the University of Otago Climate Change Research Network, warned of the significant reputational and financial damage New Zealand could face for failing to meet its climate targets. She stressed the importance of reducing emissions to remain competitive in international supply chains.
Impact on Agricultural and Energy Sectors
The government's decision to pull agriculture from the emissions trading scheme, though agricultural emissions will still be taxed from 2030, and the suspension of rules protecting significant natural areas are part of its broader strategy to support the economy. The energy and mineral sectors are also targeted for expansion. The government plans to reinstate oil and gas exploration, a practice banned by former Prime Minister Jacinda Ardern in 2018, to reduce coal imports, boost fuel exports, and keep energy prices low.
Aiming to double mineral exports to NZ$2 billion over the next decade, the government has proposed a fast-track consenting process, allowing projects like mines to bypass current resource consents if they receive ministerial approval. This proposal has raised concerns among environmentalists, including Cindy Baxter, chair of Kiwis Against Seabed Mining, who fears that such measures could lead to environmental degradation.
Baxter highlighted the potential damage to New Zealand's west coast reefs and sea life from seabed mining projects, describing the area as "a beautiful piece of ocean" at risk of being destroyed.
This policy shift aims to bolster New Zealand's export-driven economy, which saw a meager growth of just 0.3% in the year leading up to March 2024, marking the lowest growth rate since the COVID-19 pandemic began. The current account deficit stands at 6.8% of GDP, underscoring the economic challenges the country faces. With exports accounting for nearly a quarter of New Zealand's economy, the government sees these measures as essential to economic recovery.
Economic Imperatives
Resources Minister Shane Jones articulated the urgency of the economic situation, describing it as "arguably the worst" he has witnessed in his adult life. He emphasized that reviving the mineral sector is a necessary response to the brutal economic realities.
The agricultural sector, including fishing, plays a critical role in New Zealand's economy, contributing 5% to GDP and representing about 80% of total exports. Farmers, who were pivotal in Luxon's election victory, argued that the environmental policies being reversed would have rendered dairy and meat production prohibitively expensive.
While these policy reversals have been welcomed by farmers and businesses, they have drawn sharp criticism from environmental groups. Nicola Toki, CEO of Forest and Bird, condemned the government's approach as shortsighted, warning that it jeopardizes the long-term prosperity of future generations for short-term economic gains.
Environmental Concerns
The rollback of environmental policies comes amid broader signs of waning commitment to climate goals. Air New Zealand recently abandoned its 2030 emissions target, citing delays in new aircraft deliveries and high costs of environmentally friendly fuel. The opposition Green Party expressed concern that the government's low ambition on climate change could lead other companies to follow suit.
A recent report from the government Climate Commission highlighted significant risks to New Zealand's ability to meet its 2030 and 2035 emission reduction targets. The report noted that any shortfall in domestic emission reductions would necessitate increased offshore mitigation, which Treasury estimates could cost up to NZ$23.5 billion ($14 billion).
Government Response and Criticism
In response to these challenges, the government has pledged to implement a comprehensive climate change plan that includes increased tree planting, boosting renewable energy supply, and investing in cutting-edge emission reduction technologies. Climate Minister Simon Watts reaffirmed the government's commitment to meeting the 2030 target but acknowledged that more efforts are needed to achieve the 2035 target.
"The Government is committed to meeting our climate change targets, but the way in which we do this will be different to former New Zealand Governments," Watts said. "This Government is using a least-cost approach to meet our climate targets. We will not shut down sectors that are boosting our economy and exports."
Despite these assurances, environmentalists argue that these measures are insufficient. Sara Walton, co-director of the University of Otago Climate Change Research Network, warned of the significant reputational and financial damage New Zealand could face for failing to meet its climate targets. She stressed the importance of reducing emissions to remain competitive in international supply chains.
Impact on Agricultural and Energy Sectors
The government's decision to pull agriculture from the emissions trading scheme, though agricultural emissions will still be taxed from 2030, and the suspension of rules protecting significant natural areas are part of its broader strategy to support the economy. The energy and mineral sectors are also targeted for expansion. The government plans to reinstate oil and gas exploration, a practice banned by former Prime Minister Jacinda Ardern in 2018, to reduce coal imports, boost fuel exports, and keep energy prices low.
Aiming to double mineral exports to NZ$2 billion over the next decade, the government has proposed a fast-track consenting process, allowing projects like mines to bypass current resource consents if they receive ministerial approval. This proposal has raised concerns among environmentalists, including Cindy Baxter, chair of Kiwis Against Seabed Mining, who fears that such measures could lead to environmental degradation.
Baxter highlighted the potential damage to New Zealand's west coast reefs and sea life from seabed mining projects, describing the area as "a beautiful piece of ocean" at risk of being destroyed.
