Small steps are underway to pay other countries to help meet New Zealand's international climate change commitments

New Zealand appears to be inching its way towards paying other countries to fight climate change on its behalf.

If adopted, this practice would augment domestic measures to cut emissions of greenhouse gases (GHGs).  

The Government insists no decisions have been made, but says officials are holding preliminary discussions with several unspecified countries to seek a way forward.    

If New Zealand goes ahead, it would echo practices of countries such as Switzerland, which has paid the African nation of Ghana to use clean technologies such as biofuels. 

A report by experts at public policy researcher Motu, argues New Zealand must start doing the same thing, and quickly. It says too much time has been wasted and New Zealand lacks the capacity to do the required work by itself at a realistic cost. 

The business community appears to be split between reluctant acceptance of this practice and alarm that it might be used to disparage New Zealand’s reputation. 

Put crudely, offshore mitigation raises the image of New Zealanders jetting off on holiday to Hawaii, while peasants in poor countries are paid to plant trees for them. And while all sides see this as a simplistic view, there are fears that the idea of New Zealand citizens passing the buck will bed in.   

'More is needed' 

The issue dates back to the Paris Agreement on Climate Change in 2015. At those talks, New Zealand issued a pledge – called a Nationally Determined Contribution (NDC) - to reduce net emissions 30% below 2005 gross emissions by 2030. In 2021 the promise was upgraded to net emissions falling 50% below 2005 gross emissions by 2030. But subsequent years of foot dragging have left New Zealand falling short of making these promises come true.    

“More is needed,” the Ministry for the Environment wrote in a report on polices needed for the years between 2026 and 2030.

“The gap between the (Government’s) first and second emissions budgets and the NDC is 101 Mt CO2-e.  The Government is considering how to address this challenge and will make further announcements in due course.”

In other words, the distance between what New Zealand needs to do, and has done, is huge. 

“This naturally raises the question of, ‘can’t we bridge that gap at home?’ and the answer to that is ‘no’,” says a Motu researcher Catherine Leining. 

“Afforestation is too slow……as you move further into that gap, mitigation costs increase…and methodologies (for assessing mitigation) change.”

Leining adds that from the start, successive governments never planned to rely solely on domestic measures and always envisaged foreign help in the fight against climate change. But they did almost nothing to make this policy work in practical terms. 

In one limited public response, a Treasury paper identified three paths for offshore mitigation: direct investment in emissions reduction schemes, investment in international carbon funds and purchasing credits from other countries’ emissions trading schemes.  

Later, the previous Labour Government expressly endorsed the principle of domestic, not foreign, climate mitigation.  But it said if we had to go offshore, then sustainable development within the Asia-Pacific region should be preferred.  The current government has now taken a step forward and said offshore mitigation is possible but not definite.    

“We are first focused on what we can do domestically to meet the target, but all options are on the table,” says the Minister of Climate Change, Simon Watts. 

“While no decisions have yet been made regarding the purchase of offshore credits or formal agreements, officials are advancing discussions with other countries to build a strong policy foundation for future decisions on cooperation.

“For example, in April, New Zealand signed joint statements with the Philippines, Thailand, and Singapore, which pave the way for discussions on the development of international carbon markets.”

Watts goes on to blame the previous administration for the problem. 

“The Government is committed to delivering our climate targets, including the first NDC under the Paris Agreement. The Motu Report highlights the challenges ahead, and we acknowledge that a lot of work is needed to meet the target, as we did not inherit a viable plan.” 

Carbon colonialism?

Motu’s report suggests offshore climate mitigation has a big problem with public opinion. It says many people think New Zealand should get its own house in order before moving next door. Nor should New Zealanders get a free pass for inactivity by getting other people to do their climate work for them.

Another complaint is “carbon colonialism”, which suggests that rich countries are taking the easy way out by paying poorer states to do the hard work on their behalf. And still others object to spending good money upfront, even if it holds the promise of future gain. 

Motu argues these objections are widespread, but there is a stronger principle at stake: climate co-operation. This tenet says that countries working together can achieve more climate mitigation than they can by going it alone, since they will be presented with far more opportunities for finding least-cost solutions. 

“Developing countries hold three-quarters of the cost-effective mitigation needed in 2030 to keep temperature rises below 1.5ºC, but currently lack the capability to make it happen, and historically have contributed least to the problem,” the Motu report says. 

“If higher and lower-income countries fail to work together to achieve that mitigation, the world will lock in dangerous climate change. Providing conventional climate finance to lower-income countries is crucial but is not the only option, and nor has it been sufficient so far."

“Supporting some level of off shore mitigation while maintaining ambitious domestic decarbonisation would enable New Zealand to deliver its committed global climate contribution, which goes beyond what is possible domestically," says Motu.

“This would be consistent with principles of a just transition.”

'There is never one solution'

All these issues are vital for the business community, which must pay higher prices for carbon-intensive inputs such as fuel while not always being able to pass those costs on to the customer in a competitive market. So, getting other countries to help us out of a jam makes some sense, according to the Sustainable Business Network (SBN), which helps small and medium sized companies (SMEs) to overcome environmental challenges. 

“There is never one solution,” says SBN’s chief executive, Rachel Brown. 

“There are going to be diverse solutions all over the place, and clever organisations are starting to say there will be some offsetting on an international scale, and that money will go offshore," Brown says.

“And I’m actually comfortable with that. It doesn’t feel naturally right, because you want to hold that money and keep it here. But the difference in cost between offshore and local is quite significant right now. We need to decarbonise at pace now. And if that means offsetting overseas, I think that needs to happen.”

Brown says any moves like these would be a big improvement, because, “frankly, year by year we are failing.”  She adds inaction is not a realistic option, because failure would undermine New Zealand’s place in a global, trading economy.  And most SMEs in her group have already faced up to the reality of change. 

“Prices of fossil fuels go up, they know all that, that’s no surprise. I think you’ll find the kinds of businesses that are in the SBN network are already well and truly down that pathway,” Brown says.

Reluctant approval

The SBN’s big brother is the Sustainable Business Council (SBC), representing larger companies. Together with its sister organisation, the CEO-based Climate Leaders Coalition (CLC), it gives reluctant approval to offshore mitigation. 

“While members recognise the need for some overseas reductions, SBC and CLC strongly believe that more detailed information on how New Zealand plans to meet this commitment is essential for maintaining international credibility,” says Antonia Burbidge, Head of Climate and Nature for the SBC. 

 “SBC and CLC urge the Government to provide a comprehensive strategy for addressing this gap, ensuring that New Zealand remains a responsible global actor in the efforts to address climate change.

“SBC and CLC recommend further transparency…..on the Government’s balance sheet. Failing to adequately cost and account for the NDC could lead to future financial and policy challenges which could affect New Zealand taxpayers and businesses," Burbidge says.

The environmental NGO, Worldwide Fund for Nature, also accepts foreign offsets, but does so through gritted teeth. 

“Nobody likes the idea of outsourcing our problems to other countries, especially when there are so many emissions reduction initiatives that can be advanced at home,” says its CEO, Kayla Kingdon-Bebb. 

“However, there has always been a place for international cooperation when it comes to meeting our climate commitments…..the challenge is getting the balance right - and the question is how we do that well and with integrity.”

Political inaction

Kingdon-Bebb says many domestic reforms could be ramped up, such as small-scale solar, more energy-efficient housing, restored wetlands and protecting native forests from pests.  All these issues are being neglected.   

“The political inaction on climate change by successive governments is going to cost us when it comes to meeting – or failing to meet – our 2030 target and future NDCs. We need to act with urgency to turn this around.”

The Motu report concludes by saying the problem is urgent. It says under current practices, the world will be three degrees celcius hotter in 2100 than it is now.  That is double the 1.5 degree ideal of Paris, and half as much again as the Paris accord’s reluctant second option, a two degree rise. 

And even if the commitments made in Paris are honoured, the increase in temperature will lessen only slightly, to 2.5 to 2.9 degrees. To meet the goal of a 1.5 degree increase, net emissions would have to fall by 42% by 2030 compared with 2019 levels. 

Motu says New Zealand is nowhere near that level of progress. 

In helping to write this report, Leining says her work was independent and does not reflect her position on the board of the Climate Change Commission.