Sustainability and Climate Change Update
Topics covered in this article: RMA, RMA & Local Government, Sustainability & Climate Change
Special Counsel
Phone: +64 7 927 0522
Email: rzame@clmlaw.co.nz
Bachelor of Laws, Bachelor of Science, University of Otago
There is a lot happening in the Climate Change and Sustainability space - for this December update we provide a selection of topics below:
- Complete overhaul of the RMA – submissions due early February 2023.
- Restrictions on councils having regard to the effects of greenhouse gas discharges (GHG) on climate change now removed from the RMA
- Court of Appeal says end use of plastic bottles not relevant in water bottling case
- High Court says climate targets ‘aspirational’
- Agricultural emissions pricing – Ministers report released
- Across the ditch – Australian Securities and Investment Commission cracks down on ‘greenwashing’ – taking its first action
Complete overhaul of the RMA – submissions due early February 2023
Most will be aware that the government has proposed a complete overhaul of the RMA, following on from the recommendations in the Randerson Report back in 2020. Two bills were introduced to Parliament in November and are now before the Environment Select Committee and open for submissions:
- Natural and Built Environment Bill (NBEB); and
- Spatial Planning Bill (SPA).
A third bill, to deal specifically with climate change related matters including managed retreat, is due to be introduced into Parliament next year.
The changes to the legislation are significant and complex, and the submission period is very short (submissions due by 5 February 2023, although an extension can be sought on a case-by-case basis). Our specialist Resource Management Team has been following the bills from the genesis in the Randerson Report, through to the exposure drafts and now the release of the Bills. You can read more about the Bills here https://www.cooneyleesmorgan.co.nz/NBEB-and-SPB-first-reading-in-parliament.
In relation to climate change more specifically, climate change matters including “the reduction of greenhouse gas (GHG) emissions, removal of GHG from the atmosphere and the reduction of risks arising from, and better resilience of the environment to, natural hazards and the effects of climate change” are listed as ‘system outcomes’ which must be provided for in the national planning framework (NPF) and the new plans. However, there are a number of other ‘system outcomes’ listed in the NBEB, with no priority between them. As such, conflicts between climate change matters and other system outcomes would have to be resolved at the NPF stage.
The Bill also provides for extinguishing ‘existing use rights’ where rules in a plan are introduced to address climate change associated or natural hazard risks. That is considered a helpful step forward, given the complexity of managed retreat associated with Matata which required a special regional council plan change to remove existing use rights, which was a novel approach. The Bill also provides for a review of resource consent conditions on climate change grounds. The intention appears to be that the NPF could direct a review of the duration of a resource consent in such situations.
Given the importance of the Emissions Reduction Plan (ERP) and National Adaptation Plan (NAP) to New Zealand’s journey towards net-zero and ability to address a changing climate, there is a surprising lack of reference to these documents within the NBEB (and no reference at all within the SPA). Adaptation matters will likely be addressed through the Climate Adaptation Bill, when that is introduced to Parliament. However, the only reference to ERP that we could locate was a requirement that recommendations on the NPF be ‘not inconsistent with’ the ERP. That is surprising given the ERP itself contains a number of references to ‘key actions’ being the improvement of the current resource management system to promote GHG emission reductions and climate resilience.
If you need help drafting your submission, or you would like to understand the changes and how it will affect your business, please feel free to contact a member of our Resource Management team.
Councils can now have regard to the effects of GHG discharges on climate change
From 30 November 2022 provisions in the RMA have been repealed which previously:
- Precluded regional councils from having regard to the effects of discharges of GHG on climate change when making discharge rules in plans; and
- Precluded consent authorities from having regard to the effect of GHG discharges on climate change when considering discharge and coastal permits.
Back in 2021 the government consulted on plans to phase out fossil fuels in process heat, and Cabinet agreed on a new National Environmental Standard (NES) and National Policy Statement (NPS) that would set out nationally consistent policies, rules and requirements. These provisions were supposed to help guide regional councils when making decisions on industrial GHG emissions. Unfortunately that national direction has not been forthcoming, and councils are now faced with a situation where the statutory restriction has been lifted but there is a national policy vacuum. The Ministry for the Environment’s website now notes that drafting of national direction is in progress and final decisions will be made by Cabinet in the first half of 2023. Given that reform of the RMA is currently underway, it is unclear whether the intention is that this will be incorporated into the first NPF envisaged by the draft bills.
End use of plastic bottles not relevant in water bottling case
The Court of Appeal has recently released its decision on the Creswell water bottling matter. The Court upheld the Council’s decision to grant consent to take water from an aquifer for the water bottling plant even though this would enable Creswell to produce up to 144,000 bottles per hour. Local tangata whenua and an environmental group had appealed, arguing that the Council (and the Courts) should have considered the effects of plastic bottle disposal when granting consent.
The Court referred to five ‘conceptual difficulties’ in bringing plastic bottle disposal into the range of relevant effects:
1. Disposal is not something that would be authorised by the resource consent or for which any permission is needed under the RMA.
2. Disposal is an action of those who have purchased the water, rather than the resource consent holder.
3. Disposal in NZ would either be lawfully done by a recycling scheme or (ultimately) through an authorised landfill (which is subject to its own regulatory controls). Unlawful discarding would be a breach of the Litter Act and could be regulated by that legislation.
4. Disposal overseas (lawful or not) is too remote to be taken into account by a consenting authority under the RMA.
5. Even if export could be taken into account, it would be impossible to quantity effects and assess the impact. Any attempt to impose a condition would not be justified as fairly and reasonably relating to the water take consent.
The Court also considered (following the reasoning from Buller Coal) that a ‘tangible impact’ would need to be demonstrated by evidence i.e. it would need to be shown that attempting to control the use of plastic bottles through an individual resource consent would have a tangible impact on the wider environmental issues arising from plastic bottle disposal.
High Court says climate targets in the CCRA ‘aspirational’
At the end of November the High Court issued its judgment dismissing a judicial review challenge brought by Lawyers for Climate Action New Zealand (LCANZ) against the Climate Change Commission’s (Commission) advice to the government. The High Court confirmed that the Commission’s advice can be subject to judicial review, which may pave the way for future challenges to advice provided by the Commission.
More significant is the Court’s finding that the statutory purpose of the Climate Change Response Act 2002 (CCRA), to ‘contribute to’ the 1.5°C goal, is “more consistent with an aspiration rather than an obligation”.
The Court accepted the Minister’s submission that there is a ‘distinction to be made between international obligations and political commitments although political commitments may still be relevant considerations under the statutory framework.´ The Court stated that the international obligation under the Paris Agreement is to prepare and maintain the nationally determined contribution (NDC) and related reporting obligations. ‘Contributing to’ the goal does not require New Zealand’s international obligations to be met via the emissions budget. Rather the NDC is the vehicle to meet the international law obligations, and that may be met by a combination of domestic mitigation measures through the CCRA and offshore mitigation.
The judgment can be found here: https://www.courtsofnz.govt.nz/assets/cases/2022/2022-NZHC-3064.pdf
Although the case was ultimately unsuccessful, it is reflective of a growing global trend of litigation challenging governments’ decisions on climate change, and will likely have reverberations beyond the decision. The Court specifically noted that LCANZ were correct that the Commission’s advice did not put New Zealand on track to meeting the Intergovernmental Panel on Climate Change (IPCC) pathways. The Minister for Climate Change has already indicated he will review the CCRA as a result of the Court’s decision.
Agricultural Pricing Emissions – Ministers report released
We have written extensively on the government’s proposal for pricing agricultural emissions, including our most recent article here:
https://www.cooneyleesmorgan.co.nz/pricing-agricultural-emissions-government-proposal
The provisions of the Climate Change Response Act (CCRA) required the Climate Change Minister and Minister of Agriculture to report on a system for pricing, as an alternative to the ETS, by 31 December 2022. That report was released today (21st December) (Report).
The Report notes that final policy decisions on the agricultural emissions pricing system will be made in early 2023, followed by legislation to give effect to those decisions.
We will undertake a more detailed review of the Report earlier next year, but at this point note the following:
- A farm-level, split-gas levy (pricing biogenic methane and nitrous oxide separately) still remains.
- The most significant change appears to be that the prices are intended to be ‘as low as possible.’ The Report refers to ‘relatively low, unique prices’ to be set initially for five years, based on set criteria.
- The proposed price pathway would be set for 5 years, with a review after 3 years
- A sequestration strategy would be developed to determine the details of how sequestration is accounted for and rewarded within the pricing system.
- An interim approach would be taken for rewarding sequestration through a declaration based system from 2025, followed by a transition to the NZ ETS. At the minimum, sequestration from riparian plantings and from increases in carbon from indigenous forest linked to specific management interventions will be included from 2025.
- Revenue recycling (i.e. recycling revenue back into the system) is retained, in line with a strategy outlining spending priorities to mitigate agricultural emissions and operate the system.
Watch this space for further updates…..
Across the ditch – Australian Securities and Investment Commission (ASIC) cracks down on ‘greenwashing’
‘Greenwashing’ is where a company or fund overrepresents the extent to which their practices are environmentally friendly, sustainable or ethical. Earlier this year ASIC identified ‘sustainable finance / greenwashing’ as one of its nine ASIC focus areas for 2022-23. ASIC has recently taken its first action for greenwashing against listed energy company Tlou Energy Limited (Tlou).
Tlou has paid AU$53,280 to comply with four infringement notices issued over concerns about alleged false or misleading sustainability-related statements made to the Australian Securities Exchange (ASX) in October 2021. The infringement notices related to statements and images made by Tlou which claimed:
- Electricity produced by Tlou would be carbon neutral;
- Tlou had environmental approval and capability to generate certain quantities of electricity from solar power;
- Tlou’s gas-to-power project would be ‘low emissions’; and
- Tlou was equally concerned with producing ‘clean energy’ through the use of renewable sources as it was with developing its gas-to-power project.
ASIC was concerned that Tlou either did not have a reasonable basis to make the representations, or that the representations were factually incorrect. Tlou paid the infringement notices, but payment of the infringement notice is not an admission of guilt or liability.
In New Zealand, the Financial Markets Authority (FMA) regulates New Zealand’s financial markets. Earlier this year, it also signalled concerns about Kiwisaver and other managed funds ‘blurring the line’ on ethical investments, and highlighted the regulatory tools at the FMA’s disposal, from ‘stop’ or interim orders, through to legal action.
If you would like to discuss any of the matters listed in this final update for 2022, please contact Rachael Zame, Senior Associate, Local Government and Resource Management Team.
Latest Update: 21 December 2022
