Revealed: The climate cost of Chris Hipkins’ U-turns and fossil fuel subsidies

The Government’s climate policy U-turns and fossil fuel subsidies have blown up roughly 16 per cent of the emissions reductions the Government had wanted to achieve by 2025 – and which it is still committed to.

A tallying-up of the emissions cost of the Government’s policy bonfire and fossil fuel subsidies puts their emissions cost at about 1,050,000 megatonnes of CO2 equivalent emissions over the three-year period of the first emissions budget, which lasts from 2022 to 2025.

That three-year budget is for net emissions of 290 megatonnes of carbon dioxide equivalent greenhouse gasses, or 72.4 megatonnes a year.

This budget would mean net emissions would be about 2 megatonnes a year less than the five-year average between 2017-2021 or 6 megatonnes a year over the three-year budget.

But one megatonne of those six will need to

Most of that comes from the binning of the “sustainable biofuels obligation,” which came in Hipkins’ first round of reprioritisations in February.

A regulatory impact statement for that policy, which would have blended zero-emissions fuel with ordinary petrol, estimated it would contribute about 1 megatonne of emissions reductions to the first budget.

The Clean Car Upgrade and the Social leasing scheme, binned on Monday, were meant to contribute 2500 and 2700 tonnes of emissions reduction over the first budget.

The Herald can also reveal the emissions impact from another one of the Government’s policies: Answers to Written Parliamentary Questions from Julie Anne Genter have estimated the fuel subsidies in place since last March will contribute 35,000-83,000 tonnes of additional CO2 equivalent emissions for the period to June 30, 2023, when they are currently slated to expire.

Hipkins said on Monday that the Government was still committed to the emissions budgets.

“Our emissions reductions targets have not changed, so where we are making changes that potentially mean that we have to find savings in other areas, then that’s what we’ll do,” Hipkins said.

He said that the policies the Government had axed did not actually contribute a great deal to the Government’s emissions reduction goals, and he could get better value for money elsewhere.

“To put this into perspective: across the two — the clean-car upgrade and social leasing schemes — that we’ve announced today that we’re not going to be progressing with, we’ve been talking around 7,000 tonnes of reductions during the first emissions budget period.

“To put that into context, we’re aiming to reduce emissions by about 1.2 million during that same period through the GIDI scheme, and about 183,000 through the State sector decarbonisation work.

“To put this into perspective: across the two — the clean-car upgrade and social leasing schemes — that we’ve announced today that we’re not going to be progressing with, we’ve been talking around 7,000 tonnes of reductions during the first emissions budget period. To put that into context, we’re aiming to reduce emissions by about 1.2 million during that same period through the GIDI scheme, and about 183,000 through the State sector decarbonisation work.”

It came as the first Emissions Trading Scheme auction of the year failed for the first time in the history of the scheme.

The clearing price did not meet the confidential reserve price, meaning there were no winning bids.

There were 4.475m units on offer and all of these will now roll over to the next auction in June.

The ETS price has been trending down recently. The previous ETS auction saw units trade at $79.00, but ahead of the most recent auction, the spot market was trading at just below $64 a unit.

Climate Change Minister James Shaw agreed the auction’s failure was a sign market participants did not have faith the Government would be as ambitious in its decarbonisation goals as they believed last year.