On 31 December 2021 past prohibitions on considering the direct and indirect effects of greenhouse gas emissions and climate change in decision-making will be removed from the RMA. The ramifications of that change are significant for those seeking resource consents or a plan change where climate change could be raised as an issue. The Ministry for the Environment (MfE) has published a consultation paper Phasing out fossil fuels in process heat: National direction on industrial greenhouse gas emissions (Consultation Paper) about how this new approach could work.

Those with emissions, particularly those who use process heat, will need to ensure the proposals provide adequate certainty about the level of information needed for resource consent applications and private plan changes and reduce parameters for possible climate action litigation.

Direction and guidance are proposed to fill the void

The Consultation Paper proposes national direction on industrial greenhouse gas emissions (targeting coal) and non-statutory guidance on how other direct and indirect greenhouse gas emissions should be considered in consenting and planning decisions. The proposals will affect all businesses that emit or plan to emit greenhouse gases as a by-product of their operations, particularly those operating on coal-fired heating systems.

We comment on MfE’s proposals in further detail below and what they may mean for your business.

National direction on industrial greenhouse gas emissions will target coal

MfE has proposed national direction on industrial greenhouse gas emissions, focussing on emissions from the burning of fossil fuels for ‘process heat’. This is where MfE sees significant opportunity to reduce emissions and support New Zealand to meet its first set of emissions budgets under the Climate Change Response (Zero Carbon) Amendment Act 2019 (CCRA). Coal in particular is being targeted because it is the most emission-intensive fuel and is a low-cost fuel.

The ‘preferred option’ outlined in the Consultation Paper is a National Environment Standard (NES) supported by a targeted National Policy Statement (NPS) to regulate industrial greenhouse gas emissions.  Under this proposal:

• NPS provisions could provide policy direction regulating the discharge of greenhouse gas emissions. For example, they could require that greenhouse gas emissions from uses of certain fossil fuels are prohibited, setting limits on the contents of regional plans and establishing matters for local authorities to consider when assessing resource consent applications.
• NES provisions could prohibit the discharge of greenhouse gas emissions from the burning of certain fossil fuels and set nationally consistent rules for the discharge of greenhouse gas emissions (including maximum consent durations e.g. 5-10 years).
• The government’s recently announced ban on coal-fired boilers will likely be implemented. New low and medium temperature coal-fired boilers are expected to be banned from the end of 2021, and existing boilers phased out by 2037.
• MfE is also proposing to phase out the use of other fossil fuels in existing sites through re-consenting processes and best practice requirements. No phase-out date is specified. Policies and rules are also proposed to avoid the discharge of greenhouse gas emissions from new fossil fuel assets (excluding coal) for low and medium temperature process heat requirements.  The Consultation Paper sets out a variety of different approaches to achieve this outcome including emissions volume thresholds and various exemptions.
• Consistent with MfE’s desire to phase out the use of other fossil fuels, it is proposed that industrial sites (above a certain threshold) will be required to prepare and implement a greenhouse gas emissions plan to encourage energy efficiency and the update of best practices, and transition fossil fuel assets to low emissions energy sources over time.
• Low greenhouse gas emitting process heat sites (defined as sites operating fewer than 400 hours per year or emitting below a specific threshold) will be excluded from scope on the basis they do not emit significant quantities of greenhouse gas emissions. Emissions from electricity generation and waste are also excluded from scope.
• It is not clear if commercial sector space and water heating (with appropriate size thresholds) will be captured by the proposals. MfE is seeking feedback on this particular aspect.

MfE’s intention with the combined NES/NPS is to ensure a level of national consistency and certainty in the management of greenhouse gas emissions under the RMA, without local authorities needing to initiate plan changes.  MfE wants to provide policy direction and implementation requirements to avoid complex and costly case-by-case assessments where applicants can argue the effects of their individual greenhouse gas emissions on the environment and climate change are negligible.

Non-statutory guidance on other direct and indirect greenhouse gas emissions in consenting and planning decisions

MfE has proposed developing guidance or policy direction on how local authorities should assess other direct and indirect greenhouse gas emissions in planning and consenting decisions under the RMA.

This guidance is proposed to include clarification on how cumulative emissions and offsets of emissions are addressed, how wider climate change policies and targets should be considered, the extent to which the permitted baseline should be considered and guidance on how to consider the ‘net’ greenhouse gas emissions from a proposal. The guidance would also cover how to consider greenhouse gas emissions when preparing plans and policy statements and when considering private plan change requests.

MfE’s preferred option is the development of non-statutory guidance. This is intended to be an interim measure until a more fulsome package of national direction on climate change is developed through the comprehensive resource management system change that MfE is currently undertaking.

Non-statutory guidance could present some problems. Consenting authorities are not directly required to give effect to non-statutory guidance under the RMA and could potentially disregard it when making decisions (including on resource consent applications) leading to inconsistent application by local authorities within and across regions.   Guidance does not have the same weight as regulation when issues are considered by the courts.  While this guidance is only an interim measure, it is a particularly ‘soft’ approach to regulating ‘other direct and indirect’ greenhouse gas emissions.

The manufacturing sector will be most affected

The proposals will affect all businesses that emit or plan to emit greenhouse gases as a by-product of their operations.

The manufacturing sector (particularly food and beverage) and those that currently rely on and combust coal are expected to feel the biggest impact. The mining, gas, biofuels and electricity sectors will be impacted to different degrees depending on the type of industrial systems they operate and accessibility to low emissions energy sources.

Capital expenditure will be required to replace existing infrastructure and may face increased costs of low emissions energy sources.

The Government Investment in Decarbonising Industry Fund is addressing some of the impacts to industry by providing funding to New Zealand-based private sector businesses to accelerate the decarbonisation of industrial process heat.  Applications for the next round of funding are expected to open in mid-April.

Have your say

MfE’s intention is that national direction (and non-statutory guidance) is in place by 31 December 2021 when the amendments in the RMA relating to climate change mitigation take effect. This is intended to support local authority decision-making and will also align with the timeframes to produce the first emissions reduction plan under the CCRA.

MfE is consulting on its proposals until 20 May 2021 and feedback can be provided via MfE’s website.

Please get in touch with one of our experts if you require assistance in understanding how the proposals will affect your business or in drafting a submission on the proposals.