New Zealand’s rate of emissions reduction will need to more than double over the next few years to meet the country’s climate goals, according to the latest Climate Change Commission annual emissions monitoring report released today.
The report finds emissions reduction progress stalled in 2024, and is not falling fast enough to meet the country’s climate goals.
“This is a clear warning sign. Emissions are gradually falling but progress stalled in 2024, and current policy settings are not delivering at the pace needed. Government choices in the next 12-24 months will be critical to getting the country back on track,” says Climate Change Commission (CCC) Chief Executive, Jo Hendy.
The report found that risks to New Zealand’s climate goals for the next decade have increased, stating the second and third emissions budgets are “at high risk”, and the 2030 biogenic methane target is “unlikely to be met”.
“Risks have increased especially for agriculture, electricity generation, and transport – this is also where some of the greatest opportunities for reductions can be found.”
The Commission report makes two recommendations:
Recommendation 1: that the Government takes action to address market barriers and failures within the next year to ensure it can meet its emissions goals including:
- start determining how to incentivise further emissions reductions and removals in the 2030s given that the New Zealand Emissions Trading Scheme in its current form will struggle to do this.
- for the primary sector: immediately scale up support measures to meet the 2030 biogenic methane target; and reduce barriers for high-value, low-emissions agricultural products for long-term reductions and resilience
- expand resource recovery facilities, services and planning, and extend landfill gas capture requirements to class 2 landfills
- encourage electric vehicle uptake through strong supply- and demand-side measures, and support greater shifts to public and active transport
- address upfront cost barriers to fuel-switching for households and businesses.
Recommendation 2: that the Government update its approach to emissions projections to ensure they provide a robust indication of likely future policy impact.
In some areas (agricultural technology, forestry on Crown-owned land and LFG capture), the assumptions underlying the projections do not appear to be driven by a realistic assessment of current policy. While scenarios provide useful information, there is a need for robust modelling based on evidence about how much different policies can reduce emissions, the report states.
The Commission says New Zealanders are already experiencing the impacts of a changing climate and choices made now will affect how quickly the country cuts its own emissions, and how well households, businesses and communities are positioned to manage future shocks.
The annual report highlights practical examples where available low-emissions technologies can reduce costs.
“EVs are cheaper to run than petrol vehicles, and upfront costs have dropped. For comparable compact SUVs, EV owners can save about NZ$7,500 over five years. In parts of Australia (where about a third of households have solar), rooftop solar and battery systems are helping reduce regulated electricity prices by up to 10%. It’s now generally cheaper for businesses to buy and run a new industrial heat pump than continue running a fossil-fuel low-temperature boiler,” the report states.
Separately, research released earlier this year by the Sustainable Business Council and Climate Leaders Coalition estimated that earlier decarbonisation could contribute NZ$22 billion per year to GDP in less than a decade.
“But roll-out in Aotearoa New Zealand is lagging. This isn’t just a missed opportunity to reduce emissions, it means that households and businesses may be paying higher energy costs than they need to. Slow or delayed action also restricts the country’s future options,” says Ms Hendy.
The Commission says people are missing out on savings and reducing their exposure to future energy risks because upfront costs and other barriers prevent households and businesses from switching away from fossil fuels.
It says the Government has low-cost options to address these barriers. These include targeted funding and financing mechanisms, stable investment signals for markets and consumers, and better information to support household and business decisions.
“The Government has already taken useful steps to reduce upfront cost barriers, including low-interest loans for EV charging and the gas transition loan scheme. The question now is how to build on them quickly enough to support the scale of change needed,” says Ms Hendy.
“It’s not just about what the Government spends money on, but also the signals it gives. Clear and stable policy settings help households, businesses and investors make decisions with confidence. The goal should be to avoid getting locked into expensive long-run options. Infrastructure and other long-lived investments that support low-emissions choices are generally cheaper to get right early than to retrofit later.”
The 179-page 2026 report is available here.
