The employee was one of only a few external experts asked to help develop the Government’s rules for buying overseas carbon offsets, which will determine how the country spends anywhere between $3.3 billion and $23.7 billion over the next seven years.
Climate Change Minister James Shaw said the person was chosen for their expertise, not specifically because they worked for the dairy giant, but didn’t supply any further detail.
The process has reignited concerns about the plan for a mass buy-up of carbon offsets, which is expected to cost billions under any scenario.
New Zealand has to solve the problem of how to get enough credits to meet the climate promises it has made on the world stage, at a cost it can afford, without falling into buying junk credits of little or no climate benefit.
The Government – backed by the independent Climate Change Commission – believes it can’t do anywhere near enough inside New Zealand to meet its targets, partly because the bulk of the country’s emissions are from meat and dairying.
There are just seven years left to vet and purchase millions of tonnes of carbon offsets from other countries, which could be anything from overseas tree-planting to renewable energy schemes.
Facing intense criticism for relying on overseas projects, Ministers asked a team at the Ministry for the Environment to draft rules ensuring the offsets have “environmental integrity”.
That integrity is crucial to New Zealand’s reputation – and the drafting team sought outside advice from a small group to steer their early thinking. A footnote to a mid-2020 briefing to Shaw, released to Stuff under the Official Information Act, named just three organisations as having contributed staff input to a “small expert group to help us develop principles and guidelines.”
They were policy think-tank Motu, which has published influential research on carbon offsets, climate-focussed US charity Environmental Defense Fund (EDF), which runs a carbon credit quality initiative, and Fonterra, New Zealand’s single largest greenhouse gas emitter.
Fonterra has experience at buying offsets from projects in New Zealand, Bangladesh and India (vetted by consultancy Toitu) for the Simply Milk brand, which it launched with Foodstuffs in 2020, though it’s not clear whether that is why the dairy giant’s expert was consulted.
Fonterra itself couldn’t find any specific information on the advice provided, though it said it supports exploring options for the offset market.
Told of the small, early consultation pool, Greenpeace’s Russel Norman asked why New Zealand environmental non-profits hadn’t been involved, when Fonterra and an overseas green group (EDF) had.
“There is a public interest in this issue, it’s public money. They’ve gone to Fonterra, and I guess fair enough – they’re a market player – but they haven’t gone out to any New Zealand environmental NGOs (non-governmental organisations) as representatives of civil society. NGOs have a public interest in this. Fonterra has a private interest,” he said.
“New Zealand has bet the bank on this thing (buying offshore climate action) rather than cutting emissions. It’s 2023 – seven years until we’re meant to have bought millions and millions of these offsets and we’ve done almost no work on it,” said Norman.
New Zealand will need to start buying overseas credits long before the 2030 deadline, because of the way its target is designed.
Stuff asked the Ministry for the Environment if it was appropriate to consult a major climate polluter early in the design process, as well as who was consulted and what kind of advice was supplied.
The ministry replied that these answers would need to be pursued under an Official Information Act request, which Stuff had already lodged.
Stuff asked Shaw the same question. He said the Fonterra staff member was asked to take part because of their knowledge and experience, not because they worked for Fonterra.
“When developing regulations it is standard practice for [the ministry] to consult with a wide variety of stakeholders, including NGOs, iwi/Māori, Government agencies and industry,” he said.
However, the 2020 briefing shows the design team at the ministry wanted to start ‘low key’ consultation with a wider group, including NGOs, Māori, foresters, Government agencies and polluters who buy New Zealand carbon credits under the Emissions Trading Scheme.
Shaw said no – telling the ministry to wait until after the 2020 election before consulting wider. As of April 2023, the ministry confirmed to Stuff that those wider discussions still hadn’t happened.
Many of these groups are deeply worried about the strategy of buying offsets, including their cost and environmental integrity. The ministry had hoped to soothe their fears by bringing them into discussions, the briefing shows.
Russel Norman, pictured during his days as a Green MP, with former Prime Minister John Key and the late Green Party co-leader Jeanette Fitzsimons at Parliament in 2009.
Where to from here?
The ministry said global negotiations over the ground rules for international carbon trading made progress in 2021, so it now had the “basics” in place on which to build New Zealand’s rulebook. It said it still intended to seek Cabinet’s approval to widen consultation to New Zealand green groups, Māori, industry and others, though it didn’t say when.
New Zealand is one of only a few countries relying as heavily on offsets from overseas to meet its international climate commitments, having been told that making deep cuts onshore would cause major economic and social upheaval.
One reason for this is the dominance of dairying and meat emissions (about 50% of total emissions as compared to the United Kingdom (10%), Australia (12%), the EU (12%), the USA (10%) and Canada (8%)). Planet-heating gases from farm animals are considered hard to cut deeply without fewer cows, and don’t yet incur an emissions price.
Other factors include a high share of transport emissions, and the fact that New Zealand’s electricity is already mainly renewable, meaning there are few coal-fired power stations to cull compared with other countries. There’s also the fact that the country is generally “late to the party” at cutting emissions (in the words of climate commission chair Rod Carr), so almost certainly won’t have done near enough domestically by 2030 to meet its promises under the Paris Agreement.
The future cost of carbon offsets, like those from these Te Awamutu pines, is wildly uncertain but almost certain to rise as countries ramp up their climate targets.
The cost and quantity of offsets is wildly uncertain – the more emissions are cut onshore, the fewer the Government needs to buy and the lower the financial unknown on the Government’s books.
Many offset schemes – particularly ones where people promise to protect trees that already exist – have been shown to do little or nothing extra for the climate, and, in general, better-quality offsets are more expensive.
The cost was labelled a “significant fiscal risk” in a recent report by Treasury and the Ministry for the Environment, set to be multiple billions over the period from 2024 to 2030 under any scenario.
Countries can only buy offsets from other countries if that country hasn’t already counted the same actions towards its own climate targets. As countries deepen their own commitments to climate action, there’ll be less leftover to sell, and the price of trading will rise.
Briefings to Shaw say New Zealand is already in talks with overseas candidates to supply carbon offsets. The ministry said it was too soon to divulge who they were talking to.
“We can’t give specifics at this time, as working with overseas entities is still under active consideration,” it said in an email. “Cabinet has directed officials to take a portfolio approach that prioritises sustainable development outcomes and resilience in the Asia-Pacific region.”
