The Prime Minister has doubled down on his insistence that the government will not spend billions of dollars offshore to meet New Zealand’s climate commitments.
Treasury estimates it could cost up to $5 billion to pay for the overseas carbon credits New Zealand needs to honour its Paris Agreement commitments.
An additional $1.6 billion may also be needed to pay for credits to meet a subsequent commitment, due by 2035.
The government was “gonna do everything we can” to honour the country’s Paris Agreement pledge to halve emissions by 2030, Christopher Luxon said.
“But just reassuring everybody, we ain’t shutting down farms and we certainly aren’t sending billions of dollars offshore.”
The Green Party said it was impossible for the government to meet the target with domestic climate policies alone.
It was time for Luxon be honest about whether the government was still committed to the Paris Agreement, and – if so – to explain how it would do that, co-leader leader Chlöe Swarbrick said.
“Are we genuinely, honestly going to meet the [target], do they genuinely, honestly commit us to doing that? Because if so, the reality is we will need to pay for offshore mitigation.”
New Zealand has the option of meeting its pledge to halve net greenhouse gas emissions by 2030 entirely with domestic policies.
However, the most recent analysis from the Ministry for the Environment showed that there was a shortfall of 84 million tonnes of emissions, that would need to be made up by paying other countries to offset their emissions instead.
Treasury has identified the potential cost of offshore credits to make up the gap as a specific fiscal risk to the government’s finances for several years now.
However, it has never put an official figure on the government books, because there was “no legal obligation” to meet the target and successive governments had not committed to any purchases.
A previous one-off analysis it prepared in 2023 put the cost at anywhere from $3 billion to $24 billion.
Last year, Treasury secretary Iain Rennie gave Green Party co-leader Chlöe Swarbrick an undertaking to update that analysis.
The new estimate narrows the range to $4.4b-$5 billion to meet the 2030 pledge, and $0.2-$1.6 billion to meet New Zealand’s next pledge to lower emissions by 51-55 percent by 2035.
That was based on the Ministry for the Environment’s 2025 emissions projections, with and without extra policies to reduce emissions.
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