A full decarbonisation of both the industry sector’s energy use and processes is possible by 2050.

Energy related emissions

Direct CO₂ emissions from energy demand in the industry sector have remained pretty much constant in the past few years at around 8 to 9 MtCO₂/yr. The 1.5°C pathways show emissions continuing to decline, except for the high energy demand low CDR reliance scenario where emissions peak and decline before 2030. Full decarbonisation of the sector could be reached by 2050 in the low energy demand scenario, where electricity (35%) and biomass (33%) play a large role. In terms of electricity, a 1.5°C benchmark requires New Zealand to have a nearly 100% renewables-based power sector by 2030. The country needs to phase out coal by 2023 and natural gas by 2032 to 2035 latest.

The high CDR reliance scenario demonstrates the option of having hydrogen cover 11% of energy demand by 2050. The government’s hydrogen vision outlines how renewable hydrogen can replace fossil fuels as a feedstock for industrial processes.²⁴

Process related emissions

Industry process related emissions decrease in all analysed scenarios, but decline rapidly in the high CDR reliance scenario, which shows an emissions reduction of 71% by 2030 from 2019 levels and 103% by 2050 where industry process emissions can reach net zero or below.

New Zealand has a number of policies aimed at reducing emissions in this sector, including an Emissions Trading Scheme (NZ-ETS) requiring industry to report and pay for emissions, and the Government Investment in Decarbonising Industry Fund (GIDI), a public-private partnership programme aimed at reducing industrial process emissions. While these measures were updated or implemented recently (2020 and 2021 respectively), their actual effectiveness is as of yet unclear. The CCC (Climate Change Commission) has made recommendations to improve the NZ-ETS regulation.

The government also has a policy to phase down HFCs and cut usage by 85% from 2020 to 2036.¹⁹ New coal boilers in manufacturing and production are prohibited since 31 December 2021.²¹ The government is considering banning new fossil fuel boilers where an economically viable alternative exists and proposed to phase out existing coal boilers by 2037.²¹ To make this possible, it has set aside a dedicated fund to support major companies across the country to replace their boilers and transition away from fossil fuels.

¹ Climate Action Tracker. New Zealand. November 2021 update. Climate Target Update Tracker. Climate Action Tracker. (2021).

² Ministry for the Environment. Te hau mārohi ki anamata Transitioning to a low-emissions and climate-resilient future Have your say and shape the emissions reduction plan. (2021).

³ Climate Action Tracker. New Zealand. September 2021 update. Climate Action Tracker. (2021).

⁴ Daalder, M. New Paris Target Might Actually Reduce Emissions, A Bit. Newsroom, (2021).

⁵ Gütschow, J., Jeffery, L., Gieseke, R. & Günther, A. The PRIMAP-hist national historical emissions time series (1850-2017). V.2.1. GFZ Data Serv. (2019).

⁶ United Nations Climate Change Secretariat. Summary Of GHG Emissions For New Zealand. 0–3 (2021).

⁷ Ministry for the Environment. New Zealand’s Greenhouse Gas Inventory 1990-2018. New Zealand Government. (2020).

⁸ Ministry for the Environment. New Zealand’s Fourth Biennial Report Under the United Nations Framework Convention on Climate Change. (2019).

⁹ Woods, M., Parker, D. & Shaw, J. Government delivers next phase of climate action. Beehive. (2021).

¹⁰ Ministry of Business Innovation & Employment. Energy in New Zealand 20. (2020).

¹¹ Climate Bonds Initiative. AUS & NZ Green Infrastructure list. Climate Bonds Initiative. (2018).

¹² Ministry of Business Innovation & Employment. Energy strategies for New Zealand. New Zealand Government. (2021).

¹³ EECA. Clean and Clever Energy Progress Report. (2020).

¹⁴ He Waka Eke Noa Steering Group. He Waka Eke Noa Discussion Document, Steering Group Discussion Document to support Partnership Targeted Engagement Nov/Dec 2021. (2021).

¹⁵ New Zealand Government. New Zealand’s Action on Climate Change. (2016).

¹⁶ New Zealand Government. Reducing government fleet emissions. New Zealand Government Procurement and Property. (2021).

¹⁷ New Zealand Government. Public sector to be carbon neutral by 2025. Beehive. (2020).

¹⁸ Ministry for Primary Industries. One Billion Trees Programme.

¹⁹ Beehive. New Zealand to phase down use of HFCs from 2020. Beehive. (2018).

²⁰ Ministry of Business Innovation & Employment. Unlocking our energy productivity and renewable potential : New Zealand energy efficiency and conservation strategy 2017-2022. (2017).

²¹ Woods, M., Parker, D. & Shaw, J. Government delivers next phase of climate action. Beehive. (2021).

²² Climate Change Commission. Ināia tonu nei : a low emissions future for Aotearoa. (2021).

²³ Woods, M. Major contract awarded to power NZ Battery investigation . Beehive. (2021).

²⁴ New Zealand Government. A vision for hydrogen in New Zealand, Green Paper. (2019).

²⁵ New Zealand Government. Building for climate change. Building Performance. (2021).

²⁶ Waka Kotahi NZ Transport Agency. Clean Car Discount overview. Waka Kotahi NZ Transport Agency. (2021).

²⁷ Ministry of Transport. Climate change — emissions work programme New Zealand Government. (2021).

²⁸ New Zealand Parliament. Land Transport (Clean Vehicles) Amendment Bill 2021: Bills Digest 2654. New Zealand Parliament. (2021).

²⁹ Ministry for the Environment. New Zealand’s projected greenhouse gas emissions to 2050. (2021).

³⁰ Including the residual methane emissions left from the separate methane target for 2050.

³¹ According to national projections, LULUCF emissions could reach -26 to -31 MtCO₂e by 2040. See the Government 2020 for LULUCF projection estimates.³⁰

³² While global cost-effective pathways assessed by the IPCC Special Report 1.5°C provide useful guidance for an upper-limit of emissions trajectories for developed countries, they underestimate the feasible space for such countries to reach net zero earlier. The current generation of models tend to depend strongly on land-use sinks outside of currently developed countries and include fossil fuel use well beyond the time at which these could be phased out, compared to what is understood from bottom-up approaches. The scientific teams which provide these global pathways constantly improve the technologies represented in their models – and novel CDR technologies are now being included in new studies focused on deep mitigation scenarios meeting the Paris Agreement. A wide assessment database of these new scenarios is not yet available; thus, we rely on available scenarios which focus particularly on BECCS as a net-negative emission technology. Accordingly, we do not yet consider land-sector emissions (LULUCF) and other CDR approaches which developed countries will need to implement in order to counterbalance their remaining emissions and reach net zero GHG are not considered here due to data availability.

³³ See the Climate Action Tracker for full explanation.

³⁵ Methane from agriculture and waste sectors.

³⁶ According to national projections, LULUCF emissions could reach -36 to -41 MtCO₂e by 2040. See the Climate Action Tracker assessment on New Zealand (July 2020 update) for assumptions on LULUCF projections.