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.
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. New coal boilers in manufacturing and production are prohibited since 31 December 2021. 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. 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.