The applicant, a climate change NGO, challenged regulations promulgated by the respondent under New Zealand’s Climate Change Response Act 2002 (“the Principal Act”). These regulations – the Climate Change (Auction, Limits and Price Control for Units) Amendment Regulations 2022 (“the Amendment Regulations”) – set unit limits and price controls under New Zealand’s emissions trading scheme (ETS) for a five-year period (2023-2027). The applicant argued that these regulations were inconsistent with the Principal Act.
Before the matter went to a full merits hearing, the parties reached agreement on error and relief. The Court ratified that agreement in this decision, finding the Amendment Regulations to be ultra vires the Principal Act, and requiring the Minister to reconsider the unit limit and price control settings (that is, minimum reserve prices, trigger prices for reserve sales, and the amount of reserve domestic units) for the 2023-2027 period.
The Principal Act requires the ETS unit limits and price control settings to be set taking into account New Zealand’s nationally determined contribution (NDC) under the Paris Agreement, emissions budgets, and statutory target, as well as a list of matters set out at s 30GC(5)-(6) of the Principal Act. The Amendment Regulations set the price control settings at levels far lower than those projected by New Zealand’s own Climate Change Commission had recommended as sufficient to meet New Zealand’s emissions budget and target.
Although the Minister had originally recommended following the Commission’s advice, this recommendation was later revised following a directive from New Zealand’s Cabinet. Cabinet had deviated from the Commission’s settings because of concerns that higher ETS settings could inflate fuel and energy bills. In the course of the litigation, however, the Minister acknowledged that he had erred. Specifically, he accepted that he lacked reasonable grounds toe be satisfied that the Amended Regulations were in accordance with New Zealand’s 2050 target, emissions budgets, and NDC; and alternatively, that any deviation from these standards could not be justified by other matters prescribed in the Principal Act. Although he argued that such settings were not necessarily inconsistent with these standards, he accepted it was unreasonable to arrive at these settings based on the analysis that he had carried out.
Following agreement between the parties, the Court ordered that the Amendment Regulations be reconsidered to ensure that, as per the Principal Act, they were: (1) in accordance with New Zealand’s 2050 target; and (2) strictly in accordance with New Zealand’s emissions budgets and NDC, or alternatively, in accordance with them, with discrepancies justified by matters set out in the Principal Act. The Minister must reconsider the settings by September 30, 2023.
Case Documents:
Filing Date | Type | File | Summary |
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07/13/2023 | Decision | Download | Original decision |