The drive to decarbonise industry and further accelerate preparations for a sustainable, more resilient future will get
a boost from the Climate Emergency Response Fund in Budget 2022 by supercharging efforts to encourage the switch to
cleaner energy options and transform the energy system.
“Today is a momentous day which shows we can secure New Zealand’s long-term energy future with an ambitious package of
measures to help slash emissions, and ensure we seize the economic opportunities that come with the transition to a
low-emissions world,” Megan Woods said.
“Rising global energy prices we cannot control show we must wean ourselves off expensive fossil fuels, scale up our
ambition to decarbonise industry, and future proof our energy system, to ensure that a cheaper, more secure energy
supply becomes the norm.
“Emissions from our energy and industry sectors make up 27 percent of our total emissions. That’s why we are committing
to significantly expanding the Government Investment in Decarbonising Industry Fund or GIDI, which sees the Government
partner with major process heat energy users, helping them cut costs as well as emissions.
“Our clean and green reputation is an international draw card, but many businesses still use fossil fuels. Ensuring our
businesses are run on, and produce products made with renewables will be critical to maintain our leading business edge.
“We’re investing around $650 million over four years to massively increase the size of the funding available to the GIDI
programme, which means we can expand the number and type of projects that receive money, including high impact
decarbonisation projects of national significance.
“There will also be targeted investment at a regional level for projects that optimise low emission fuel use, funding
for electricity transmission and distribution infrastructure upgrades to support fuel-switching, and the early adoption
of high decarbonisation energy technologies. It’s a huge win for our businesses who are looking at innovation to stay
ahead of the curve.
“The original $69 million GIDI fund has been a huge success having helped fund 53 major industrial decarbonisation
projects – all contracted for completion by April 2024 and over their lifetime are estimated to save 7.46 million tonnes
of CO2, equivalent to taking 134,800 cars off the road.
Climate Change Minister James Shaw said the transition to clean, green energy alternatives is a key part of the
Emissions Reduction Plan, also announced today, and fundamental to New Zealand’s journey to net zero.
“The funding announced today builds on substantial investment over the last four years to help businesses move over to
cleaner, more affordable, more efficient energy choices. Businesses all over Aotearoa are finding that in so doing, they
are able to not only cut emissions, but also improve their profitability.
“There are tremendous gains to be made in cutting emissions associated with our energy sector. Once again, there is a
golden opportunity to do that in a way that makes people’s lives better with lower bills and warmer homes. A new
national energy strategy will help ensure that our transition to a zero-carbon economy benefits everyone,” James Shaw
said.
Budget 2022 also includes support for an energy efficient equipment scheme that will help businesses to buy and install
high efficiency electrical equipment used for industrial and commercial processes, including specifically electric
motors and electric heat pumps.
Another component will help commercial buildings replace fossil fuel use for space and water heating, and be more energy
efficient.
“We know there’s a growing list of businesses that are keen to hurry up and decarbonise their products and services, but
that cash-flow can be a barrier. This will encourage businesses, including small businesses, farms and factories, to
purchase equipment with the highest efficiency rather than the less efficient, cheaper alternatives,” Megan Woods said.
“The expanded programme is estimated to deliver projects that will make up around one sixth or 17 percent of our total
emissions reductions required between 2022 and 2025, and around one third or 35 percent of our emissions reductions
required between 2025 and 2030, so it is doing some heavy lifting for our climate goals,” Megan Woods said.
Budget 2022 will also invest in developing major strategies to achieve the Government’s vision for a net-zero economy in
2050, where energy is accessible and affordable, secure and reliable, and supports New Zealanders’ wellbeing.
Almost $18 million over three years will support the transition to a low carbon economy through the development of an
energy strategy, a regulatory framework for offshore renewable energy, and a roadmap for development and use of
hydrogen.
“In plotting the next steps to slash emissions in the energy sector we need to do more to address strategic challenges,
and signal pathways away from fossil fuels. We are looking to a National Energy Strategy to provide some of the sought
after certainty industry and consumers have been asking us for, on our journey to net zero 2050,” Megan Woods said.
In addition approximately $5 million over two years will provide funding to develop measures that support a reliable and
affordable electricity supply while accelerating the move to a highly renewable electricity system, and to explore the
potential for public sector procurement of renewable electricity via long term power purchase agreements, or PPAs.
“These long term PPA contracts could fundamentally change the electricity landscape, by leveraging the buying power of
Government to help unleash new renewable generation.
“Removing fossil fuels will require the transformation of every sector of our economy but we must be ambitious so we can
reap the unprecedented economic benefits, including green jobs, that the latest clean technology brings,” Megan Woods
said.