Climate Change Minister Simon Watts has been warned that NZ's shortfall to meeting its climate targets was large when compared with other countries. Photo: RNZ / Samuel Rillstone
The government was warned to expect overseas scrutiny over a huge shortfall in plans for meeting the country's international climate target.
The 84 million-tonne gap is because the current government has not committed to buying carbon credits from overseas.
Although Prime Minister Christopher Luxon says he is committed to meeting the target of cutting emissions by 50 percent by 2030, the country is currently more than a whole year's worth of emissions short of that.
This was highlighted late last year, when New Zealand was preparing its first-ever report on its progress at meeting its Paris Agreement commitments.
Environment officials warned Climate Change Minister Simon Watts that countries were expected to explain how they would close their emissions gaps.
New Zealand had not announced a plan then, and still has not.
Its shortfall was also large when compared with other countries, officials told Watts.
They said this was "an area where New Zealand can expect to receive some scrutiny".
They also presented Watts with a list of decisions by previous Cabinets dating back to 2015, agreeing to use offshore carbon credits. They invited him to get the current Cabinet to either confirm this or make a different decision - however it's not clear how that worked out.
The briefing was released to RNZ under the Official Information Act.
'Exploring options'
Previous governments planned to meet the target with a mix of savings at home and buying offshore climate action, which could involve paying for projects in a lower-income country such as replacing a coal station with renewable power or ditching diesel generators for solar.
Doing the work overseas could cost less than it would in New Zealand, successive governments were told.
If the government wanted to meet the target fully by cutting emissions in New Zealand, it would need to - in the next four years - fully electrify all road transport, eliminate all industrial energy emissions, and eliminate half of all agricultural emissions, or other equivalent actions.
The Climate Change Commission told the government attempting to do this would be "costly and disruptive" and have "severe social and economic consequences" - as well as not being feasible.
But the coalition has proven wary of committing to the only remaining option, offshore purchases, despite saying it was committed to the Paris Agreement.
When New Zealand's progress report was published for other countries to read in December, it did not explain where the missing 84 million tonnes would come from.
It said New Zealand was exploring "options for international cooperation".
Work on the rules and options has been underway since the previous government.
While Budget 2025 allocated further funding for this exploratory work, it didn't allocate anything for purchases.
The issue was highlighted again in January 2025, in talking points foreign affairs officials posted overseas, which were again released to RNZ under the Official Information Act.
The notes for diplomats acknowledge New Zealand has a shortfall and offer the same statement the government made in the progress report, that a "concerted effort was underway to establish options for future offshore purchasing."
Confusion affecting climate commission, Treasury
Other documents show conflicting statements by ministers have led to confusion at the Climate Change Commission, and contributed to Treasury deciding that the government might still decide not to purchase anything.
Treasury has put the cost of the purchases at $3-24 billion, though some experts put the likely cost at the lower end, based on deals other countries have struck.
In early September 2024, Watts told a conference that spending billions on overseas purchases was "not realistic", but later appeared to backtrack and acknowledge there was no way to meet the 2030 target without overseas help and that successive governments had always planned to do this.
In December 2024, Agriculture Minister Todd McClay told Morning Report New Zealand would not be spending money offshore.
"No, we don't have to go and buy credits overseas to meet our obligations and we're working very hard to make sure we don't.
"The idea of sending billions overseas is not palatable to anybody in New Zealand," McClay said.
Luxon punted questions on McClay's statements to Watts.
At the time, Watts gave RNZ a statement saying: "The government currently has no formal plans to purchase offshore. However, we are realistic about the need to cooperate with other countries and are considering all options."
"Considering all options" was the last official word from the government.
However coalition partner New Zealand First has refused to say if it would support purchases and is openly hostile to the Paris Agreement target.
In March this year New Zealand first leader and deputy Prime Minister Winston Peters told RNZ nobody knew why National had signed up to the Paris Agreement or what the target was.
The lack of agreement created confusion among those advising the government.
A slide from a Climate Change Commission PowerPoint presentation to its Board in on Emission Trading Scheme settings on 24 September 2024 said:
"Recent public comments by ministers raised some questions for us."
"We are seeking further information from Ministry for the Environment officials to clarify the government's plans for obtaining offshore mitigation to meet (the 2030 target)."
The commission needed to clarify whether offshore purchases were still on the table, because otherwise it would need to change its recommendations on the level of carbon cuts the government should make here using the Emission Trading Scheme, in order to remain compliant.
The commission noted that making all the cuts here would be "costly and disruptive" and also not possible using only the country's main climate tool of the Emissions Trading Scheme, which covers less than half the country's greenhouse gas emissions.
The lack of clear statements also affected Treasury's decision, to leave the cost of buying offsets off the government's books.
Treasury documents say it decided not to book the cost as a liability, saying ministers have never made a public statement strong enough to suggest the government "will accept a responsibility to pay for emissions to meet its targets".
"In essence, our judgement is that the government has not been sufficiently specific in its plans to achieve the [2030 target] that it is valid to expect that the government has little or no realistic alternative."
Treasury notes the cost of meeting the climate target using overseas purchases as a fiscal risk in its notes to the government's accounts, which is distinct from including it as a liability that has to be accounted for.
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