Supercharging decarbonisation

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.

• Aotearoa New Zealand's first emissions reduction plan — at a glance and full plan

Budget 2022 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.

The Government will also invest in developing major strategies to achieve 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.

Notes 

• Just over $650 million has been allocated to decarbonising industry over the four-year Budget 2022 period (2022/23 to 2025/26), plus a pre-commitment of $25 million across 2022/23 and 2023/24 agreed prior to Budget 2022, with the remainder (approximately $330 million) allocated over 2026/27 and beyond.

• In addition, almost $18 million to fund the development of:
  • An energy strategy,
  • A regulatory framework for offshore renewable energy, and
  • A roadmap for development and use of hydrogen.
• In addition, approximately $5 million to:
  • Develop and implement electricity market measures that support reliable and affordable electricity supply while accelerating the transition to a highly renewable electricity system.
  • Explore and facilitate public sector procurement of renewable electricity via long term power purchase agreements.

Phasing and allocation of funding to decarbonise industry

Over seven years approximately $1 billion, to be spent:

• ~$600m towards an expanded process heat fund, which has the potential to include (subject to further programme design):
  • Nationally available contestable funding (similar to the current GIDI fund model)
  • Streamlined process for smaller projects
  • Partnerships with our biggest emitters
  • Enabling infrastructure and supply of low emission fuels to support decarbonisation, such as network upgrades
  • Regionally targeted decarbonisation based on plans through the Regional Energy Transition Accelerator (RETA)
  • Technology diffusion
• ~ $40m for commercial space and water heating decarbonisation
  • Switching fossil fuel space and water heating to renewable energy and to be more energy efficient in the commercial sector
• ~$330m towards assisting businesses, including small and medium businesses, to upgrade to more energy efficient equipment
• These are estimates which are based on current technologies and barriers. The Energy Efficiency & Conservation Authority’s policy is to invest where the money will get the best return. This can change over time.