A new paper released today by Motu Research, shows how Aotearoa New Zealand could work with other countries to accelerate global climate progress by funding offshore mitigation.

Successive New Zealand governments have committed to funding offshore emissions reductions. The country currently needs to finance at least 90 million tonnes of offshore mitigation to meet its 2030 goal under the Paris Agreement.

IMAGE: Motu

It’s a huge amount - nearly twice the country’s domestic emissions reduction target over the same period - with Treasury predicting it will cost between $3 billion and $24 billion.

It sounds like a lot of money - and it is - but the government under John Key fought hard to allow offshore mitigation at the UN’s 2015 negotiations, as making the emissions reductions at home was considered too much of a burden on New Zealand’s economy.

Experts still say that New Zealand can get more bang for its buck by funding emissions reductions offshore as well as doing everything possible to reduce climate pollution at home.

Catherine Leining, Motu Research policy fellow and co-author of the paper, says delivering on the international targets should be a win-win for New Zealand.

“Cooperating with other countries to deliver on the Paris targets will enhance Aotearoa New Zealand’s credibility under multilateral and trade agreements, create new market opportunities, and improve global outcomes.”

Leining is a former carbon markets negotiator for New Zealand at the UN talks. She is also a Climate Change commissioner, although stresses that her work for Motu does not represent the views of He Pou a Rangi Climate Change Commission.

Leining says recent comments from climate change minister Simon Watts, that writing a cheque for offshore mitigation is not politically ‘realistic,’ underlines the lack of social licence for funding offshore mitigation.

“I think some of the reporting on that just honed right in on the ‘not a political reality’ and you know what he was saying is that he's not hearing the social licence to send that kind of money offshore - and that's exactly what we're getting at in this paper: Why don't we have the social licence? And what would it take to secure the social licence?”

Leining is keen to open up that conversation. “I think what the Minister was reflecting is we don't have the social licence right now, and I can't disagree with him.”

But Leining’s report concludes the government has only two options: pursuing international co-operation, or failing to meet the target.

The research identifies four competing mindsets that are paralysing progress:

IMAGE: Motu

“By shifting to a mindset of ‘climate cooperation’, Aotearoa New Zealand could combine domestic climate action with funding for offshore mitigation, in ways that serve both national and global interests.”

Leining says she is really excited that Watts is stepping up to chair carbon market negotiations at the UN’s major climate conference, COP29, in a few weeks.

“Historically New Zealand has shown a lot of leadership in this space to help to shape effective options for this kind of climate cooperation, so I think it will put him right into the middle of the issues and the opportunities.

“I'm hoping that it will be very clear that this is not just a political reality, but also a climate imperative for lots of countries and it can and should be for New Zealand as well.”

New Zealand has always advocated hard for these options - and has also fought really hard for integrity in these options, Leining says. “Because it will help New Zealand to meet our [nationally determined contribution], but also because this is just incredibly important as a part of accelerating climate actions and sustainable development in developing countries.

“This is a really important mechanism for mobilising action and making it work well is really in everybody's interest.”

New Zealand could partner with other buyer countries to develop bilateral agreements that have a lot more impact than New Zealand might be able to be one its own. “That's what creates these exciting possibilities, is these partnerships… so we could go out with other countries, help to shift a whole sector in the country, not just undertake a handful of projects, but actually shift a sector in its development by leveraging the resources and the investment from multipliers.”

But New Zealand is lagging behind other countries in forging cooperative climate mitigation agreements - and risks a much higher price tag for emissions reductions by coming late to the party.

Eleven buyer countries and 48 host countries have already negotiated 90 bilateral agreements to transfer mitigation under the Paris Agreement.

To get started with offshore mitigation, the paper recommends the New Zealand Government make clear policy and funding commitments, adopt a portfolio approach, partner with other countries, start with pilot initiatives, and clarify the roles of the private sector and carbon markets.

“Climate cooperation is about boosting action beyond what we can and should be doing at home because the climate situation is dire, and we've got to bridge these gaps,” Leining says.

She is hoping her research will help shift people's thinking around the possibilities for international climate action. “I think a lot of people still hope that we can just do this domestically and the gap is just too big.”

TABLE: Motu