There is already a lot of work underway

The Regional Hydrogen Transition will support early consumers of green hydrogen in New Zealand by bridging the price gap between hydrogen and fossil fuel alternatives. The rebate mechanism to deliver this outcome will be finalised following industry engagement. The goals of the initiative are:

• decarbonising hard-to-abate sectors
• economic diversification
• supporting the wider goals of the just transition

Budget 2023 provides $32.5 million over the first 4 years of the Regional Hydrogen Transition.

Regional Hydrogen Transition

Industrial energy use accounts for about 25% of our energy emissions and its decarbonisation is a critical component of the Emissions Reduction Plan. The GIDI fund targets these emissions by providing co-funding grants to businesses to decarbonise their use of industrial process heat through fuel switching and energy efficiency improvements. Without Government co-funding, many decarbonisation projects would present too high an upfront cost to a business, with too low a corresponding return to be prioritised or to proceed. Co-funding can also bring forward decarbonisation projects that may have occurred at a later point in time.

Through Budget 2022, GIDI funding increased by $650 million over 4 years to expand and accelerate what can be achieved in decarbonising our energy system, without de-industrialising it.

The recently announced partnership with New Zealand Steel is New Zealand’s largest emissions reduction project to date, with half of the coal being used at Glenbrook steel to be replaced with electricity to recycle scrap steel. The Government is contributing up to $140 million to this project.

About the Government Investment in Decarbonising Industry Fund(external link) — Energy Efficiency & Conservation Authority

The Carbon Neutral Government Programme (CNGP) has been set up to accelerate the reduction of emissions within the public sector.

Launched in December 2020, the programme aims to make a number of organisations within the public sector carbon neutral from 2025. 

Key initiatives in the CNGP include:

• phasing out coal-fired boilers from the public sector, with a focus on removing the largest and most active by the end of 2025
• optimising the size of agencies’ car fleets and purchasing electric vehicles.

The CNGP is supported with funding from the State Sector Decarbonisation Fund.

Carbon Neutral Government Programme(external link) — Ministry for the Environment

State sector decarbonisation fund(external link) — Energy Efficiency & Conservation Authority

The Government launched the Warmer Kiwi Homes programme in July 2018 and has since completed over 110,000 heating and insulation retrofits for eligible homeowners. 6% of New Zealand’s energy-related emissions come from households. Improving the energy efficiency of New Zealanders’ homes not only reduces emissions, it also plays a vital role in ensuring whānau can enjoy warm, dry and healthy homes – without increased energy costs.

Through Budget 2023, the Government extended Warmer Kiwi Homes. The extended Warmer Kiwi Homes programme will deliver around 26,500 extra insulation and heating retrofits each year. The extended programme will help tens of thousands of New Zealanders lower their power bills and improve their health by repairing and efficiently heating their homes, and providing more energy efficient hot water heating and lighting.

Warmer Kiwi Homes programme(external link) — Energy Efficiency & Conservation Authority

Electrifying the vehicle fleet is an important step towards a net zero-carbon future. The emissions reduction plan sets out a commitment to increase zero-emission vehicles to 30% of the light vehicle fleet and reduce emissions from freight transport by 35% by 2035. Achieving these targets means there will be 1.5 million more EVs in the fleet by 2035. We need to invest in the appropriate public and private EV charging infrastructure ahead of this growth.

The Government’s Clean Car Discount is making low emission vehicles more affordable. The discount consists of rebates and fees based on CO2 emissions for new and used eligible vehicles the first time they are registered in New Zealand. The higher the CO2 emissions, the greater the fee; the lower the emissions, the greater the rebate. Vehicles with moderate emissions will not incur a fee or be eligible for a rebate.

The national EV charging system needs to be underpinned by affordable, reliable, secure and safe electricity supply and infrastructure. The Government recently consulted on a draft electric vehicle charging strategy: 'Charging Our Future'. Budget 2023 helps to provide greater certainty to New Zealanders adopting EVs by investing $120 million to expand EV charging infrastructure. This will expand the growing national network of EV charging hubs across New Zealand, by adding 25 hubs each containing up to 20 chargers. 

Electric Vehicle charging strategy: Charging our future

Community-based energy initiatives that also help improve energy affordability, security and resilience, and lead to improved health outcomes.

Building on pilots funded through the Māori and Public Housing Renewable Energy Fund ($28 million in Budget 2020), the Government has committed a further $46 million (in Budget 2022 and 2023) for an expanded programme to support small-scale community renewable energy projects.

This new Community Renewable Energy Fund supports renewable generation to lower energy bills and encourage greater use of heating, leading to warmer and healthier homes. Some projects may also provide a more resilient power supply and enhance energy sovereignty by enabling local communities to generate their own power.

Community Renewable Energy Fund

Meeting our emissions targets will require a rapid and efficient expansion of renewable electricity such as wind and solar generation. We need to boost renewable electricity generation by 170% by 2050 to support increased electricity demand and to transition away from emissions-intensive fuels. Significant expansion and upgrade of other parts of the electricity network will also be required to enable this renewable electricity to reach customers.

The Government, through MBIE and the Ministry for the Environment, is currently progressing proposed changes to the National Policy Statement for Renewable Electricity Generation and the National Policy Statement for Electricity Transmission under the Resource Management Act. 

Consenting improvements for renewable electricity generation and transmission

New Zealand relies heavily on hydro power to generate electricity. When our existing hydro-power catchments don’t receive enough rainfall or snowmelt, the level of the storage lakes runs low. We call this lack of rainfall or snowmelt our ‘dry year problem’. When this occurs, some form of back-up is needed, and this is currently provided by fossil fuel generation.

As we transition from fossil fuels and increasingly rely on hydro, wind and solar, the dry year problem may expand to become a dry, calm and cloudy problem.

The New Zealand Battery Project is undertaking a significant programme of work to solve the dry year problem without using fossil fuels and support a pathway to 100% renewable electricity generation. The name, 'NZ Battery', refers to the manner in which the intended solution may provide stored energy for New Zealand’s electricity system, similar to the way a battery stores energy until it’s needed.

NZ Battery Project

The Government is developing an Equitable Transitions Strategy to help Aotearoa New Zealand tackle climate change challenges and to ensure opportunities in a low emissions future work for everyone. The strategy aims to support people through this period of change, lay the foundations for future decision-making, and uphold Te Tiriti o Waitangi. This will include proposed action areas to guide and support a fair and inclusive with a particular focus on those groups that are disproportionately affected by the transition.  

The Equitable Transitions Strategy is co-led by the Ministry of Business, Innovation, & Employment and the Ministry of Social Development. There will be a range of opportunities for interested parties influence the development of the Strategy and to share their views on the policies and measures needed to assist people to manage the impacts and seize the opportunities of the transition.

Equitable Transitions Strategy