Carbon News
  • Members
    • Login
      Forgot Password?
    • Not a member? Subscribe
    • Forgot Password
      Back to Login
    • Not a member? Subscribe
  • Home
  • New Zealand
    • Politics
    • Energy
    • Agriculture
    • Carbon emissions
    • Transport
    • Forestry
    • Business
  • Markets
    • Analysis
    • NZ carbon price
  • International
    • Australia
    • United States
    • China
    • Europe
    • United Kingdom
    • Canada
    • Asia
    • Pacific
    • Antarctic/Arctic
    • Africa
    • South America
    • United Nations
  • News Direct
    • Media releases
    • Climate calendar
  • About Carbon News
    • Contact us
    • Advertising
    • Subscribe
    • Service
    • Policies

Govt finances still don’t recognise climate liability

17 Oct 2024

PHOTO: Queenstown New Zealand

 

Treasury has failed to recognise a liability for New Zealand’s international climate commitments in its latest financial statement, with its position unchanged on the multibillion dollar price tag of purchasing offshore mitigation.

Experts have argued that the government’s books need to recognise a liability for buying carbon units offshore to meet international obligations, with billions of dollars of spending needed to meet the first nationally determined contribution (NDC) to 2030.


The obligation to purchase offshore carbon mitigation under the Paris Agreement is not currently being recorded in Crown accounts. But the amount is significant, with Treasury last year estimating a cost ranging from $3.3 billion to $23.7 billion.

 

And New Zealand is lagging behind in sealing deals with other governments to meet its obligation.


However, Treasury has for the first time included a detailed explanation of its position on the NDC in its financial statement, explaining its current accounting treatment of New Zealand’s commitment to the Paris Agreement.


It says that to include a liability in the financial statements there must be an obligation (legal or constructive) that is both “probable” and “reliably measured”.

 

“New Zealand has a legal obligation as a Party to the Paris Agreement to prepare, communicate, and maintain successive NDCs that it intends to achieve. This does not extend to an obligation to meet the NDC.”


It notes external commentators have suggested that the constructive obligation has been meet by pointing to:

 

  • Successive government’s commitments to meet the NDC1 target which has been reiterated by the current government.
  • The NZ-EU Free Trade Agreement which includes an obligation ‘to refrain from any action or omission that materially defeats the object and purpose of the Paris Agreement’.
  • The acceptance of the Climate Change Commission’s advice on the level of the first emissions budgets.
  • When setting the INDC (2015) and NDC1 (2021) the Government’s notified intention to complement domestic action with international cooperation to meet NDC1.


However, Treasury says that these actions and statements are in the nature of “a demonstration of intent”.


They note that the government has not yet formulated a plan for international cooperation necessary to achieve the NDC. “Without that specificity, there is not yet a valid expectation for accounting purposes that NDC1 will be met through offshore purchases, a constructive obligation is not yet present, and it is not yet appropriate to report a liability in these financial statements.”


Treasury says it will review this position as circumstances and government policies develop. “The intention is that the accounting fairly reflects current policy rather than being a driver of it.”


The estimated shortfall in meeting NDC1 from projected domestic emission reductions is currently 93 Mt, as estimated in the draft second emissions reduction plan.


The Auditor-General also reviewed Treasury’s assessment of whether a liability should be recognised for the NDC commitment, concluding that not recognising a liability at this point of time is a reasonable interpretation.


But the Auditor-General did note that this issue is reported as a key audit matter because of the judgement required - and increasing public interest.


Treasury also includes commentary around the possible 2030 price per tonne of potential international mitigation, based on the Intergovernmental Panel on Climate Change Scenarios Data Explorer, ranging from $12.65 to $303.



Ben Taylor, who works in ESG advisory, commented that Treasury’s statement prompts questions about the government’s approach to meeting the NDC. “If a specified plan is published by the Government on how it will achieve NDC1, would this then likely meet [Treasury’s] constructive obligation criteria?”


New Zealand’s first Biennial Transparency Report under the Paris Agreement is due by 31 December 2024. This represents the first official communication tracking progress towards New Zealand’s first NDC.

print this story


Story copyright © Carbon News 2024

Related Topics:   Carbon Credits Carbon prices Emissions trading Green finance Greenhouse Effect Paris Agreement Politics United Nations

More >
New Zealand
More >

Debanking debate heats up as deadline looms for submissions on NZ First bill

Tue 1 Jul 2025

By Shannon Morris-Williams | The debate over so-called “woke banking” is back in the spotlight as the deadline approaches for public input on NZ First’s Debanking Bill.

NIWA forecaster Chris Brandolino tracking the 'subtropical river of moisture' that was set to drench the country

Govt policy going backwards on protecting communities from climate-fuelled flooding, say campaigners

Tue 1 Jul 2025

Extreme flooding at the top of the South Island demonstrates the dangers of the government’s ‘growth at any cost’ agenda, according to freshwater campaigners.

SolarZero liquidation complex - but sale possible

Tue 1 Jul 2025

It will likely take a long time to sort out the complexities around the liquidation of SolarZero, with a series of claims against the company adding to the myriad complexities in arrangements set up to manage its contracts and obligations.

Mangroves' overlooked climate role

Mon 30 Jun 2025

By Shannon Morris-Williams | New Zealand’s mangrove forests are pulling tens of thousands of tonnes of carbon from the atmosphere each year, yet their climate benefits remain unrecognised in national emissions reporting.

Bill to limit farm-to-forest conversions passes first reading

Fri 27 Jun 2025

By Shannon Morris-Williams | The government's bill aiming to limit farm-to-forestry conversions in the Emissions Trading Scheme passed its first reading in Parliament this week, however concerns were raised over rushing it through under urgency, with less than two weeks allowed for public submissions.

IRD will stop using wetland destruction in ‘how-to’ for claiming expenses

Fri 27 Jun 2025

By Liz Kivi | Environmental organisation Forest & Bird has welcomed the Inland Revenue’s decision to stop using wetland destruction as an example of a tax-deductible agricultural expense in future guidance.

The new bund is providing some protection to Amberley Beach residents for now.

Council land banks to prepare for future disasters

Fri 27 Jun 2025

By David Hill, Local Democracy Reporter | In a "uniquely Hurunui" move, a North Canterbury council is land banking to prepare for future natural disasters and the threat of climate change.

Pre-trial skirmishes kick off in groundbreaking climate case

Thu 26 Jun 2025

By Vernon Rive | The Supreme Court’s February 2024 ruling clearing the way for Māori climate spokesperson Mike Smith’s tort claims against a group of New Zealand ‘carbon majors’ to proceed to trial has set the stage for years of protracted, contentious litigation.

NZ climate reports must shift from compliance to strategy as Scope 3 disclosures loom

Thu 26 Jun 2025

By Shannon Morris-Williams | New Zealand’s largest climate-reporting entities are being urged to evolve their mandatory disclosures from checklist-style compliance to strategic, risk-focused documents, or risk falling behind.

NZ quits Beyond Oil and Gas Alliance

25 Jun 2025

By Liz Kivi | The New Zealand government has quietly withdrawn from an ambitious coalition to phase out fossil fuels, with a $200 million publicly-funded subsidy for new gas fields the latest policy in conflict with that goal.

Carbon News

Subscriptions, Advertising & General

[email protected]

Editorial

[email protected]

We welcome comments, news tips and suggestions - please also use this address to submit all media releases for News Direct).

Useful Links
Home About Carbon News Contact us Advertising Subscribe Service Policies
New Zealand
Politics Energy Agriculture Carbon emissions Transport Forestry Business
International
Australia United States China Europe United Kingdom Canada Asia Pacific Antarctic/Arctic Africa South America United Nations
Home
Markets
Analysis NZ carbon price
News Direct
Media releases Climate calendar

© 2008-2025 Carbon News. All Rights Reserved. • Your IP Address: 216.73.216.119 • User account: Sign In

Please wait...
Audit log: